The poison cup is far from empty for IT giant Atos – and its shareholders and customers. The French tech company, which is plagued by financial problems and is an important IT supplier to many Dutch governments, appears to need even more money to avoid going bankrupt.
To continue the activities, 1.7 billion euros is needed, Atos writes in a press release published on Monday. At the beginning of this month, the company still assumed that 1.2 billion euros in new financing was needed.
The extra money is necessary because many customers are currently reluctant to conclude new contracts with the company. As a result, revenues in the first quarter were disappointing and the company also revised downwards its forecasts for future sales. Those prospects are essential to persuade financiers to lend new money to the company. Interested parties have now been given until Friday to submit financing proposals, extending the previous deadline of last Friday.
With 105,000 employees and a turnover of 11 billion euros, Atos is one of the largest IT service providers in Europe. The company has grown rapidly in recent years through acquisitions of smaller players. However, those purchases were paid for by borrowing money. This spring it emerged that a major financier wanted to leave the company because it believed the debt burden had become too high. Since then, Atos has been trying to raise money by divesting parts, so far without success. The company is now warning its shareholders that a debt restructuring is likely to involve the issuance of new shares, which will lead to dilution.
Also read
Government institutions are taking measures now that ICT giant Atos is in financial trouble
Atos is a supplier of essential IT to companies and many governments, including in the Netherlands. For example, the Land Registry and the UWV have outsourced crucial IT tasks to the French company. These authorities have major concerns about the continuity of that service if the company collapses or changes hands.
Nuclear test simulations
The French government also has close cooperation with the Paris company. For example, a supercomputer simulates nuclear tests for the French army. Atos also supplies management systems for nuclear power plants.
For this reason, the French government offered an emergency loan of 50 million euros to Atos at the beginning of this month to continue paying the bills in the short term. Part of that proposal was the introduction of a ‘golden share’ for the business units that are essential to the French government. The government could thus block the sale of those parts if it did not trust the buyer.
The French government goes one step further in its new proposal. This weekend it was announced that the government plans to make a bid for three for its strategic components. Atos confirmed that news on Monday morning. The government is willing to pay 700 million to 1 billion euros for the business units active in supercomputers, servers for artificial intelligence and cybersecurity. That is more than analysts and investors expected. Atos shares rose by more than 20 percent on the Paris stock exchange on Monday, reaching more than 2.30 euros per share. Four years ago, an Atos share was still worth more than 80 euros.
A final offer should be on the table in June. Atos warns that if the sale to the French government goes ahead, the proceeds will probably not be credited to the company’s account until the end of 2025 – and therefore only then can they be used to pay off debts early. To survive until then, new loans will have to be taken out.
To share
Email the editor
