Atos’s Biggest Investor Scraps Rescue Plan, Leaving Few Options

(Bloomberg) — Negotiations to bail out Atos SE were dealt another blow after its largest shareholder walked away from a plan to rescue the troubled French IT company, leaving it with dwindling options.

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David Layani’s Onepoint, a smaller French tech company that holds the largest stake in Atos, had initially beat out a rival bid from billionaire Daniel Kretinsky’s EPEI to negotiate with Atos’s creditors. Now that those talks have failed, Kretinsky’s firm has said it would be willing to restart negotiations, Atos said in a statement on Wednesday.

Layani’s “One Atos” plan was pitched as a way to help the company avoid a breakup and remain under French ownership. But Onepoint and its backers learned during negotiations that Atos would need more investment than initially assumed, and the group wouldn’t be able to come up with enough funds, people familiar with the discussions said, asking not to be identified because the talks were private.

Atos was once one of France’s premier tech companies, setting its sights on taking market share from Accenture Plc and Capgemini SE, before accounting scandals and huge debts left it on the verge of insolvency. Even though Atos has lost 90% of its value in the last year, it remains a key IT services provider in its home country, with strategic contracts linking it to the defense and nuclear industry, as well as the Olympic Games.

A representative for Atos declined to comment further on why the Onepoint talks fell apart. Onepoint, which had partnered with Paris-based investment firm Butler Industries and digital transformation specialist Econocom Group SE, said in a separate statement that “the conditions had not been met to conclude an agreement paving the way for a lasting solution.”

Atos is now left with two clear options for surviving its financial woes: hammer out a deal with Kretinsky or cobble together a solution to its nearly €5 billion ($5.3 billion) in debt among existing creditors alone. Kretinsky — a Czech billionaire who’s been buying up undervalued European assets and is on his third attempt to buy Atos — had been more pessimistic about Atos’s prospects and had previously asked bondholders to forgive a large portion of the company’s debt.

Atos still plans to reach an agreement with the majority of its creditors next month, it said in the statement. As part of the restructuring process already underway, the backstop provision of €1.5 billion in new debt and €75 million of new equity is expected to start this week.

Atos shares fell 7.4% to 1.11 cents at 2:58 p.m. in Paris trading on Wednesday after earlier gaining as much as 12%. The company’s bonds are currently quoted at around 16 cents on the euro across the different maturities, according to pricing compiled by Bloomberg.

In a letter to Atos this week, Kretinsky’s EPEI said it would seek to secure bondholders’ support by allowing them and other creditors to participate alongside EPEI in the offer, with cash funding equivalent to as much as 49% of Atos’ capital.

Kretinsky and investment firm Attestor had previously proposed elevating €500 million of the company’s debt load. Creditors were offered warrants for 20% of the company’s share capital and would have been repaid €500 million right after the completion of the restructuring.

Separately, Atos said it will sign an agreement on Wednesday granting the French state a preferred share in its Bull SA subsidiary, a supercomputing firm that’s key for France’s nuclear industry. That deal will include governance rights and allow the state to purchase sovereign sensitive activities if a third-party acquires 10% or more of either firm’s capital and if there is no agreement on how to protect national interests.

–With assistance from Giulia Morpurgo.

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