Why the French Atos is still reeling on the stock market
What happens not only on the stock market to the French company Atos. Facts, numbers and insights
Another start of the week with a crash on the Paris Stock Exchange for the French group Atos, active in the IT sector.
The stock of the IT services company, at the center of a difficult reorganization, lost 3.6% to 2.39 euros around 10.30 am, while the Cac 40 index rose by 0.3%. Since the beginning of the year, the price has fallen by approximately 65%. On Friday evening, Standard & Poor's announced its decision to lower Atos's credit rating from "B-" to "CCC", with a negative outlook.
Under the leadership of new president Jean Pierre Mustier (formerly Unicredit) , Atos is trying to refinance itself and avoid a broader debt restructuring. Last Monday the company announced the appointment of an ad hoc "authority" for negotiations with banks on the refinancing of its debt. At the same time, the company abandoned a capital increase plan of 720 million euros, which was supposed to strengthen the balance sheet, explaining that there were no longer conditions to carry it out.
Once a French corporate champion with prized assets such as supercomputers and sensitive contracts with the French military, attempts to split the group and sell assets to repay debts have faltered after a series of strategic missteps and management changes, summed up the recently Financial Times . Over the past three years, the company has had five CEOs, issued a series of profit warnings and lost 90% of its market capitalization.
All the details.
THE BLOW DEALED BY S&P
The rating agency underlined that the renegotiation of the French group's bank debt is taking longer than expected. Atos risks experiencing delays in meeting its liquidity needs through refinancing over the next 12 months – S&P has warned – given the risks associated with the execution of the asset sale plan and the lack of investor confidence, highlighted by the drop in prices of stocks and bonds.
ATOS AT RISK OF DEFAULT?
The negative outlook reflects the fact that Standard & Poor's could further downgrade the rating if it finds a continued lack of progress in the company's ongoing refinancing negotiations and asset divestment efforts and therefore an increasing likelihood of debt restructuring, which if if it took place it would be equivalent to a failure to pay.
“In the absence of an agreement with the banks, this could lead to a debt restructuring over the next 12 months, which we could view as a distressed trade and equivalent to a default,” the ratings agency said. S&P last downgraded the group's rating on January 19.
RECENT DIFFICULTIES
In recent times Atos has been struggling to restore its business. The company must refinance or repay 3.65 billion euros in loans and bonds by 2025. In mid-January the company named a new boss: Paul Saleh is the company's fifth CEO in 2.5 years.
The French IT company is taking longer than expected to negotiate the sale of its loss-making Tech Foundations arm to Czech billionaire Daniel Kretinsky's EPEI. The talks have been at a standstill for weeks, although neither side is yet willing to officially declare the deal dead, according to several people familiar with the negotiations reported by the FT .
While concerns over Atos' debt burden have mounted and the Kretinsky deal is currently uncertain, Chairman Mustier has explored a backup plan by entering into negotiations to sell the Big Data & Security (BDS) unit. , which brings together the cybersecurity, legacy Bull supercomputer and artificial intelligence businesses with Airbus . However, a deal with Airbus would take time to finalize, as the parties have only recently begun due diligence.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/perche-la-francese-atos-barcolla-ancora-in-borsa/ on Mon, 12 Feb 2024 15:13:32 +0000.