Atos: Why Atos shares are likely to collapse with Orpea-style mega-dilution

Atos: Why Atos shares are likely to collapse with Orpea-style mega-dilution
Atos: Why Atos shares are likely to collapse with Orpea-style mega-dilution

(BFM Bourse) – The IT services group in great financial difficulty is at the dawn of a heavy and painful restructuring which will, regardless of the offer selected, lead to mega-dilution for shareholders.

Atos is still under pressure on the Paris Stock Exchange. The title of the digital services company in difficulty lost another 10.8% to 1.218 euros this Tuesday, after having already returned more than 30% over the last two sessions.

A certain tension surrounds the file on the Stock Exchange while it is this week that Atos will decide on one of the two offers received with a view to its heavy financial restructuring.

The first comes from Daniel Kretinsky associated with the Attestor fund, the second from the digital services company Onepoint allied with the investment fund Butler Capital, the company Econocom and certain creditors of the group.

According to information from BFM Business, David Layani has now taken a clear advantage in his standoff with Daniel Kretinsky. The founder of Onepoint would have acquired a base of Atos creditors for his cause.

It must be said that the scale of the restructuring is gigantic, like Emeis, formerly Orpea. At the end of April, Atos indicated that it needed 1.7 billion euros in various forms (cash, credit lines, guarantees) for the next two years and intended to reduce its gross debt by 2.4 billion euros.

Above all, the company had indicated that it still expected to burn cash, for a total of approximately 600 million euros cumulatively in 2024 and 2025, after having consumed 1.08 billion euros of cash in 2023.

To clean up Atos’ balance sheet, the Kretinsky – Attestor tandem submitted an offer to take over the entire group. This first proposal provides for a reduction of 3.4 billion euros gross of debt, which is a little less than the 4 billion euros initially announced. It is accompanied by a contribution of 500 million euros in capital increase and an additional 200 million euros in liquidity.

A consortium led by David Layani is proposing to creditors to convert 2.9 billion euros against 3.2 billion euros previously of debt into capital, and to provide 250 million euros of new money through a increase in capital.

“A massive dilution of shareholders”

But in any case, this rescue will not be without consequences for existing shareholders. It will come at the cost of massive dilution as the group warned: “Implementation of the proposals will in all cases result in massive dilution of current Atos shareholders.” The dilution of the two offers amounts to approximately 99.9% each, according to documentation posted online by the company. This is also what Invest Securities also points out in its note published this Tuesday morning.

According to the financial intermediary, whatever the choice of the buyer, the dilution will be colossal for the shareholders, who will be “totally sacrificed”.

“To obtain the support of bond creditors, David Layani, who held 11% of the capital, completely sacrificed the current shareholders who will represent less than 0.01% of the capital post-restructuring,” regrets the research office.

Invest Securities has taken out its calculator and expects a first estimate that the number of shares in circulation will increase from 112 million to 84 billion after this restructuring.

“The worst part is perhaps that this restructuring will not be sufficient given the operational deterioration,” laments Invest Securities, which adopts a sell opinion on the file with a price target of 0.01 euros, i.e. the theoretical nominal value of the post-restructuring share. And to think that the title was worth more than 100 euros seven years ago…

Sabrina Sadgui – ©2024 BFM Bourse

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