Market update - April 29
Non-binding letter of intent received
from the French state to acquire 100% of the Advanced Computing,
Mission-Critical Systems and Cybersecurity Products activities of
Atos SE’s BDS (Big Data & Security) business
- Indicative enterprise valuation between
€700 million and €1 billion
- Due diligence phase to start shortly in
view of the issuance of a confirmatory non-binding offer by early
June 2024
Revision of the parameters of the financial
restructuring framework presented on April 9, 2024, to reflect
current market conditions and business trends
- €1.1 billion of
cash needed to fund the business over the 2024-25 period compared
with €600 million previously. Funds to be provided in the form of
debt and/or equity by existing stakeholders or third-party
investors
- €300 million in new
revolving credit facility and €300 million in additional bank
guarantee lines (unchanged)
- Targeting BB credit
profile by 2026, which assumes a financial leverage1 below 2x by
year-end 2026 and implies a gross debt reduction of €3.2 billion
compared with €2.4 billion previously
- Remaining debt
maturities extended by 5 years (unchanged)
- These parameters are based on Atos full
business perimeter of Tech Foundations and Eviden (unchanged)
Submission of financing proposals
including new money by existing stakeholders of Atos SE and
third-party investors extended to May 3, 2024
- Allowing time to
incorporate new information
- Given the Group’s
needs, a global financial restructuring agreement will trigger
significant dilution of existing shareholders
July 2024 target date to reach a
financial restructuring agreement with financial creditors
unchanged
- Atos intends such
financial restructuring agreement to include the extension of €450
million interim financing agreed in-principle and an incremental
interim financing of €350 million from July 2024 to final
implementation of the financial restructuring agreement.
Paris, France – April 29, 2024
- Atos SE announces today the receipt of a non-binding letter of
intent from the French state to acquire 100% of the Advanced
Computing, Mission-Critical Systems and Cybersecurity Products
activities of Atos SE’s BDS division. The Company also presents a
revision of the parameters of its financial restructuring framework
based on an adjusted business plan that reflects current market
conditions and business trends.
Non-binding letter of intent received
from the French state to acquire 100% of the Advanced Computing,
Mission-Critical Systems and Cybersecurity Products activities of
Atos SE
Atos announces it has received on April 27,
2024, a non-binding letter of intent from the French state
concerning the potential acquisition of 100% of the Advanced
Computing, Mission-Critical Systems and Cybersecurity Products
activities of Atos SE’s BDS division for an indicative enterprise
value comprised between €700 million and €1 billion. This perimeter
represents a turnover of circa €1 billion in 2023, out of a total
of €1.5 billion for the BDS division as a whole.
The Group welcomes this letter of intent, which
would protect the sovereign strategic imperatives of the French
State. Due diligence phase with the French state would start
shortly, in view of the issuance of a confirmatory non-binding
offer by early June 2024.
The letter of intent provides for a limited
exclusivity undertaking, applying to direct offers on the perimeter
covered by the letter of intent (expressly allowing exchange of
information and global offers in the context of the financial
restructuring plan), until the earlier of July 31, 2024,
and the conclusion of a global restructuring agreement.
Adjusted 2024-2027 business plan of the
Atos Group
20242
The Group 2024 revenue of €9.8 billion compares
with €9.9 billion communicated previously and represents an organic
revenue evolution of circa -3.3% compared with 2023, compared with
circa - 2% communicated on April 9, 2024.
The Group Operating margin of €0.3 billion or
2.9% of revenue compares with €0.4 billion or 4.3% of revenue
communicated previously.
Change in cash before debt repayment of €-0.6
billion compares with €-0.4 billion communicated previously. It
excludes the full unwind of the working capital actions of circa
€1.8 billion as of December 31, 2023, which will be covered from
cash on the balance sheet.
20273
The Group’s revenue of €11.0 million in 2027
compares with €11.4 billion in 2027 communicated previously and
represents a revenue CAGR4 of +2.3% over the 2023PF5 - 2027 period,
compared with circa +3.1% communicated on April 9, 2024.
The Group Operating margin of €1.1 billion or
9.9% of revenue compares with €1.2 billion or 10.3% of revenue
communicated previously.
Change in cash before debt repayment of €0.2
billion compares with €0.5 billion communicated previously.
Key revisions to business plan hypothesis
The adjusted business plan takes into account
current business trends and softer market conditions in some of the
Group’s key regions. It also reflects delays in award of new
contracts and add-on work, as clients await the final resolution of
the Group’s financial restructuring plan. In addition:
- The adjusted
business plan for Digital reflects:
- A delay in the
return of a positive organic revenue growth to July 2025;
- Lower profitability
due to lower utilization of billable resources;
- Higher overhead
costs;
- Higher
restructuring costs in 2025.
- BDS operating
margin was reduced in 2024 mainly due to lower utilization of
billable resources in Cybersecurity services.
- The adjusted
business plan for Tech Foundations includes:
- Lower revenue and
operating margin due to higher risk of contract terminations and
reduced expectations for new logos in 2024 and 2025;
- Lower profitability
due to lower utilization of billable resources and lower absorption
of fixed costs.
Digital adjusted business plan6
Digital, in € million |
|
2023PF |
2024E |
2025E |
2026E |
2027E |
|
|
|
|
|
|
|
Revenue |
|
3,476 |
3,347 |
3,443 |
3,729 |
4,070 |
Growth (%) |
|
|
-3.7% |
2.9% |
8.3% |
9.1% |
|
|
|
|
|
|
|
Operating margin |
|
233 |
95 |
254 |
349 |
458 |
OM% |
|
6.7% |
2.8% |
7.4% |
9.3% |
11.3% |
|
|
|
|
|
|
|
Free cash flow before interest and taxes |
|
|
46 |
91 |
276 |
420 |
BDS adjusted business plan7
BDS, in € million |
|
2023PF |
2024E |
2025E |
2026E |
2027E |
|
|
|
|
|
|
|
Revenue |
|
1,438 |
1,553 |
1,836 |
2,054 |
2,253 |
Growth (%) |
|
|
8.0% |
18.2% |
11.9% |
9.7% |
|
|
|
|
|
|
|
Operating margin |
|
35 |
87 |
189 |
237 |
269 |
OM% |
|
2.4% |
5.6% |
10.3% |
11.5% |
11.9% |
|
|
|
|
|
|
|
Free cash flow before interest and taxes |
|
|
-71 |
152 |
331 |
97 |
Tech Foundations adjusted business plan8
Tech Foundations, in € million |
|
2023PF |
2024E |
2025E |
2026E |
2027E |
|
|
|
|
|
|
|
Revenue |
|
5,179 |
4,857 |
4,637 |
4,670 |
4,724 |
Growth (%) |
|
|
-6.2% |
-4.5% |
0.7% |
1.1% |
|
|
|
|
|
|
|
Operating margin |
|
148 |
101 |
87 |
243 |
368 |
OM% |
|
2.9% |
2.1% |
1.9% |
5.2% |
7.8% |
|
|
|
|
|
|
|
Free cash flow before interest and taxes |
|
|
-160 |
-238 |
51 |
253 |
Atos Group adjusted business plan9
Atos Group, in € million |
|
2023PF |
2024E |
2025E |
2026E |
2027E |
|
|
|
|
|
|
|
Revenue |
|
10,093 |
9,757 |
9,915 |
10,453 |
11,046 |
Growth (%) |
|
|
-3.3% |
1.6% |
5.4% |
5.7% |
|
|
|
|
|
|
|
Operating margin |
|
417 |
282 |
531 |
828 |
1,095 |
OM% |
|
4.1% |
2.9% |
5.4% |
7.9% |
9.9% |
|
|
|
|
|
|
|
Free cash flow before interest and taxes |
|
|
-185 |
5 |
659 |
770 |
|
|
|
|
|
|
|
Taxes |
|
|
-61 |
-68 |
-94 |
-140 |
Separation costs & other |
|
|
-169 |
-79 |
-42 |
-42 |
Interests10 |
|
|
-190 |
-300 |
-317 |
-281 |
|
|
|
|
|
|
|
Change in cash before debt repayment |
|
|
-605 |
-442 |
206 |
307 |
Free cash flow may vary based on interest
expense related to the new financial restructuring solution. Please
refer to the disclaimer in this press release.
Parameters of Atos’ financial
restructuring framework
As indicated in its press release of March 26th,
2024, Atos SE has entered into an amicable conciliation procedure
in order to frame discussions with its financial creditors. This is
to facilitate the emergence of a global agreement regarding the
restructuring of its financial debt within a short and limited
timeframe of four months, which could be further extended by one
month if needed.
Atos SE presents today a revision of its
financial restructuring framework presented on April 9, 2024, to
reflect current market conditions and business trends:
- €1.1 billion of
cash needed to fund the business over the 2024-25 period compared
with €600 million previously. Funds to be provided in the form of
debt and/or equity by existing stakeholders or third-party
investors. The €1.1 billion of cash needed for the 2024 and 2025
period is based on a severe downside case performed by the Company
adjusting for lower interest expenses related to debt reduction
targets;
- €300 million in new
revolving credit facility and €300 million in additional bank
guarantee lines (unchanged);
- Targeting BB credit
profile by 2026, which assumes a financial leverage11 below 2x by
year-end 2026 and implies a gross debt reduction of €3.2 billion
compared with €2.4 billion previously;
- Remaining debt
maturities extended by 5 years (unchanged).
The key parameters of this financial
restructuring framework are not impacted by the Letter of Intent
received from the French state. If an agreement is reached with the
French state, proceeds resulting from such a transaction are not
assumed to be received before H2 2025. Such proceeds would be
available for early repayment of potential new money instruments as
part of the financial restructuring solution.
Interim financing until the final
implementation of the financial restructuring
agreement
The financial restructuring agreement will need
to include the extension of €450 million interim financing agreed
in-principle and an incremental interim financing of €350 million
from July 2024 to final implementation of the financial
restructuring agreement.
Next steps and financial restructuring
discussions’ process
Existing stakeholders of Atos SE and third-party
investors can submit proposals for new money by May 3, 2024, in
order to allow a global agreement on the new capital structure of
the Company to be finalized by July 2024.
Atos will evaluate all proposals, under the
aegis of the conciliator Maître Hélène Bourbouloux in the best
corporate interest of the Company including its employees, clients,
suppliers, shareholders, and other stakeholders, while maintaining
an attractive business mix.
Atos will inform the market in due course of the
progress of the financial restructuring discussions, which will
result in a change in its capital structure arising from a final
financial restructuring agreement, including the potential issuance
of new equity which will result in a dilution of the existing
shareholders.
Shareholders and financial creditors will be
consulted in compliance with French legal requirements.
***
Appendix 1
The debt structure of the Group as of 31
December 2023, taking into account drawings on the remaining
available RCF (drawn in January 2024) is as follows:
Debt Structure as of 31 Dec. 2023, Pro
Forma(1) |
€ in millions |
|
Maturity |
Outstanding |
|
|
|
|
Term Loan
A |
|
Jan-25 |
1,500 |
RCF |
|
Nov-25 |
900 |
Bank loans |
|
|
2,400 |
|
|
|
|
Sustainability linked Bond 1% |
Nov-29 |
800 |
OEB
zero coupon |
Nov-24 |
500 |
Senior Bond 1.75% |
May-25 |
750 |
Senior Bond 2.5% |
Nov-28 |
350 |
NEU MTN |
|
Apr-26 |
50 |
Bonds & mid-term notes |
|
2,450 |
|
|
|
|
Other
debt |
|
|
85 |
|
|
|
|
Total debt |
|
|
4,935 |
(1) Pro Forma €320M RCF draw
and maturity extension of Term Loan A to January 2025
(2) Excluding accrued interest
on LT Borrowing
Note: the €1.5 billion Term Loan A, maturing in
July 2024, provides for another 6-month extension option until
January 2025 available to Atos SE under standard conditions
(notably no event of default and payment of an extension fee); it
should be noted that under French law, any events of defaults
triggered by the opening of mandat ad hoc or conciliation
proceedings are considered void.
The debt principal schedule of the Group from 31
December 2023, taking into account drawings the remaining available
RCF and assuming the exercise of the Term Loan A second extension
option would be as follows:
Maturity Profile of Gross Debt as of 31
Dec. 2023, Pro Forma(1)
€ in millions, FYE Dec. |
|
H1-24 |
H2-24 |
H1-25 |
H2-25 |
2026 |
2027 |
2028 |
2029 |
|
|
|
|
|
|
|
|
|
|
Term Loan
A |
|
- |
- |
1,500 |
- |
- |
- |
- |
- |
RCF |
|
- |
- |
- |
900 |
- |
- |
- |
- |
Bank loans |
|
- |
- |
1,500 |
900 |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
Bonds |
|
- |
500 |
750 |
- |
- |
- |
350 |
800 |
MTN |
|
- |
- |
- |
- |
50 |
- |
- |
- |
Bonds & mid-term notes |
|
- |
500 |
750 |
- |
50 |
- |
350 |
800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt |
|
- |
500 |
2,250 |
900 |
50 |
- |
350 |
800 |
(1) Pro Forma €320M RCF draw and maturity
extension of Term Loan A to January 2025
Appendix 2: expected guarantee
needs
€m, FYE
Dec. |
|
Dec-23 |
Dec-24 |
Dec-25 |
Dec-26 |
Dec-27 |
|
|
|
|
|
|
|
Guarantees beginning of period |
|
504 |
573 |
407 |
453 |
562 |
New lines |
|
280 |
164 |
226 |
214 |
199 |
Releases |
|
(211) |
(330) |
(180) |
(105) |
(114) |
Outstanding end of period |
|
573 |
407 |
453 |
562 |
647 |
Appendix 3: FY23 actual – FY23 pro forma
revenue and operating margin reconciliation
The tables below present the reconciliation
between the FY 2023 actual revenue and operating margin and the
2023 pro forma revenue and operating margin, for the Group, Eviden,
Tech Foundations and the two components of Eviden, Digital and BDS.
Elements in reconciliation correspond to businesses disposed in
2023.
(in € millions)
External revenue |
2023 Actuals |
Scope effects |
2023 PF |
Digital |
3,630 |
-154 |
3,476 |
BDS |
1,459 |
-21 |
1,438 |
Sub-total Eviden |
5,089 |
-175 |
4,914 |
Tech Foundations |
5,604 |
-425 |
5,179 |
Total Group |
10,693 |
-600 |
10,093 |
|
|
|
|
|
|
|
|
Operating margin |
2023 Actuals |
Scope effects |
2023 PF |
Digital |
257 |
-23 |
234 |
BDS |
38 |
-2 |
36 |
Sub-total Eviden |
295 |
-25 |
270 |
Tech Foundations |
172 |
-25 |
147 |
Total Group |
467 |
-50 |
417 |
Pro forma information consists in adjusting
historical published information from scope changes but shall not
be considered as pro forma information as defined by the EU
Prospectus regulation.
Appendix 4: Free cash flow
reconciliations
|
In € billion |
|
|
Reported 2023 Free cash flow |
-1.1 |
Less: working capital actions |
-1.8 |
Free cash flow assuming no working capital actions |
-2.9 |
|
|
2024E change in cash before the unwinding of working capital
actions12 |
-0.6 |
Unwinding of the working capital actions |
-1.8 |
2024E change in cash after the unwinding of working capital
actions13 |
-2.4 |
Disclaimer
This document contains forward-looking
statements that involve risks and uncertainties, including
references, concerning the Group’s expected growth and
profitability in the future which may significantly impact the
expected performance indicated in the forward-looking statements.
These risks and uncertainties are linked to factors out of the
control of the Company and not precisely estimated, such as market
conditions or competitor’s behaviors. Any forward-looking
statements made in this document are statements about Atos’s
beliefs and expectations and should be evaluated as such.
Forward-looking statements include statements that may relate to
Atos’s plans, objectives, strategies, goals, future events, future
revenues or synergies, or performance, and other information that
is not historical information. Actual events or results may differ
from those described in this document due to a number of risks and
uncertainties that are described within the 2022 Universal
Registration Document filed with the Autorité des Marchés
Financiers (AMF) on April 21st, 2023 under the registration number
D.23-0321 and within the 2023 Consolidated financial statements
published by Atos SE on March 26, 2024. Atos does not undertake,
and specifically disclaims, any obligation or responsibility to
update or amend any of the information above except as otherwise
required by law. This document does not contain or constitute an
offer of Atos’s shares for sale or an invitation or inducement to
invest in Atos’s shares in France, the United States of America or
any other jurisdiction.
This document includes information on specific
transactions that shall be considered as projects only. In
particular, any decision relating to the information or projects
mentioned in this document and their terms and conditions will only
be made after the ongoing in-depth analysis considering tax, legal,
operational, finance, HR and all other relevant aspects have been
completed and will be subject to general market conditions and
other customary conditions, including governance bodies and
shareholders’ approval as well as appropriate processes with the
relevant employee representative bodies in accordance with
applicable laws.
***
About Atos
Atos is a global leader in digital
transformation with c. 94,000 employees and annual revenue of c. €
11 billion. European number one in cybersecurity, cloud and
high-performance computing, the Group provides tailored end-to-end
solutions for all industries in 69 countries. A pioneer in
decarbonization services and products, Atos is committed to a
secure and decarbonized digital for its clients. Atos is a SE
(Societas Europaea), and listed on Euronext Paris.
The purpose of Atos is to help design the future
of the information space. Its expertise and services support the
development of knowledge, education and research in a multicultural
approach and contribute to the development of scientific and
technological excellence. Across the world, the Group enables its
customers and employees, and members of societies at large to live,
work and develop sustainably, in a safe and secure information
space.
Contacts
Investor relations : David Pierre-Kahn | investors@atos.net |
+33 6 28 51 45 96
Individual shareholders : 0805 65 00 75
Press contact : globalprteam@atos.net
1 Ratio net debt pre-IFRS16 over EBITDA pre-IFR16; EBITDA
computed as OMDA pre-IFRS16 minus anticipated RRI (restructuring,
rationalization, integration) costs and Other changes2 Please refer
to the disclaimer of this press release3 Please refer to the
disclaimer of this press release4 CAGR: Compound annual growth
rate5 PF: Pro forma6 Please refer to the disclaimer of this press
release7 Please refer to the disclaimer of this press release8
Please refer to the disclaimer of this press release9 Please refer
to the disclaimer of this press release10 Reflect contractual
interests and 7% interest rate on negative liquidity position11
Ratio net debt pre-IFRS16 over EBITDA pre-IFR16; EBITDA computed as
OMDA pre-IFRS16 minus anticipated RRI (restructuring,
rationalization, integration) costs and Other changes12 Before debt
repayment13 Before debt repayment
- PR-Atos-Market Update - April 29 2024
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