Paris, April 29, 2024 — Atos today announced 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 presented a revision of the parameters of its financial restructuring framework based on an adjusted business plan that reflects current market conditions and business trends.

French State Offer to Acquire Advanced Computing, Mission-Critical Systems and Cybersecurity Products

Atos announced 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 France. 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

2024:

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.

2027:

The Group’s revenue of €11.0 billion in 2027 compares with €11.4 billion in 2027 communicated previously and represents a revenue CAGR of +2.3% over the 2023PF – 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 €0.3 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.

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 Financial Restructuring

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 leverage 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

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

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.

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.

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Source: Atos