Atos in talks to change terms of Křetínský deal for IT services unit

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Atos is renegotiating the terms of a deal with Czech billionaire Daniel Křetínský to buy the French group’s lossmaking IT services business Tech Foundations as it seeks to raise funds to service its debt. 

The company said on Tuesday it had relaunched talks over the agreement and would consider additional asset sales and tapping debt and equity markets to address its capital raising plans and debts of €2.25bn maturing in 2025.

News of the talks comes after rating agency Standard & Poor’s downgraded Atos’s credit rating on Monday due to increased liquidity risks.

Shares in Atos, which said S&P’s move would have a “negligible” impact on its interest expenses at roughly €6mn a year, fell more than 6 per cent on Tuesday morning.

Atos is also in negotiations with its bankers including JPMorgan and BNP Paribas to refinance its debts, according to people with knowledge of the situation, with a deal expected to be announced in the coming weeks. The company’s market value has slumped by more than 90 per cent in the past three years to €651mn.

The new round of exclusive negotiations with Křetínský is aimed at recalibrating a summer deal under which the Czech tycoon would take over Tech Foundations and anchor a €900mn capital raise in Atos’s prized cyber security and supercomputing business Eviden that would give him a 7.5 per cent stake.

Investors, defence officials and politicians balked at the arrangement, notably for national security reasons. Eviden houses supercomputers that run models for France’s nuclear arsenal, and French politicians and officials objected to having a foreign investor in the share capital. Křetínský had also agreed to invest based on a €20-a-share valuation for Eviden, far above the €5.80 level at which they are currently trading.  

People close to Křetínský have said negotiations will focus on getting him out of the Eviden leg of the deal.

“This is a discussion we are happy to have and all the players are all more or less aligned on that,” said a person close to the Czech businessman. 

The negotiations are “principally around the price for Tech Foundations”, the person said, the idea being that some portion of the €215mn originally destined for the capital raise in Eviden would be reallocated to the purchase price for the legacy business. Investors in Atos, including recently arrived lead shareholder OnePoint, have said the agreed price was too low.

Under the terms of the August deal with Křetínský, Eviden would receive €100mn in net cash while Tech Foundations would be recapitalised by the Czech businessman to the tune of €800mn. It would also get €800mn in working capital from its former parent.

Other parties, including defence contractors Airbus and Thales, have previously expressed interest in purchasing parts of Atos’s cyber security and supercomputing businesses. Dassault Aviation has also been monitoring the situation.

Negotiations for Airbus to take a minority stake in Eviden foundered under pressure from the aerospace group’s shareholders this year. Thales has stated that it is no longer interested in Atos’s assets.