(Bloomberg) -- Atos SE, the legacy IT company once seen as the rising star of France’s tech industry, is facing a wall of debt — and it’s running out of options for bringing it down.

On Tuesday, Airbus SE walked away from talks to buy Atos’s big data and cybersecurity business. Atos will reschedule its earnings release, which was planned for Wednesday, and will now evaluate its next steps. 

Atos shares plunged 19% to €1.74 on Tuesday, and its €750 million ($814 million) bond due in May next year slid by the most in two months.

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The company has tried — and failed — several times to raise cash for its debt payments. 

Last year, Airbus discussed taking a stake in the same unit but ended talks after shareholder criticism. In February, Atos’s discussions with billionaire Daniel Kretinsky’s EPEI over the sale of its legacy IT services unit ended when the two parties failed to agree on terms and pricing. It also dropped plans to sell €720 million in equity rights.

What Bloomberg Intelligence Says: 

Atos’ debt-reduction options look increasingly dire after Airbus walked away from a potential deal to buy Atos’ big data and cybersecurity (BDS) unit, which would have provided some much-needed liquidity. The transaction was never certain — we thought Airbus’ indicative €1.5-€1.8 billion offer was opportunistic — but the collapse in talks narrows a pathway for Atos to meet debt obligations maturing in November.

— Tamlin Bason, BI TMT Analyst

Its fate is now largely in the hands of a court-appointed mediator, Helene Bourbouloux, who will discuss options with banks. 

Atos, which is running out of cash, needs to find a solution before its bond matures in November. It said in January it expected to miss its free cash flow target for the second half of 2023. It has €2.4 billion of bank debt due next year that’s part of the mediated negotiations. It also has to deal with €500 million of convertible bonds due in November, a €750 million bond due in May next year and about €1.2 billion of notes maturing between 2028 and 2029 that are not part of Bourbouloux’s mandate for now, according to company disclosures.

France’s finance ministry said in a statement late Tuesday that it will find a “national solution for the protection of strategic activities” of Atos. “All the interests of France will be preserved,” it said.

Strategic activities include sensitive businesses in cybersecurity and supercomputers.

With Airbus walking away, Atos is left with few potential buyers for its big data and security unit, given the government’s concern over who can be a significant shareholder. Defense company Thales SA had been reported as a potential bidder but, in a call with reporters earlier this month, Chief Executive Officer Patrice Caine said the company wasn’t interested in any Atos business.

One option for the company could be to reach a deal with the banks to refinance its debt in exchange for more security in the capital structure. Another option would be to include bondholders in the discussions and carry out a more comprehensive restructuring. In any of those scenarios, it would need new funds to continue.

Atos’ debt situation is looking “increasingly dire,” said Bloomberg Intelligence analyst Tamlin Bason.

--With assistance from Siddharth Philip and Benedikt Kammel.

(Updates share price in third paragraph; adds finance ministry comment in eighth paragraph.)

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