(Bloomberg) -- Atos SE chose a bailout proposal from a group led by David Layani’s Onepoint, its top shareholder, beating out a rival bid from Czech billionaire Daniel Kretinsky for the troubled French IT company. 

Onepoint’s rescue plan for the troubled French IT company, which includes new equity and reduced debt, has the support of the board and the company will now seek to reach a final agreement with its creditors by July, Atos said in a statement on Tuesday. The Onepoint-led bid was also backed by Paris-based investment firm Butler Industries and digital transformation specialist Econocom Group SE. 

Onepoint’s so-called “One Atos” plan will massively dilute existing shareholders, but should help the company avoid a breakup and remain under French ownership. Founder Layani, 45, will take over as chief executive officer. Kretinsky’s bid had targeted a more radical debt reduction and suggested selling off the company’s digital business. 

Atos, loaded with close to €5 billion in debt, has been under a formal restructuring process — known as conciliation — since April with creditors and banks to try to avoid bankruptcy. The choice of the Onepoint-led bid marks the culmination of months of negotiations involving the deeply distressed firm’s banks, creditors, shareholders, and the French government.  

Atos shares were down 15% in Paris on Tuesday. Bonds issued by Atos, which are trading at deeply distressed levels, gained after the announcement. The €350 million ($376 million) in notes due November 2028 quoted 4.6 cents on the euro higher at 31.5 cents, according to data compiled by Bloomberg. That’s the biggest increase since April. 

The Onepoint consortium offered €250 million of new money equity, €1.5 billion of new money debt and aims to convert €2.9 billion of Atos’s debt into shares to save the company. 

The offer “has the support of a large number of Atos’s financial creditors,” and aligns with its corporate interests, the company said in the statement.

What Bloomberg Intelligence Says:

Onepoint’s restructuring proposal for Atos — which its board has accepted over a competing offer by Czech investor Daniel Kretinsky — will result in massive dilution, all but putting an end to Atos’s equity narrative. The deal calls for converting €2.9 billion of Atos debt into shares, resulting in at least 2.5 billion new shares vs. the 112 million outstanding. Atos has close to €5 billion of debt, and will still need to reach an agreement with creditors.

— Tamlin Bason, BI TMT litigation and industry analyst

Founded in 2002, Onepoint is a much smaller IT group than its target, with around €500 million of revenue last year compared with €10.7 billion for Atos. Onepoint became Atos’s top shareholder last year, following months of setbacks for the bigger firm, including failed deals, management turnover and a dramatic plunge in its valuation. 

Rival bidder EPEI made its fortune in the energy sector, but has sought to diversify in recent years, targeting mostly entities in financial distress. Kretinsky’s privately owned conglomerate completed the takeover of troubled French grocery chain Casino Guichard Perrachon SA in March and is in the process of buying the Royal Mail in the UK. It has been circling Atos for almost a year, at first seeking to buy its legacy IT division before making a rescue bid for the whole company.

Atos was once one of France’s premier tech companies, setting its sights on taking market share from Accenture Plc and Capgemini SE, before accounting scandals and huge debts left it on the verge of insolvency. Even though Atos has lost 90% of its value in the last year, it remains a key IT services provider in its home country, with strategic contracts linking it to the defense and nuclear industry, as well as the Olympic Games.

The unraveling of Atos has been a new test for France’s restructuring regime, following the downfall of care-home operator Orpea and Casino. It also forced the government to contribute €50 million in interim funding and make a separate offer for its most sensitive supercomputing unit. 

Atos separately said late Tuesday that it has entered into exclusive negotiations with the French IT and engineering firm Alten SA for the sale of its smart energy business, Worldgrid, in a deal valued at €270 million. The transaction is expected to close before the end of 2024 and is subject to regulatory approvals, the company said in a statement.

French Finance Minister Bruno Le Maire had said last month that the unit, including systems used to control French nuclear plants, should remain under the control of the French state, adding at the time that public energy giant Electricite de France SA could be a candidate.

--With assistance from Vlad Savov and Libby Cherry.

(Updates with exclusive talks with Alten in penultimate paragraph)

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