Atos, a French IT firm, experiences a 12% decline and significant share dilution after opting for a rescue deal.

• The French IT company Atos experienced a nearly 12% decline in its shares on Tuesday.
• The company announced that it had opted for a rescue plan suggested by key investor David Layani, which will lead to a significant reduction in the ownership stakes of current shareholders.
• Earlier this year, Atos revealed that it was considering two potential rescue deals, one from Layani and the other from Czech billionaire Daniel Kretinsky.

On Tuesday, the share price of French IT company Atos dropped by almost 12% after the company announced a rescue deal that would lead to a significant dilution of its existing shareholders.

Shares were last down 11.97% as of 9:52 a.m. London time.

Atos has decided to proceed with a proposal from major shareholder David Layani, whose IT firm Onepoint holds approximately 11% of Atos' share capital and voting rights as of December 2023, according to its website. Atos was also considering a rival offer from Czech billionaire Daniel Kretinsky.

The completion of the deal will result in a significant reduction of existing shareholders' ownership, with them holding less than 0.1% of share capital.

Atos provided Layani with a stronger capital structure and ensured the firm had sufficient financial liquidity to remain operational.

The Onepoint consortium's proposal has the backing of a significant number of Atos' financial creditors, increasing the likelihood of a final financial restructuring agreement being reached, according to the company.

Reuters reported that Layani stated on Tuesday that the deal partners aimed to enhance Atos' financial standing and establish the company as a prominent global player in the tech industry.

Onepoint, Butler Industries, Econocom, and some of Atos' financial creditors are fronting Layani's deal, which is expected to be implemented by July.

The French military and other authorities have awarded Atos with sensitive contracts for managing data and cybersecurity during the Paris 2024 Olympics.

The company has been grappling with increasing financial difficulties, including a growing debt burden, with its net debt reaching 3.9 billion euros ($4.2 billion) by the end of the first quarter.

Atos has been in talks with major companies, including Airbus, about potential deals during its financial struggles. Additionally, the French government expressed interest in acquiring parts of Atos' business with a letter of intent earlier this year.