(Bloomberg) — Ailing French IT company Atos SE expanded talks with creditors to include bondholders, with a goal of reaching a debt restructuring agreement by July to head off a looming repayment crisis.

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The process will last four months and can be extended by one month according to French law, Atos said in a statement on Tuesday. It will present its refinancing framework to creditors during the week of April 8, it said.

The problems at Atos, a strategic company in France due to its ties with the nation’s military and nuclear industry, swelled after several failed attempts to raise cash for debt payments. Talks to sell its legacy IT services unit to Czech billionaire Daniel Kretinsky’s EPEI ended without a deal, and Airbus SE this month walked away from a deal to buy its big data and cybersecurity business.

Read More: Struggling IT Firm Atos Faces Debt Wall as Airbus Talks Fail

“We’re all working toward the same goal, with all our creditors working with us,” Atos Chief Executive Officer Paul Saleh said on a call with reporters on Tuesday. “On this point I have no worries, we’ll come up with a global solution by July.”

Atos said it has sufficient liquidity to operate the business until a refinancing plan is reached. It’s also in discussions with its financial creditors regarding an interim financing so it has more runway until it finds a more permanent fix for its balance sheet. The French government is part of the talks, which are brokered by court-appointed mediator Helene Bourbouloux.

While bondholders weren’t initially included in the refinancing talks, they will be part of the amicable conciliation procedure, according to the statement. Atos debt repayments are set to spike through 2025, with a €500 million ($542 million) convertible bond coming due in November, a €750 million bond maturing in May 2025 and €2.4 billion of bank debt due next year.

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What Bloomberg Intelligence Says:

Atos may be nearing clarity on its debt obligations, aiming to reach a refinancing plan by July via a conciliation procedure with banks and bondholders. The company has debt totaling €3.65 billion maturing by end-2025, beginning with a €500 million convertible bond due Nov. 6. Free cash flow was €1.1 billion negative in 2023, and though management has provided no 2024 guidance, it has said there’s sufficient liquidity to operate until a refinancing deal is reached.

— Tamlin Bason, BI TMT analyst

Shares in Atos fell 7.1% to €1.59 at 9:02 a.m. in Paris. They are down 77% since the start of the year amid the turmoil.

The company said its 2023 financial statements have been audited and it expects the resulting report will include a section about the material uncertainty related to the going concern.

All of Atos’s financial debt is unsecured. As part of the restructuring, the company could offer more security to creditors willing to provide new funds. The company did not say whether the restructuring could involve a haircut for creditors or a debt conversion into equity.

Atos is “actively evaluating strategic alternatives, having received several expressions of interest or indicative offers relating to various perimeters,” according to the statement.

Impairment Charge

Atos on Tuesday reported a loss of €3.44 billion last year, from a loss of €1.01 billion in 2022. The results included an impairment charge of €2.55 billion and reorganization costs of €696 million as it split its business into two units. The company also confirmed its previously reported 2023 results.

In February, Atos reported preliminary 2023 revenue was €10.69 billion, below an estimate of €10.89 billion among analysts surveyed by Bloomberg. It said its negative free cash flow for the period was €1.08 billion.

France’s finance ministry has said it will find a national solution to protect the strategic activities of Atos, especially its sensitive activities, in particular the Big Data & Security unit that Airbus considered buying.

A candidate to rescue Atos is David Layani, the head of Atos’s top shareholder Onepoint. Layani told Le Figaro newspaper on Sunday that he is prepared to lead the recapitalization of the whole group with the support of its employees.

Meanwhile, Kretinsky is considering a renewed takeover offer for parts of Atos after he walked away from his previous bid, Bloomberg reported in February.

(Updates with shares in the seventh paragraph)

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