French technology company Atos named a new chief executive on Monday and warned that free cash flow would be slightly below its initial target for the year’s second half, sending its share price tumbling. The firm said Paul Saleh, currently chief financial officer, would become CEO – the fourth in less than two years as it has grappled with a series of profit warnings. Atos, deemed strategic by the French government for its high-tech assets, including supercomputers used by the army and finance ministry to manage tax collection, said it had been forced to adjust its forecasts as it faced challenges in its resale activities and IT consulting business.
Atos said it had reaffirmed its plans to split itself into two groups by the end of 2023 and had set up a special committee to oversee this process, which is already underway. The group is undergoing a major financial overhaul to address its mounting debts. It has also been hit by an ongoing legal dispute with one of its shareholders over a Tech Foundation Co division sale.
The reshuffling of the executive team is part of this, with new CFO Jacques-Francois de Prest stepping up to the top job alongside Saleh. The former car parts and telecoms company finance chief is expected to bring a strong background in refinancing and corporate turnaround to the role, according to the firm.
Yves Bernaert, appointed CEO in October after a career at Accenture, has decided to leave due to disagreements with the board over implementing his turnaround plans. The move came days after Atos issued its latest profit warning, which pushed its shares down to their lowest level since 2012.
Shares in the group slumped as much as 18% on Monday, and bonds plunged. Atos has more than EUR11 billion ($11.3 billion) in debt and relies on creditors’ support to help it restructure and avoid bankruptcy.
A court-supervised procedure known as the “procédure de sauvegarde” resembles Chapter 11 bankruptcy in the United States and could allow the company to continue operating while it reschedules its debts. Atos’s lenders include banks such as Credit Agricole and Société Générale and private equity firms including Darrois Villey Maillot Brochier and Perella Weinberg Partners.
Analysts are divided on whether Atos will be able to break itself up successfully, with some suggesting the plan will fail to deliver its goals and the company may need to seek fresh funding or even file for insolvency. But others say the planned separation is a good step forward and could give it the breathing space to regain investor confidence and focus on its core businesses. This includes the digital transformation of businesses in France and abroad. Atos has promised to significantly change this area and accelerate its digital, cloud, security, and decarbonization strategy.
