Atalian - comment
We were surprised at the Atalian announcement yesterday. We did expect that another restructuring would be needed, but didn’t expect it to be quite so imminent. Clearly, performance in France has deteriorated since the H1 results back in August. Atalian is now in talks with an Ad Hoc committee representing >50% of the bonds, and the ongoing discussions with bondholders will inevitably require some form of exchange of debt for equity. The French business is still losing contracts and is unable to pass on higher costs to its customers. Whilst the company also announced yesterday that it would consider a potential sale of the business, given the operational challenges in France, proceeds from a sale would not cover debt. Creditors will want to control this process to maximise recoveries. Atalian will also want to preserve as much cash as possible, and we expect the €16m cash coupon due on the bonds (at the end of March) is unlikely to be paid. Weil, Gotshal and Manges advised bondholders at the last restructuring, but we have yet to get confirmation of the advisors this time around.