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Shares in beleaguered French IT company Atos fell close to 12% on Tuesday after the firm said it had chosen a rescue deal, which is set to result in a major dilution of existing shareholders.

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

Atos said it would go ahead with a proposal by major shareholder David Layani, whose IT firm Onepoint held around 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 deal will nevertheless lead to a “massive dilution” of existing shareholders, who are set to hold less than 0.1% of share capital once it is completed, Atos said.

Atos said Layani’s deal included a stronger capital structure and provided the firm with enough financial liquidity to stay in business.

“The proposal submitted by the Onepoint consortium also has the support of a large number of Atos’ financial creditors and thus gives greater confidence that a definitive financial restructuring agreement will be reached,” the company said.

Layani’s deal is fronted by Onepoint, as well as investment company Butler Industries, IT company Econocom and some of Atos’ financial creditors. It is expected to be implemented by July.

Atos is managing data and cybersecurity for the Paris 2024 Olympics and holds various sensitive contracts with the French military and other authorities.

It has been facing mounting financial troubles, including soaring debt, for some time, with its net debt standing at 3.9 billion euros ($4.2 billion) at the end of the first quarter.

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