Bull strives to secure financial future

Bull, a French supplier of servers and IT services, aims to return the company to financial health by bringing in new capital and...

Bull, a French supplier of servers and IT services, aims to return the company to financial health by bringing in new capital and reducing or writing off outstanding obligations.

The move marks the third phase in the reorganisation of the company's finances, which began in March 2002 with the injection of €350m by the French.

The plan will disengage the French government from the company, giving Bull a chance to make decisions based on the needs of its customers, rather than its investors, said chairman and chief executive officer Pierre Bonelli.

Shareholders will inject €33m in new equity into the company.

Existing shareholders France Télécom and Japanese technology company NEC will invest €7.5m each. They will be joined by capital management fund Axa Private Equity, which will invest €7m; German investment fund and major Bull customer Debeka Gruppe (€3m), Groupe Artemis (€2m) and some 350 managers at Bull who will invest €6m, said deputy CEO Gervais Pellissier.

The recapitalisation is accompanied by a reorganisation of the company's financial structure.

The company has called a general meeting for 11 December, where it will propose changes to the conditions attached to convertible bonds already issued, with the effect of reducing their value by 90%.

If approved, the company's debts to the French government will be reduced by a similar amount, and the government will then write off the residual debt in return for the right to a proportion of the company's future profit. If the company makes pre-tax profit of more than €10 million in any of the next eight years, the state will take up to 30% of the excess.

The plan must be approved by the European Commission, although Bonelli admitted he had no alternative plan if approval is denied.

Bull's debt to the French government is already the subject of a dispute with the European Commission.

Bull received a total of €450m from the French government in 2001 and 2002, in the form of "loans" which the government has not asked it to repay. This landed the government in trouble with the commission in October because of questions over whether the outstanding loan constituted illegal state aid. [

Bull's executive board also considered a proposal from a private investor which would have involved giving up control of the company, but the board did not want to take this step. Bonelli declined to name the company, citing a confidentiality agreement, but according to a report in a French newspaper, the rejected proposal was from US investment company Gores Technology Group, which offered to invest at least €50m  in return for control of the company.

Peter Sayer writes for IDG News Service

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