Atento (ATTOF) Risk Analysis

On July 21, 2023, the Company received a letter from the New York Stock Exchange ("NYSE") communicating that the NYSE has initiated proceedings to delist Atento's ordinary shares from the NYSE. The NYSE initiated the delisting proceedings after determining that the average market capitalization of Atento's ordinary shares fell below $15 million over a 30 trading-day period under Section 802.01B of the NYSE Listed Company Manual. The NYSE also indefinitely suspended trading of Atento's ordinary shares effective July 21, 2023. Atento does not intend to appeal to the NYSE's determination. Atento's ordinary shares are quoted on the appropriate tier of the over the counter ("OTC") market. The Company's ticker symbol on the OTC "ATTOF". The delisting will only affect the shares of Atento S.A. at a holding company level and so will not affect business operations. Atento will continue to have reporting obligations under the Securities Exchange Act of 1934, as amended. On August 18, 2023 the entire class of Ordinary shares of Atento S.A. was retired from listing and registration on the New York Stock Exchange. As a result of the delisting of our ordinary shares from the NYSE, the volume of trading in our shares has been reduced and may remain limited, which will have a negative impact on your ability to sell or transfer our ordinary shares on terms that are acceptable to you, or at all.

The market price of our ordinary shares has experienced a significant decline in recent years. Additionally, as a result of the delisting of our ordinary shares from the NYSE, our ordinary shares are now trading over the counter only. As a result, the volume of trading in our ordinary shares has significantly declined and may further decline, which will contribute to volatility in the price of our ordinary shares. In addition, our shareholders may experience future decreases in the value of our ordinary shares held by them, or a complete loss of their investment. The price of our ordinary shares may continue to fluctuate in in response to several factors, including those listed elsewhere in this "Risk Factors" section and others, such as: - variations in our operating performance and the performance of our competitors;- actual or anticipated fluctuations in our quarterly or annual operating results;- changes in our revenue estimates or recommendations by securities analysts;- publication of research reports by securities analysts about us or our competitors or our industry;- our failure or the failure of our competitors to meet analysts' projections or guidance that we or our competitors may give to the market;- additions or departures of key personnel;- strategic decisions by us or our competitors, such as acquisitions, divestitures, spinoffs, joint ventures, strategic investments or changes in business strategy;- announcement of technological innovations by us or our competitors;- the passage of legislation, changes in interpretations of laws or other regulatory events or developments affecting us;- speculation in the press or investment community;- changes in accounting principles;- terrorist acts, acts of war or periods of widespread civil unrest;- changes in general market and economic conditions;- changes or trends in our industry;- investors' perception of our prospects; and - adverse resolution of any new or pending litigation against us. In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management's attention and resources and could also require us to make substantial payments to satisfy judgments or to settle or defend litigation. As of the date of this report the Company are not aware of any lawsuit filed by investors.

We are organized under the laws of the Grand Duchy of Luxembourg. Most of our assets are located outside the United States. Furthermore, some of our directors and officers named in this Annual Report reside outside the United States and most of their assets are located outside the United States. As a result, investors may find it difficult to effect service of process within the United States upon us or these persons or to enforce outside the United States judgments obtained against us or these persons in U.S. courts, including judgments in actions predicated upon the civil liability provisions of the U.S. federal securities laws. Likewise, it may also be difficult for an investor to enforce in U.S. courts judgments obtained against us or these persons in courts located in jurisdictions outside the United States, including actions predicated upon the civil liability provisions of the U.S. federal securities laws. It may also be difficult for an investor to bring an original action in a Luxembourg court predicated upon the civil liability provisions of the U.S. federal securities laws against us or these persons. Luxembourg law, furthermore, does not recognize a shareholder's right to bring a derivative action on behalf of the Company except where such shareholder or a group of shareholders holds shares representing at least ten percent (10%) of the Company's share capital at the annual general meeting of shareholders of the Company resolving upon the discharge to be granted to the directors. As there is no treaty in force on the reciprocal recognition and enforcement of judgments in civil and commercial matters between the United States and the Grand Duchy of Luxembourg, courts in Luxembourg will not automatically recognize and enforce a final judgment rendered by a U.S. court. The enforceability in Luxembourg courts of judgments entered by U.S. courts will depend upon the conditions set forth in the Luxembourg procedural code, which may include the following: - the judgment of the U.S. court is enforceable (exécutoire) in the United States;- the U.S. court had jurisdiction over the subject matter leading to the judgment (that is, its jurisdiction was in compliance both with Luxembourg private international law rules and with the applicable domestic U.S. federal or state jurisdictional rules);- the U.S. court has applied to the dispute the substantive law designated by the Luxembourg conflict of law rules (although one first instance decision rendered in Luxembourg-which had not been appealed-no longer applies this condition);- the judgment was granted following proceedings where the counterparty had the opportunity to appear, and if appeared, there was no violation of the rights of the defendant;- the U.S. court has acted in accordance with its own procedural rules; and - the judgment of the U.S. court does not contravene Luxembourg international public policy. Our directors and officers, past and present, are entitled to indemnification from us to the fullest extent permitted by Luxembourg law against liability and all expenses reasonably incurred or paid by him/her in connection with any losses or liabilities, claim, action, suit or proceeding in which he/she is involved by virtue of his/her being or having been a director or officer and against amounts paid or incurred by him in the settlement thereof, subject to limited exceptions. To the extent allowed by law, the rights and obligations among us and any of our current or former directors and officers will be governed exclusively by the laws of Luxembourg and subject to the jurisdiction of the Luxembourg courts, unless such rights or obligations do not relate to or arise out of their capacities as directors or officers. Although there is doubt as to whether U.S. courts would enforce such a provision in an action brought in the United States under U.S. securities laws, such provision could make enforcing judgments obtained outside Luxembourg more difficult to enforce against our assets in Luxembourg or in jurisdictions that would apply Luxembourg law.

The New York Stock Exchange listing rules require listed companies to have, among other things, a majority of their board members be independent, and to have independent director oversight of executive compensation, nomination of directors and corporate governance matters. As a foreign private issuer, however, while we intend to comply with these requirements within the permitted phase-in periods, we are permitted to follow home country practice in lieu of the above requirements. Luxembourg law, the law of our home country, does not require that a majority of our board consist of independent directors or the implementation of a nominating and corporate governance committee, and our board may thus in the future not include, or include fewer, independent directors than would be required if we were subject to the New York Stock Exchange listing rules, or they may decide that it is in our interest not to have a Compensation Committee or Nominating and Corporate Governance Committee, or have such committees governed by practices that would not comply with New York Stock Exchange listing rules. Since a majority of our board of directors may not consist of independent directors if we decide to rely on the foreign private issuer exemption to the New York Stock Exchange listing rules, our board's approach may, therefore, be different from that of a board with a majority of independent directors, and as a result, the management oversight of our Company could, in the future, be more limited than if we were subject to the New York Stock Exchange listing rules. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as companies that are not foreign private issuers whose securities are registered under the U.S. Exchange Act. In addition, we are not required to comply with Regulation FD, which restricts the selective disclosure of material information. As a result, our shareholders may not have access to information they deem important, which may result in our shares being less attractive to investors.

The market price of our ordinary shares could decline as a result of sales of a large number of our ordinary shares in the market, and the perception that these sales could occur may also depress the market price of our ordinary shares. We have 15.4 million ordinary shares outstanding as of December 31, 2022. Pursuant to an agreement, the major shareholders of Atento agreed that during the 24-month period following its acquisition will not sell, assign, transfer, pledge hypothecate, encumber or otherwise dispose of the shares without the written permission of the Issuer. In 2022 Atento has announced that it has extended its director nomination lock-up agreements by another 12-months until June 22, 2023, after this limitation all of our outstanding ordinary shares may be sold in the public market by existing stockholders subject to applicable volume and other limitations imposed under federal securities laws. Sales of our ordinary shares or pursuant to registration rights may make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. These sales, or the perception that such sales could occur, also could cause the market price for our ordinary shares to fall and make it more difficult for you to sell our ordinary shares. As of the date of this report no extended lock-up agreements is expected to be announced.

In connection with the Restructuring Plan, we will issue new equity interests in the Company or its subsidiaries that will significantly dilute the holdings of ordinary shareholders. This will reduce the proportionate ownership and voting interests of holders of our ordinary shares, as well as our earnings per ordinary share and net asset value per ordinary share, and could have a negative impact on the future market value of our ordinary shares.

In connection with the Restructuring Plan, we were required to prepare projected financial information to the English Court. At the time they were last filed with the English Court, the projections reflected numerous assumptions concerning anticipated future performance and prevailing and anticipated market and economic conditions that were and continue to be beyond our control and that may not materialize. Projections are inherently subject to uncertainties and to a wide variety of significant business, economic and competitive risks. Consequently, there can be no assurance that the results or developments contemplated by the Restructuring Plan will occur or, even if they do occur, that they will have the anticipated effects on us or our business or operations. The failure of any such results or developments to materialize as anticipated could materially adversely affect the successful execution of the Restructuring Plan.

On September 21, 2017, the Board of Directors approved a dividend policy for the Company with a goal of paying annual cash dividend pay-outs in line with industry peers and practices. The declaration and payment of any interim dividends is subject to approval of Atento's corporate bodies and will be determined based upon, amongst other things, Atento's performance, growth opportunities, cash flow, contractual covenants, applicable legal requirements, and liquidity factors. The Board of Directors intends to review the dividend policy regularly and, accordingly, is subject to change at any time.

The CRM BPO industry is characterized by high working capital requirements and the need to make new investments in operating sites and employee resources to meet the evolving requirements of our clients. Similar to our competitors in this industry, we incur costs related to investments in infrastructure to provide our services and to the hiring and training of employees, such expenses being historically incurred before revenue is generated. In addition, we are exposed to adverse changes in our main clients' payment policies, which could have a material adverse impact on our ability to fund our working capital needs. During the year ended December 31, 2022, our average days sales outstanding ("DSO") was approximately 74 (70 in 2021). If our key clients implement policies which extend the payment terms of our invoices, our working capital levels could be adversely affected, and our finance costs may increase. If we are unable to fund our working capital requirements, access financing at competitive prices or make investments to meet the expanding business of our existing and potential new clients, our business, financial condition, results of operations and prospects could be adversely affected.

As of December 31, 2022, we had total indebtedness of $743.3 million. Our level of indebtedness may have significant negative effects on our future operations, including: - impairing our ability to obtain additional financing in the future (or to obtain such financing on acceptable terms) for working capital, capital expenditure, acquisitions, or other important needs;- requiring us to dedicate a substantial portion of our cash flow to the payment of principal and interest on our indebtedness, which could impair our financial liquidity and reduce the availability of our cash flow to fund working capital, capital expenditure, acquisitions and other important needs;- increasing the possibility of an event of default under the financial and operating covenants contained in our debt instruments; and - limiting our ability to adjust to rapidly changing conditions in the industry, reducing our ability to withstand competitive pressures and making us more vulnerable to a downturn in general economic conditions or business than our competitors with less debt. Our financing arrangements contain a number of covenants and restrictions, including limits on our ability and our subsidiaries' ability to incur additional debt, pay dividends and make certain investments. Complying with these covenants may cause us to take actions that make it more difficult to successfully execute our business strategy and we may face competition from companies not subject to such restrictions. Moreover, our failure to comply with these covenants could result in an event of default or refusal by our creditors to renew certain of our loans. As announced on June 30, 2023, the Company entered into a binding restructuring support agreement with certain major financial stakeholders that provides a path to a comprehensive restructuring transaction to significantly deleverage the Company's balance sheet. See more details in Consolidated Financial Statements Note 31 - Subsequent Events.

Effective January 2022, LIBOR is not expect to be used to issue new loans in the U.S. and was officially discontinued after June 30, 2023 as a floating rate benchmark. As of December 31, 2022, 3.5% of our outstanding indebtedness was tied to LIBOR. To the extent interest payments are linked to LIBOR at the time of its discontinuation, the applicable floating interest rate will be determined using the alternative methods then set forth under the applicable agreements. At the date of this report, the company does not have any debt tied to LIBOR, following the Company debt structure after the restructuring support plan (see Note 31 of the consolidated financial statements). The Company expects that the LIBOR alternative rate, in case of any Company´s new debts, will be based on the Secured Overnight Financing Rate ("SOFR") because SOFR is a financing rate based on overnight funding transactions secured by U.S. Treasury securities, it differs fundamentally from USD LIBOR. SOFR has a limited history, having been first published in April 2018.