technicolor - 2018 Registration document

FINANCIAL STATEMENTS

NOTE 8 FINANCIAL ASSETS, FINANCING LIABILITIES & DERIVATIVE FINANCIAL INSTRUMENTS

The U.S.$125 million credit line agreement signed with Wells Fargo in November 2017 contains the same financial covenant but this covenant is only applicable if outstanding availability under the line is less than U.S.$20 million on June 30 or December 31 of each financial year. The €35 million credit line agreement signed with Crédit Agricole d’Île de France in July 2017 contains the same financial covenant but this covenant is only tested on December 31 of each financial year. Leverage covenant Total gross debt of the Group at December 31, 2018 must be no more than 4.00 times the Adjusted EBITDA of the Group for the twelve months ending December 31, 2018.

The events of default apply in whole or in part to Technicolor SA. The events of defaults include among other things and subject to certain exceptions, thresholds and grace periods: failure by Technicolor SA to meet the payment dates of the Debt • Instruments or of any other financial indebtedness or to comply with material obligations related to the Debt Instruments; any auditor’s report qualification made to the Technicolor SA’s ability • to continue as a going concern or the accuracy of the information given. Under the mandatory prepayment terms of the Debt Instruments, the Group is required to apply funds towards the repayment of outstanding amounts of the loans under the Debt Instruments in certain circumstances, including the following: asset disposals: the net proceeds in respect of any disposal of any of • its assets to an unaffiliated third party will be applied, subject to a minimum threshold, to repay the outstanding amounts of the term loans unless the proceeds are reinvested in assets useful for its business within 365 days; excess cash flow: a percentage of the Company’s excess cash flow will • be applied to prepay the term loans. The applicable percentage depends on the leverage ratio of the Group, and ranges from 25% to 50%. The percentage steps down to 0% if certain levels of leverage ratio are reached. Excess cash flow is defined for purposes of the term loans prepayments, as the aggregate of net cash from operating and investing activities, subject to certain adjustments and minus the total funding costs, which comprise all voluntary or mandatory prepayments of the term loans during the year; other: net proceeds in respect of payments related to a casualty event • (giving rise to insurance reimbursements or condemnation awards) shall be applied to the repayment of the debt under the Debt Instruments, subject to certain minimum thresholds and with certain carve-outs. Technicolor can also, at its election, prepay all or part of its outstanding Term Loan Debt without penalty. Covenants Application scope The Term Loan Debt does not contain a financial affirmative covenant. he RCF contains a single affirmative financial covenant which requires that the total gross debt be no more than 4.00 times Adjusted EBITDA on a trailing twelve-month basis (“Leverage covenant”) on June 30 and December 31 of each financial year, but this covenant is only applicable if there is an outstanding drawing of more than 40% of the RCF amount on June 30 or December 31 of each financial year.

Gross Debt

€1,024 million €266 million

Covenant Adjusted EBITDA* Gross Debt/Covenant Adjusted EBITDA Ratio

3.85

Adjusted EBITDA in respect of the leverage covenant definition. *

Since 3.85 is less than the maximun allowed level of 4.00, the Group meets this financial covenant. Other Restrictions In addition to certain information provision covenants, the agreements governing the Debt Instruments include certain negative covenants that restrict the ability of Technicolor SA to undertake various actions regarding indebtedness, investments and material changes in the general nature of the business. These restrictions are subject in each case to certain exceptions and limitations. In particular, the Group is subject to restrictions on its ability to, among other things and subject to certain exceptions: make restricted payments, if certain ratios are not met, in excess of • certain cumulative amounts, including payment of dividends, distributions, share purchases or redemptions, investments other than permitted investments, repayment of subordinated debt; incur additional financial debt in excess of certain cumulative amounts • and if certain ratios are not met and with certain carve outs; and make certain investments in joint ventures not controlled by the • Group and in which the Group has no veto right on material decisions, except to the extent the Group’s consolidated leverage ratio is under a threshold which decreases over time and subject to a certain cumulative amount and with certain carve-outs.

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TECHNICOLOR REGISTRATION DOCUMENT 2018