technicolor - 2019 Universal registration document

6 FINANCIAL STATEMENTS BORROWINGS & FINANCIAL INSTRUMENTS

9.2.2

FINANCIAL COVENANTS AND OTHER LIMITATIONS

50%. Excess cash flow is defined for purposes of the term loan 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 The Term Loan Debt does not contain a financial affirmative covenant. The 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. Because there were no drawings on the RCF the covenant did not apply at December 31, 2019. Leverage covenant Had the covenant applied at December 31, 2019, total gross debt of the Group could not have been more than 4.00 times the EBITDA of the Group in 2019. For information purposes, the calculation at December 31 was:

In respect of the: term Loan Debt Agreement entered into in December 2016 as • amended in March 2017; and the RCF entered into in December 2016; • together the “Debt instruments”, the Group is required to meet financial covenants and is subject to several limitations described below. Security Package Technicolor granted security interests to secure the Debt Instruments with the pledge of the shares of the main subsidiaries of Technicolor S.A. and of certain intra-group loans and material cash pooling bank accounts. Early repayment and mandatory prepayments In case of default or change of control of Technicolor, creditors will have the ability to immediately demand payment of all or a portion of the outstanding amounts. 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 S.A. 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 S.A.’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 0% to

Gross Debt*

€1,026 million €324 million

Covenant Adjusted EBITDA*

Gross Debt/Covenant Adjusted EBITDA Ratio 3.17 Gross debt and Adjusted EBITDA in respect of the leverage covenant definition. *

Since 3.17 is less than the maximum allowed level of 4.00, the Group meets this financial covenant.

Interest rate hedging operations 9.3 The Group has two interest rate hedging instruments outstanding at December 31, 2019. These instruments hedge future interest charges of the Group, which are principally indexed on a floating rate as shown in note 9.2. The main characteristics are the following ones: Notional Hedge Issuance Maturity Fair value (1) Interest rate swap €240 million Receive 3m EURIBOR (2) /pay 0.22% May 2018 November 2021 (1) Cap U.S.$145 million 3m LIBOR capped at 3.00% May 2018 November 2021 - FAIR VALUE (1) Market value in millions of euros at December 31, 2019. (1) EURIBOR floored at 0%. (2)

TECHNICOLOR UNIVERSAL REGISTRATION DOCUMENT 2019 280