Agreement in Principle on Financial Restructuring Plan 2020-06-22 05:00:002020-06-22 06:45:00

PRESS RELEASE

AGREEMENT IN PRINCIPLE ON FINANCIAL RESTRUCTURING PLAN

€420 MILLION NEW FINANCING AND DELEVERAGING THROUGH € 660 MILLION DEBT

EQUITIZATION

OPENING OF AN ACCELERATED FINANCIAL SAFEGUARD PROCEDURE

Paris (France), 22 June 2020-Technicolor(EuronextParis: TCH; OTCQX: TCLRY) (the "Company")announces today that it has reached an agreement in principle on a financial restructuring plan (the"Agreement In Principle"),which meets the Company's objectives of (i)obtaining a new financing inan amount of €420 million, addressing the liquidity needs of the Group and (ii) deleveraging theCompany'sbalance sheet, through the equitization of upto €660 millionof its Term Loan B and Revolving Credit Facility. The Company has received the support of a majority (65,77%1) of its lenders under the Term Loan B and Revolving Credit Facility and of Bpifrance Participations, an institutional shareholder.

This Agreement in Principle, whose terms and conditions are described in more details below, provides a framework for long-term sustainability for the Company's businesses, employees,customers andsuppliers, and offers its current shareholders an opportunity to participate in the Company's recovery.

Based on the proposed new financing plan, gross debt2is to decrease from the current position of€1,444 million to €1,102 million.The net debt to EBITDA target (post IFRS 16 adjustments) is around 3x at end of 2021, decreasing thereafter.

Furthermore, the Company announces the opening today of an accelerated financial safeguard procedure, in order to facilitate the implementation of the Agreement in Principle, by the Paris commercial Court.

• 1 On the basis of an exchange rate(€/$)of 1.1193

• 2 Before IFRS operating lease debt

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1. Status of the restructuring process

In February 2020, Technicolor informed the market of its intention to launch a€300 million rights issue by June 30th2020 at the latest, which was authorized by the general meeting of the Company'sshareholders on March 23rd2020. Since then, the impact of the Covid-19 crisis on the business activities of the Group, and the uncertainty in global market conditions, have rendered it difficult to launch the initially contemplated rights issue within the contemplated timeline, and have increased the liquidity needs of the Group, which were originally intended to be covered by the rights issue.

In May, the Company launched a confidential process aiming at raising a new money facility replacing the rights issue in order to finance the group's operationsand to repay the $110 million bridge loan due on July 31st.

Technicolor has received offers both from third parties and from existing creditors, including notably, as announced in the June 4thpress release, an offer from a group of creditors representing 59% at that time of the Term Loan B and the Revolving Credit Facility, in the framework of the conciliation proceedings opened on June 2nd. This proposal addressesboth the Group's liquidity requirements and the need to deleverage the Company's balance sheet, througha combinationof a rights issue (fully backstopped by the Term Loan B and Revolving Credit Facility lenders by way of set-off of their claims) and a capital increase reserved to the Term Loan B and Revolving Credit Facility lenders (subscribed by way of set-off of their claims).

Upon the recommendation of theComité Ad Hoc(appointed by the board in the context of the debt restructuring and composed of a majority of independent directors) and given the potential significant dilution implied by such capital increases, the Board of Directors decided on June 5thto appoint, on a voluntary basis, Finexsi([e-mail]/ 01 43 18 42 42), as independent appraiser, in accordance with article 261-3 of the AMF General Regulation. Finexsi will, in particular, issue a fairness opinion on the proposed capital increases.

On June 11th, the Company announced the launching of a waiver consent solicitation of its existing lenders under its Credit Facilities, in order to allow the Company to have the option to request (i) theopening in France of a "procédure de sauvegarde financière accélérée" (which is a form of pre-negotiated safeguard procedure with financial creditors only) ("SFA") on Technicolor SA and (ii) therecognition of the SFA in theUS, in accordance with applicable regulations (the "Recognition Procedure"), without such actions constituting an event of default under the Credit Facilities.

After having received waiver consents from the requisite majority of its lenders, the Company therefore decided on June 18thto file a request for the opening in France of an SFA, with the Recognition Procedure to be filed shortly after the SFA has been opened. The SFA was effectively opened today.

The SFA allows for the implementation of the transaction with only a 2/3 majority of impacted lenders under the Credit Facilities. As of today, lenders representing 65,77% of the principal amount of the Term Loan B and Revolving Credit Facility, as well as Bpifrance Participations, an institutional shareholder holding c. 7.5% of the share capital(the "Ad Hoc Group"), support the Agreement in Principle, setting out the terms and conditions of the debt restructuring of the Group, as further detailed below.

Technicolor intends to implement the debt restructuring provided for by the Agreement in Principle in the framework of an SFA plan which remains subject to conditions precedent as further detailed below, 2

in particular to a favorable vote by an extraordinary shareholders' meeting of the Company (the "EGM") on certain aspects of the SFA plan, and to French court approval.

2. Key Transaction Principles

The Agreement in Principle sets forth the following key principles(the "Restructuring"):

• •New money in an aggregate principal amount, net ofOriginal Issue Discount ("O.I.D.")and underwriting fees, equal to€420 million, to be made available, subject to the satisfaction of certain conditions precedent, to Technicolor'sAffiliates by (i) any lenders under the TLB and the RCF who wish to participate, in an amount of €400 million(fully underwritten by the Ad Hoc Group excluding Bpifrance Participations) and (ii) by Bpifrance Participations in an amount of€20million (the "New Money Lenders"), as follows:

  • oinitial new money to be made available around mid-July to Technicolor USA, Inc. ("TCH US") (the "US New Money"), subject to positive vote of the financial creditors committee, approval of the judge and other conditions, by way of a New York law term loan facility in order to repay in full in cash the $110 million bridge loan which was made available to TCH US on March 5th, 2020 and which is due to be repaid on July 31st2020 (the "Bridge Loan");

  • oadditional initial new money to be made available on the same date as the US New Money to Tech 6, a direct subsidiary of the Company incorporated in France, subject to positive vote of the financial creditors committee, approval of the judge and other conditions, by way of a New York law notes issue (the "Initial FR New Money" and, together with the US New Money, the "Initial New Money");

  • oremaining new money to be made available by the end of August 2020 to Tech 6, subject to among, other conditions, approval of the SFA plan by the Court (the "Balance FR New Money" and, together with the Initial New Money, the "New Money");

  • oNew Money to be secured by "fiducies-sûretés" (equivalent of a trust under French law)

    in respect of the shares of sub-holding companies, holding quasi all (after some corporate reorganization) of the members of the Group (the "Fiducies"), it being specified that the implementation of the Fiducie for the Balance FR New Money will be submitted to a consultative vote of the EGM, in accordance with the AMF recommendation n°2015-05 on transfer of assets. The New Money shall also be secured by certain other security interests, including by security over the assets currently securing the Bridge Loan (for the US New Money only), the TLB and the RCF.

• •The existing indebtedness of the Group (together, the"Credit Facilities")will be restructured, as follows:

  • oBridge Loan would be repaid using the proceeds of the injection of the US New Money;

  • o$125 million asset-based loan made available to TCH US on November 6th2017 and certain other US members of the Group (the "ABL Facility") to be amended, in particular to extend the final maturity date of the loan to December 2023, and to allow 3

the implementation of all of the transactions contemplated herein in order to achieve the Restructuring;

• o€725 million plus $290 million term loan facility dated December 6th2016 (the"Term LoanB"or "TLB") made available to the Company to be partially equitized as described below and, in respect of the reinstated debt, amended as to extend the maturity to December 2024 with a bullet repayment;

• o€250 million revolving credit facility dated December 21st2016 (the"Revolving Credit Facility" or the"RCF") made available to the Company (fully drawn to date) to be partially equitized as described below and, in respect of the reinstated debt, amended as to extend the maturity to December 2024 with a bullet repayment.

• •The partial equitization of the debt(up to € 660 million)will be structured as follows, subject in particular to (i) the positive vote of the EGM on all resolutions relating to the Restructuring (such resolutions being linked to each other, it being specified that Bpifrance Participations committed to vote in favor of such resolutions, subject to legal or regulatory constraints preventing him from voting, as the case may be) and (ii) approval by the AMF of a prospectus relating to:

  • oa rights issue of the Company, with shareholders' preferential subscription rights, for atotal amount of€330 million, at a subscription price of €2.98 per share, fully backstopped by the TLB and RCF lenders by way of set-off of their claims at par under the Credit Facilities; Bpifrance Participations will subscribe to the rights issue in cash pro rata its current shareholding (c. 7.5%) on a non-reductible basis (souscription à titre irréductible)for an aggregate amount up to €25.5 million; any cash proceeds of the rights issue will be used in full to repay the TLB and RCF lenders, at par value;

  • oa reserved capital increase of the Company, for a total amount of€330 million, at asubscription price of €3.58 per share,reserved to the TLB and RCF lenders and which will be fully subscribed by way of set-off against their claims at par under the Credit Facilities;

  • ofree warrants to be allocated to the New Money lenders("New Money Warrants"), with a 3-month maturity, with an exercise price of €0.01, equal to the par value of the shares,and giving access to 7.5% of the share capital of the Company (after the rights issue, the reserved capital increase and the exercise of New Money Warrants, but before exercise of the free warrants by the shareholders);

  • ofree warrants to be allocated to existing shareholders at the time of the launching of the rights issue, with a 4-year maturity and a strike price equal to the reserved capitalincrease price (i.e. €3.58per share); the free warrants will give access to 5% of the share capital of the Company on a fully diluted basis (i.e., after the rights issue, the reserved capital increase, the exercise of New Money Warrants and the exercise of the freeshareholders' warrants). Each existing share will give right to 1 warrant, which will give right to circa 0.8 new share at a price of 3.58 per share.

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• •It should be noted that, should the EGM that will be convened on July 20th 2020 decide to vote against one of the resolutions linked to the Restructuring, the SFA plan cannot be approved by the Court and, in this case, the Company will:

  • opetition the court to terminate the SFA proceedings, considering the fact that no SFA plan can be approved; and

  • ofile for rehabilitation proceedings (redressement judiciaire) in order to implement the debt reorganization as part of a court-approved rehabilitation plan (plan de continuation), failing which quasi all of the Company'sassets could be attributed or sold to the New Money Lenders, with the aim to permit continuation of the activities conducted by the Group and trading with clients and suppliers. In this latter case, (i) all employment contracts entered into by the Company will be maintained, (ii) as will the Balance FR New Money and (iii) the liabilities of the Company benefitting from senior legal privileges repaid.

The Agreement in Principle has received the support of the Board of Directors of the Company. It remains subject to the finalization of the negotiations of its terms as well as negotiations of the necessary documents and agreements.

Implementation of the Agreement in Principle remains subject also to the usual conditions precedent,which include obtaining the favorable support of impacted lenders under the Credit Facilities as well as judicial authorizations and approvals, evidenced at each of the steps of the proceedings. In essence:

• •Concerning the new money made available to the Group:

  • othe US New Money and the Initial FR New Money, which shall be made available around mid-July 2020, i.e. during the SFA proceedings, remain notably subject to the authorization of the judge supervising the SFA and to the favorable vote of Technicolor'sfinancial creditors; and

  • othe Balance FR New Money shall be funded, among other usual conditions precedent, after the favourable vote of the EGM convened on July 20th2020 and subject to thecourt's approval of the SFA plan.

• •The Restructuring of the Term Loan B and the RCF remains notably subject to (i) the favorablevote of the EGM on the Restructuring, (ii) the court's approval of the SFA plan and (iii) theapproval by the AMF of a prospectus relating to the Restructuring. The reinstatement of a portion of those two credit facilities, and the equitization of the balance, shall occur upon settlement and delivery of the rights issue and the reserved capital increase.

The information contained in this press release and its appendices and annexes is designed to re-establish, in all material respects and where necessary, equal access for the various shareholders and investors to the information relating to the Group.

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