Update on the refinancing of the Technicolor group

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PRESS RELEASE

Update on Technicolor Group refinancing

Paris, France), June 62022Technicolor (Euronext Paris: TCH; OTCQX: TCLRY) today reports on the progress of its refinancing process and updates the forward-looking assumptions announced on February 24e2022.

The Company continues to make progress in executing the spin-off of its Technicolor Creative Studios (“TCS”) division to create two independent market leaders in their respective industries and the associated global refinancing announced on February 24e2022, and confirms its objective of finalizing the distribution of at least 65% of TCS shares (the “Distribution”) in the third quarter of 2022.

As part of this process, the Company is continuing discussions with potential debt investors for Technicolor Creative Studios (“TCS”) and Technicolor Ex-TCS.

As announced on May 5epress release for the 1st quarter of 2022, the envisaged refinancing plan includes:

  • €300-375 million of private debt and an asset-based loan facility (ABL) at Technicolor Ex-TCS, subject to ongoing discussions;
  • €575-650 million term loan and €40 million revolving credit facility at Technicolor Creative Studios.

The Technicolor Group today provides specific forward-looking assumptions for 2022 and 2023 for TCS, while confirming its guidance for the Technicolor Group for 20221.

Overall, demand for the highest quality VFX art and cutting-edge technology from TCS is expected to continue to grow significantly throughout 2022 and 2023.

  • At MPC and Mikros Animation, the divisions continue to be awarded several new projects, resulting in more than 80% of the revenue pipeline for MPC and Mikros Animation already being committed for 2022 as of the end of April 2022. Additionally, the number of animated feature projects in production increased from two in 2019 to six feature films in 2022;
  • At the Moulin, whose activity is closely linked to advertising expenditure, the growth of activity is slowed down by the current global economic context. As a result, the plant now expects slower growth than initially expected over the period, with the main impact in 2022. Actions to mitigate the impact on margin have already been identified and initiated regarding costs and operational efficiency;
  • At Technicolor Games, demand for game content is expected to continue to grow, alongside the expansion of Technicolor Games’ offering to pre-production, game asset creation, animation, visual effects and integration into the engine, with co-development and quality assurance (“QA”) services.

Significant investment in recruiting, retaining and training artists (including TCS Academy programs) continues, with the delivery of all ongoing projects remaining the main challenge for 2022, due to the shortage of talent in the market .

These trends have been associated with greater volatility in the Group’s financial environment, mainly in the valuation of its main currencies – notably the US dollar, the Canadian dollar and the pound sterling – which have evolved favorably since the start of the year.

In light of the market trends highlighted above, the Company publishes the following forward-looking assumptions for TCS:

2022 2023
Previous prospective assumptions2 New forward-looking assumptions using historical exchange rates3 New forward-looking assumptions using end-April exchange rates4 Previous prospective assumptions2 New forward-looking assumptions using historical exchange rates3 New forward-looking assumptions using end-April exchange rates4
Adjusted EBITDA5 176-186 165-175 175-185 210-220 185-205 200-220
Adjusted EBITA 78-88 65-75 75-85 106-116 85-105 95-115
Free Cash Flow before tax and financial 100-110 70-80 75-85 125-135 100-120 110-130

As part of the proposed carve-out, TCS plans to review its key performance indicators (KPIs), including in particular an adjusted EBITDA after lease, with the aim of becoming more comparable to its peers and to market practices, while being more aligned with how the business is run. New KPIs will be presented as part of Capital Markets Day on June 14e2022.

The underlying market assumptions for Technicolor Ex-TCS remain unchanged and accordingly the forward-looking assumptions for Technicolor Ex-TCS remain broadly unchanged with:

2022 2023
Previous prospective assumptions2 New forward-looking assumptions using historical exchange rates6 New forward-looking assumptions using end-April exchange rates4 Previous prospective assumptions2 New forward-looking assumptions using historical exchange rates6 New forward-looking assumptions using end-April exchange rates4
Adjusted EBITDA5 >140 >140 >150 >135 >140 >150
Adjusted EBITA 38-48 38-48 48-58 29-39 29-39 40-50
Free Cash Flow before tax and financial 62-72 62-72 72-82 43-63 43-63 53-73

As communicated on May 24ethe refinancing and spin-off are expected to be completed in the third quarter of 2022, subject to (i) shareholder approval of the terms of the spin-off, (ii) completion of refinancing discussions with creditors on satisfactory terms to Technicolor Ex-TCS and TCS and (iii) customary terms, consultations and regulatory approvals.

Indicative timetable

Capital Market Day for Technicolor Ex-TCS and TCS
Technicolor General Meeting
H1 2022 results
General Meeting of Technicolor Distribution shareholders
Breakdown of TCS shares
June 14e2022
June 30the2022
July 28e2022
3rd quarter 2022
3rd quarter 2022

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Disclaimer: Forward-Looking Statements

This press release contains certain statements that constitute “forward-looking statements”, including, but not limited to, statements that are predictions or indicate future events, trends, plans or objectives, based on certain assumptions or that do not not relate directly to historical or current events. facts. These forward-looking statements are based on management’s current expectations and beliefs and are subject to a number of the risks and uncertainties that could cause actual results to differ materially from expressed future results, intended, or implied by such forward-looking statements. For a more complete list and description of such risks and uncertainties, see Technicolor’s filings with France Authority of the markets financial. 2021 Universal Registration Document (Document recording universal) has been filed with France Authority of the markets (AMF) on April 5, 2022under the number D22-0237 and an amendment to the URD 2021 was filed with the AMF in April 292022under number D-22-0237-A01.

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About Technicolor:

www.technicolor.com

Technicolor The shares are admitted to trading on the regulated market of Euronext Paris (TCH) and are negotiable in the form of American Depositary Receipts (ADR) in the United States on the OTCQX market (TCLRY).

Investor Relations Media
Alexandra Fichelson

[email protected]

Catherine Kuttner

[email protected]

Nathalie Feld

[email protected]

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ANNEX

Adjusted EBITDA» corresponds to income from continuing operations before tax and financial income, net of other income (expenses), depreciation and amortization (including the impact of provisions for risks, disputes and guarantees).

Adjusted EBITA» corresponds to income from continuing operations before tax and financial income, net of other income (expenses) and amortization of purchase accounting items.

Free movement of capitaldefined as: adj. EBITDA – (net investments + restructuring cash charges + change in pension reserves + change in working capital and other assets and liabilities + cash impact of other non-current results).


1 Guidelines communicated in May 5e, 2022 Technicolor Group press release “as is” with revenue from continuing operations expected to grow, adjusted EBITDA from continuing operations of €361 million excluding trademark licensing, adjusted EBITA from continuing operations of 161 million excluding Trademark Licenses, and FCF from continuing operations, before financial result and tax of €217 million excluding Trademark Licensing. This 2022 guidance for the Technicolor Group “as is” assumes EUR/USD exchange rate of 1.15. As presented on February 24, 2022, the 2022 forecasts reflect changes in accounting methods (IFRIC adjustments on Saas), and do not include the TCS spin-off.
2 Detailed forward-looking assumptions in Press release of February 24, 2022.
3 Eit is future-oriented hypotheses for TCS assume a EUR/USD exchange rate of 1.15EUR/CAD of 1.52, EUR/GBP of 0.89include estimated operation dissynergy €4 fee6 million in 2022 and 10 to 15 million euros in 2023, and reflect the accounting changes induced by the IFRIC interpretation on Saas adjustment, relating to configuration or customization costs in a cloud computing arrangement. The one-off impacts of the IFRIC interpretation should be significant for 2022 as software investments have been budgeted, leading to a negative impact on EBITDA with €(4) million, €(2) million euros on EBITA, and +4 million euros on capex. For 2023, these impacts should be less significant.
4 Assuming a EUR/USD exchange rate of 1.07, a EUR/CAD exchange rate of 1.37 and a EUR/GBP exchange rate of 0.84 from the end of April 2022.
5For a definition of Adjusted EBITDA and Adjusted EBITA and FCF, please refer to the appendix section of this press release.
6 These future-oriented assumptions for Technicolor Ex-TCS assume exchange rate EUR/USD of 1.15, EUR/CAD of 1.52, EUR/GBP of 0.89, excluding trademark licensing transactions, include estimated exchange rate dissynergy costs, and reflect the accounting changes induced by the IFRIC interpretation on Saas adjustment, relating to configuration or customization costs in a cloud computing arrangement. The occasional impacts of the the IFRIC interpretation should be negative with €(6) million euros on EBITDA, (3) million euros on EBITA and +6 million euros on capex. For 2023, these impacts should be less significant, except on EBITA (+4 million euros).

  • 2022-06-06-Update-refinancing-FR-Final

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