8 October 2014

The French restructuring landscape

1. Introduction of panel

2. State of economy / trends

3. New regimes: hot topics

4. Update on prominent recent cases

5. Future trends

Agenda

5. Future trends

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1. Speakers

Frederic AbitbolOne of France's leadingjudicial administrators

Saam GolshaniPartnerOrrick, Rambaud Martel,ParisCo-head of EuropeanRestructuring

Laurent GuyonnetDupératManaging DirectorSociete Generale

Arnaud JoubertPartnerRothschild

Stephen PhillipsPartnerOrrick, LondonCo-head of EuropeanRestructuring

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• GDP growth of 0% for 1H2014

• French government targets a 0.5% growth for 2014, half its earlier forecast

• The corporate default rate fell from 11.1% at the end of 2012 to 7% at the end of 2013 (Financial Times, 17March 2014)

2. State of economy: overview

4

2. State of economy: GDP growth rate convergingtowards 0%

France : Taux de croissance du PIB

variation en %

2

4

France: GDP growth rate

% change

5

© Coe-Rexecode

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

0

-6

-4

-2

0

variation sur un anvariation sur un trimestre (en % l'an)

Source : INSEE

variation over one year

a variation on a trimester (in % pa)

2. State of economy: economic sentiment

6

2. State of economy: production index still declining

France : Indice de la production industrielle manufacturière

moyenne mobile sur 3 mois, 2010 = 100

110

115

120

France: Index of manufacturing output (Industrial production)

Moving average 3 months, 2010 =100

7

© Coe-Rexecode

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

90

95

100

105

Source : Insee

2. State of economy: falling investment for households,no compensation to expect from State and corporates

France : Investissement des secteurs institutionnels

2010 = 100, investissement en milliards d'euros de 2010

110

115

120

Entreprises non financièresMénagesAdministrations publiques

France: Investment of Institutional Sectors

Non-financial companiesHouseholdsPublic administrations

2010 = 100, investment in billions Euros in 2010

8

© Coe-Rexecode

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

85

90

95

100

105

Source : INSEE, Comptes nationaux

2. State of economy: liquidity at corporates is improving

France : Situation de la trésorerie d’exploitationdes grandes entreprises et des ETI

Solde d'opinion CVS en %

10

20

France: Cash situation from big companies/corporations and intermediatesize companiesBalance of opinion CV %

9

© Coe-Rexecode

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

0

-30

-20

-10

0

Source : AFTE/ Coe-Rexecode, enquête auprès des trésoriers d'entreprise.Question : Jugez-vous la situation de la trésorerie d'exploitation de votreentreprise, aisée, normale ou difficile ?

Sources: AFTE - Coe-Rexecode, investigation from company treasurersQuestion: Do you think the situation of your company cash flaw is sufficient, fine ordifficult?

2. State of economy: requests for delayed payment ofsocial contributions remain very high

France : Demandes de délais de recouvrements des cotisations Urssaf

Demandes enregistrées au cours du mois - cvs ACOSS

4600

5000

5400

5800

6200

France : Requests for delayed payment of social contributions (Urssaf: FrenchSocial Security and Family Allowance Contribution Collection Offices)

Demand recorded during the month - CVs acoss

10

© Coe-Rexecode

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

1800

2200

2600

3000

3400

3800

4200

Source : Acoss-Urssaf

2. State of economy: Debt to GDP ratio set to divergefrom Germany for good

Dette des administrations publiquesEn % du PIB

90

100

Debt of French public administrations (FYI: state and local,regional, etc.)

As % of GDP

11

© Coe-Rexecode

1992 1995 1998 2001 2004 2007 2010 2013 2016

40

50

60

70

80

FranceAllemagne

Source : Commission Européenne (printemps 2014). Prévisions Coe-Rexecode

Germany

Sources: European Commission (spring 2014). Forecast Coe-Rexecode

• The last significant changes to the current regime result from the orders dated 12 March 2014 and 26 September2014 applicable to proceedings opened as from 1 July 2014

1. Incentives to use pre-insolvency proceedings:

• Prohibition of default clauses

• Fees of the creditors' advisors can be charged to the company up to a maximum of 75% only

• Changes to the conciliation proceedings

3. New regimes: hot topics

» Broader scope of New-Money privilege

» If during the application of the agreement, a creditor requests the payment for a debt which is notcovered by such agreement, the judge, upon the debtor 's request, may apply for a moratorium

» Possibility to organize the partial or global sale of the company or its assets ("pre-pack sale")

» Possibility to appoint a nominee in charge of the good application of the adopted plan

2. Improvement of the information to employees:

• Conciliation agreement: Information of the workers' committee (comité d’entreprise)

• The AGS (State employee insurance) to be consulted on the identity of the judicial agent (mandatairejudiciaire) if the company has more than 50 employees

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3. Improvement of the rights of the creditors:

• Easier formality of filing for proof of claim

• Automatic relief of foreclosure of creditors missing on the list provided by the debtor

• The shareholders can be obliged to pay the remaining part of the share capital not fully paid up by them

• Possibility for the creditors to propose alternative plans

• If the company's equity falls below half of the legal share capital, possibility to designate a nominee to organizea shareholders' meeting to vote and approve the capital increase in place of a shareholder

3. New regimes: hot topics

4. Groups (3 companies or more):

• Possibility to appoint a coordinator:

» A common judicial administrator (administrateur judiciaire)

» A representative of creditors (représentant des créanciers)

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• Globalization of the fast-track safeguards proceedings

» Conditions:

– The company has to justify the opening of an ongoing conciliation proceedings

– Accounts certified by an external auditor or a chartered accountant and one of thesethresholds: 20 employees at the time of the opening, or €3m of turnover, or €1,5m onbalance sheet

» 3-month period to implement a plan

» Enforceable against creditors except employees

3. New regimes: new proceedings

» Enforceable against creditors except employees

• Personal recovery proceedings: not applicable to companies

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3. New regimes: the proceedings in a nutshell

Solvent debtor

Mandat ad hoc

Conciliation

Out of court agreement

No Court acknowledgement

Acknowledgement of the agreement

Homologation of the agreement

Fast-track Safeguard or Fast-trackFinancial Safeguard

Safeguard Plan

Reorganisationproceedings

Liquidationproceedings

Insolvent debtor

Safeguard

Financial Safeguard

Observation period (up to 18 months)

Observation period (up to 18 months)

Possible temporary continuation ofthe business (up to 6 months)

Partial Sale

Total sale

ContinuationPlan

Sale Plan

Liquidationproceedings

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A discussion on two recent cases:

1. Solocal Group

2. Groupe Partouche

4. Update on prominent cases

4.1 Solocal case study

350

€1,605M €1,205M- €400m4

• Net debt¹ and net leverage2 (in €M) • Maturity profile of gross debt3 (in €M)

3.82x

3.71x

3.73x

17

84

1,171

41

814

41

814

350 350

2014 2015 2018 2014 2018 2014 2020 Post2020

Bank debt HY debt

Notes1 Net debt corresponds to the total gross financial debt plus or minus the fair value of derivative asset and/or liability hedging instruments and minus cash and cash equivalents2 Net debt / EBITDA3 Bank debt and high yield notes, proforma as of 31/03/2014, including drawn revolving credit line of €20 M4 €400 M of partial anticipated reimbursement

Before refinancing Exercise of the optionAfter refinancing

1,915

1,742

1,580

1,165

2011 2012 2013 2013 ProForma

(at 31 dec.2013)

2.74x

4.1 Solocal case study

MayMarch

Keymilestones

Amend &Extend

13 Feb: Announcement of the refinancing

23 April: Lenders approve ProposedRefinancing in SFA Proceedings

JuneFebruary

13 Feb: Launch of A&E

9 Apr: Opening of SFA"Consensual" A&E process

6 Jun. success ofthe refinancing

April

Capitalincrease

EGM

9 May: Commercial Court approvedproposed Solocal Grouprefinancing plan

24 Mar: EGM convening notice

Rights Issuesubscription

period: 15 to 28May

Centralisation:29 May to 4

June

6 Jun.Settlement-delivery andlisting of thenew shares

12 June:End of u/wguarantee

Sauvegarde FinancièreAccélérée

29 Apr: Capital increase approved atmore than 96%

14 May: Launch of the capital increase

4.2 Partouche case study

• Key facts

• Listed company, controlled by the family.

• Net debt (rounded numbers):

• - Topco: € 100M

• - Opco: € 230M

• Total: € 330M

• Restructuring solution

No new money injection

Topco's debt rescheduling:

- First two years: 1€

- Next 7 years: 5%

- Tenth year: 63%

Option for a first payment of 10% against a

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• Free cash flow: € 20M

• No will or ability for the shareholders toinvest new money

• No will to sell assets under the contractualterms of the ECF clause

• Breach of covenants. No waiver.

Option for a first payment of 10% against acancellation of pik (€36M)

Opco's debt restructuring:

- New interest rate: euribor +3,5%

- 8 years rescheduling

- New ECF (50%)

- Better treatment for cross-holders creditors

4.2 Partouche case study

Sept 2014Sept 2014

Topco'ssauvegarde

March 2013: Topco files forSauvegarde

March 2013

Commercial Courtapproves the Plande Sauvegarde

March 2014

March: Unanimous consent

Opco'ssauvegarde

Commercial Court approvesthe Plan de Sauvegarde

Oct: firstrepaymentsfrom ECF

Sept 2014: Opco files forSauvegarde

March: Unanimous consent

IBR – Negotiation within the creditors committees

5. Future trends

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5. Future trends

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• Any Questions?

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