2008 Registration Document - Rexel

14. Financial information concerning the assets andliabilities, financial position and profits and lossesof RexelFrom December 31, 2008 margin applicable will varyin accordance with the ranges in which the Pro FormaLeverage Ratio (as defined below) falls at the end of eachsemester as set out below:Pro Forma Leverage RatioMarginGreater than 4.50:1 2.00%Greater than or equal to 4.00:1 1.75%Greater than or equal to 3.50:1 1.40%Greater than or equal to 3.00:1 1.10%Greater than or equal to 2.50:1 0.90%Less than 2.50:1 0.75%The applicable margin for Facility C amounted to 0.80%until May 1, 2008 (1.20% thereafter), and the applicablemargin for Facility D amounts to 1.00% until March 14, 2009(2.00% thereafter).Covenant (Pro Forma Leverage Ratio)The Pro Forma Leverage Ratio corresponds to the adjustedconsolidated net debt relative to the adjusted consolidatedEBITDA, as such terms are defined below:Adjusted consolidated EBITDA means operating incomebefore other income and other expenses, plus depreciationand amortization as set forth in the Group’s financialstatements and:− Includes adjusted EBITDA over the last 12 months of all ofthe companies acquired during the relevant period, prorata to the Group’s participation;− Includes proceeds relating to commodity price derivativesto hedge exposure to the price fluctuations of certaincommodities which do not qualify for cash flow hedgeaccounting under IFRS;− Excludes expenses relating to employee profit sharingand any share based payments or the grant of sharesubscription options;− Excludes restructuring costs relating to the integration ofHagemeyer; and− Is adjusted to exclude the non-recurring impact on theGroup’s consolidated EBITDA related to the price ofcopper in cables.Adjusted consolidated net debt means all financial debt(whether the interest with respect to such debt is paidor capitalized) converted to the average rate of the last12 months when the debt is in a currency other than theeuro:− less transaction costs, intra-group loans and amountspayable under Facility C;− plus all indebtedness relating to the issuance of securitiesthat are not mandatorily redeemable into shares andany other amount relating to a loan under internationalaccounting standards;− plus accrued interest, including capitalized interest butexcluding interest accrued on intra-group loans;− minus cash and cash equivalents.CommitmentUnder the terms of the Senior Credit Agreement, Rexelmust, at each of the dates indicated below, maintain, at theend of each rolling twelve-month period indicated below, aPro Forma Leverage Ratio below the following levels:DatePro Forma Leverage RatioDecember 31, 2008 4.75:1June 30, 2009 4.75:1December 31, 2009 4.50:1June 30, 2010 4.25:1December 31, 2010 3.90:1June 30, 2011 and after 3.50:1As of December 31, 2008 this ratio was 3.60, thus satisfyingthe covenant with a 32% headroom.The Senior Credit Agreement contains standard clauses forthis type of agreement. These include clauses restricting theability of Group companies which are parties to the SeniorCredit Agreement, as well as certain subsidiaries, to pledgetheir assets, carry out mergers or restructuring programs,borrow or lend money, provide guarantees or make certaininvestments, as well as provisions concerning acquisitionsby Group companies.The Senior Credit Agreement allows partial or totalacceleration of repayment upon the occurrence of certainevents, including in the case of a payment default underthe Senior Credit Agreement, failure to comply with theIndebtedness Ratio set forth above, payment defaults oracceleration of other financial debt of certain Group entities(above specified amounts), or other events that are likely tohave a material adverse effect on the payment obligationsof the borrowers and the guarantors or on their ability tocomply with the Pro Forma Leverage Ratio as set forthabove.If Rexel loses indirect control over Hagemeyer, or if Keliumloses direct control over Hagemeyer (control being defined,in such cases, as the holding of more than 50% of theshare capital (geplaatst kapitaal) of Hagemeyer), a changeof control would be considered as having occurred for thepurposes of the Senior Credit Agreement and, as a result,any lender would be entitled to require early payment of itsshare in the credit agreement.A pledge over the Kelium shares, on the one hand, and apledge over the Hagemeyer shares and convertible bondsthat Kelium hold after the offer, on the other hand, hasbeen granted by Rexel Distribution and Kelium respectively,under the Senior Credit Agreement. Rexel and RexelDistribution guarantee, on a joint basis, all of the obligationsof their respective subsidiaries. In addition, certain U.S. andPAGE 196 | REXEL 2008