Obligation Eramet Group 5.875% ( FR0013461274 ) en EUR

Eramet Group

100 % ▲

France

FR0013461274 ( en EUR )

5.875% par an ( paiement annuel )

21/05/2025 - Obligation échue

Prospectus brochure de l'obligation Eramet FR0013461274 en EUR 5.875%, échue

100 000 EUR

300 000 000 EUR

Eramet est un groupe minier et métallurgique français spécialisé dans les métaux de haute performance, notamment le manganèse, le nickel et les métaux de terres rares.

L'Obligation émise par Eramet Group ( France ) , en EUR, avec le code ISIN FR0013461274, paye un coupon de 5.875% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 21/05/2025

Prospectus dated 18 November 2019

300,000,000 5.875 per cent. Bonds due 21 May 2025
Issue Price: 99.471 per cent. of the aggregate principal amount of the Bonds

This document constitutes a prospectus (the Prospectus) for the purposes of Article 6 of Regulation (EU) 2017/1129 (the
"Prospectus Regulation").
The 300,000,000 5.875 per cent. bonds maturing on 21 May 2025 (the "Bonds") of ERAMET (the "Issuer") will be issued on 21
November 2019 (the "Issue Date").
Interest on the Bonds will accrue from, and including, the Issue Date at the rate of 5.875 per cent. per annum, payable annually in
arrears on 21 May in each year, and for the first time on 21 May 2020 for the period from, and including, the Issue Date to, but
excluding, 21 May 2020, as further described in "Terms and Conditions of the Bonds Interest" of this prospectus (the
"Prospectus").
Unless previously redeemed or purchased and cancelled, the Bonds will be redeemed at par on 21 May 2025 (the "Maturity Date").
The Bonds may, and in certain circumstances shall, be redeemed before this date, in whole only but not in part, at their principal
amount, together with, any accrued interest, notably in the event that certain French taxes are imposed (see "Terms and Conditions of
the Bonds Optional redemption for taxation reasons" and "Terms and Conditions of the Bonds Compulsory redemption for tax
reasons"). The Bonds may also be redeemed at the option of the Issuer (i) in whole only but not in part, at any time prior to the
Maturity Date at their relevant Make-whole Redemption Amount (see "Terms and Conditions of the Bonds Early redemption at the
Make-whole Redemption Amount"), (ii) in whole only but not in part at their principal amount, together with any interest accrued
thereon, during the three month-period prior to the Maturity Date (see "Terms and Conditions of the Bonds Residual maturity call
option") or (iii) in whole only but not in part at their principal amount, together with any interest accrued thereon, in the event that at
least 80% of the initial aggregate principal amount of the Bonds has been purchased or redeemed by the Issuer (see "Terms and
Conditions of the Bonds -- Clean-up call option"). In addition, Bondholders will be entitled, in the event of a Change of Control of
the Issuer, to request the Issuer to redeem or purchase all of their Bonds at their principal amount together with any accrued interest
thereunder, all as defined, and in accordance with the provisions set out in "Terms and Conditions of the Bonds Redemption
following a Change of Control".
The Bonds will be issued in dematerialised bearer form in the denomination of 100,000 each. Title to the Bonds will be evidenced
by book entries in accordance with Articles L. 211-3 et seq. and R. 211-1 et seq. of the French Code monétaire et financier. No
physical document of title (including certificats représentatifs pursuant to Article R. 211-7 of the French Code monétaire et
financier) will be issued in respect of the Bonds.
This Prospectus has been approved by the Autorité des marchés financiers (the "AMF"), as competent authority under the Prospectus
Regulation. The AMF only approves this Prospectus as meeting the standards of completeness, comprehensibility and consistency
imposed by the Prospectus Regulation. Such approval should not be considered as an endorsement of the Issuer and on the quality of
the Bonds that are the subject of this Prospectus. Investors should make their own assessment as to the suitability of investing in the
Bonds.
The Bonds will, upon issue, be registered in the books of Euroclear France which shall credit the accounts of the Account Holders.
"Account Holder" shall mean any intermediary institution entitled to hold, directly or indirectly, accounts on behalf of its customers
with Euroclear France ("Euroclear France"), Clearstream Banking, société anonyme ("Clearstream") and Euroclear Bank
S.A./N.V. ("Euroclear").
Application has been made to Euronext Paris S.A. for the Bonds to be admitted to trading on the regulated market of Euronext Paris
("Euronext Paris") with effect from the Issue Date. Euronext Paris is a regulated market for the purposes of the Markets in Financial
Instruments Directive, Directive 2014/65/EU, as amended, appearing on the list of regulated markets issued by the European
Securities Markets Authority.
Neither the Bonds nor the long-term debt of the Issuer are rated.
So long as any of the Bonds are outstanding, copies of this Prospectus and all the documents incorporated by reference herein may be
obtained, free of charge, at the registered office of the Issuer during normal business hours. Copies of this prospectus and all
documents incorporated by reference herein will also be available on the website of the Issuer (www.eramet.com) and on the website
of the AMF (www.amf-france.org).
An investment in the Bonds involves certain risks. See the "Risk Factors" section for a description of certain factors which
should be considered by potential investors in connection with any investment in the Bonds.

Global Coordinators and Joint Lead Managers
BNP PARIBAS
CREDIT AGRICOLE CIB
SOCIETE GENERALE CORPORATE & INVESTMENT BANKING
Joint Lead Managers
ABN AMRO
CM-CIC MARKET SOLUTIONS
DEUTSCHE BANK
NATIXIS
1

This Prospectus has been prepared for the purpose of giving information with respect to the Issuer and the
Issuer and its subsidiaries taken as a whole (the "Group") which is necessary to enable investors to make an
informed assessment of the assets and liabilities, financial position and profit and losses of the Issuer, as well as
the Bonds.
The Joint Lead Managers (as defined in "Subscription and Sale" below) have not separately verified the
information contained in this Prospectus. The Joint Lead Managers do not make any representation, express or
implied, or accept any responsibility, with respect to the accuracy or completeness of any of the information
contained or incorporated by reference in this Prospectus. Neither this Prospectus nor any other information
supplied in connection with the offering of the Bonds is intended to provide the basis of any credit or other
evaluation and should not be considered as a recommendation by, or on behalf of, any of the Issuer or the Joint
Lead Managers that any recipient of this Prospectus or any other financial statements should purchase the
Bonds.
No person is authorised to give any information or to make any representation related to the issue, offering or
sale of the Bonds not contained in this Prospectus. Any information or representation not so contained herein
must not be relied upon as having been authorised by, or on behalf of, the Issuer or the Joint Lead Managers.
The delivery of this Prospectus or any offering or sale of Bonds at any time does not imply that (i) there has been
no change with respect to the Issuer or the Group, since the date hereof and (ii) the information contained or
incorporated by reference in it is correct as at any time subsequent to its date.
The Prospectus and any other information relating to the Issuer or the Bonds should not be considered as an
offer, an invitation, a recommendation by any of the Issuer or the Joint Lead Managers to subscribe or purchase
the Bonds. Each prospective investor of Bonds should determine for itself the relevance of the information
contained in this Prospectus and its purchase of Bonds should be based upon such investigation as it deems
necessary. The Joint Lead Managers undertake to review the financial or general condition of the Issuer during
the life of the arrangements contemplated by this Prospectus nor to advise any investor or prospective investor
in the Bonds of any information coming to its attention. Investors should review, inter alia, the documents
incorporated by reference into this Prospectus when deciding whether or not to subscribe for or to purchase the
Bonds. Investors should in particular conduct their own analysis and evaluation of risks relating to the Issuer,
its business, its financial condition and the issued Bonds and consult their own financial or legal advisers about
risks associated with investment Bonds and the suitability of investing in the Bonds in light of their particular
circumstances. Potential investors should read carefully the section entitled "Risk Factors" set out in this
Prospectus before making a decision to invest in the Bonds.
Potential purchasers and sellers of the Bonds should be aware that they may be required to pay taxes or other
documentary charges or duties in accordance with the laws and practices of the country where the Bonds are
transferred or other jurisdictions, or in accordance with any applicable double tax treaty. In some jurisdictions,
no official statements of the tax authorities or court decisions may be available for the Bonds. Potential investors
are advised to ask for their own tax adviser's advice on their individual taxation with respect to the acquisition,
holding, sale and redemption of the Bonds. Only these advisers are in a position to duly consider the specific
situation of the potential investor.
The distribution of this Prospectus and the offering or the sale of the Bonds in certain jurisdictions may be
restricted by law or regulation. The Issuer and the Joint Lead Managers do not represent that this Prospectus
may be lawfully distributed, or that any Bonds may be lawfully offered or sold, in compliance with any
applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available
thereunder, or assume any obligation or responsibility for facilitating any such distribution, offering or sale. In
particular, no action has been or will be taken by the Issuer or any of the Joint Lead Managers which is intended
to permit a public offering of any Bonds or distribution of this Prospectus in any jurisdiction where action for
that purpose is required. Accordingly, no Bond may be offered or sold, directly or indirectly, and neither this
Prospectus nor any offering material may be distributed or published in any jurisdiction, except under
circumstances that will result in compliance with any applicable laws and regulations. Persons into whose
possession this Prospectus comes are required by the Issuer and the Joint Lead Managers to inform themselves
about and to observe any such restrictions. For a further description of certain restrictions on offers and sales of
Bonds and distribution of this Prospectus and of any other offering material relating to the Bonds, see
"Subscription and Sale" below.
This Prospectus has not been and will not be submitted for approval to any authority other than the Autorité des
marchés financiers in France.
2

The Bonds have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the
"Securities Act"), or with any securities regulatory authority of any state or other jurisdiction of the United
States. In accordance with U.S. laws, and subject to certain exceptions, the Bonds may not be offered or sold,
directly or indirectly, within the United States or to, or for the account or benefit of, U.S. persons (as defined in
Regulation S under the Securities Act (the "Regulation S")). Accordingly, the Bonds will be offered and sold
outside the United States to non U.S. persons in offshore transactions in reliance on Regulation S.
MIFID II product governance / Professional investors and ECPs only target market - Solely for the purposes
of each manufacturer's product approval process, the target market assessment in respect of the Bonds, taking
into account the five categories referred to in item 18 of the Guidelines published by the European Securities
and Markets Authority ("ESMA") on 5 February 2018, has led to the conclusion that: (i) the target market for
the Bonds is eligible counterparties and professional clients only, each as defined in Directive 2014/65/EU (as
amended, "MiFID II"); and (ii) all channels for distribution of the Bonds to eligible counterparties and
professional clients are appropriate. Any person subsequently offering, selling or recommending the Bonds (a
"distributor") should take into consideration the manufacturers' target market assessment; however, a
distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the
Bonds (by either adopting or refining the manufacturers' target market assessment) and determining
appropriate distribution channels.
PRIIPs Regulation / Prohibition of sales to EEA retail investors - The Bonds are not intended to be offered,
sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail
investor in the European Economic Area (EEA). For these purposes, a retail investor means a person who is
one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or (ii) a customer within
the meaning of Directive 2016/97/EU (the "Insurance Distribution Directive"), where that customer would not
qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II. Consequently, no key
information document required by Regulation (EU) No 1286/2014 (as amended, the "PRIIPs Regulation") for
offering or selling the Bonds or otherwise making them available to retail investors in the EEA has been
prepared and therefore offering or selling the Bonds or otherwise making them available to any retail investor
in the EEA may be unlawful under the PRIIPs Regulation.

3

TABLE OF CONTENTS

RISK FACTORS .................................................................................................................................................... 5
DOCUMENTS INCORPORATED BY REFERENCE .................................................................................... 14
TERMS AND CONDITIONS OF THE BONDS ............................................................................................... 26
USE OF PROCEEDS ........................................................................................................................................... 39
DESCRIPTION OF THE ISSUER ..................................................................................................................... 40
RECENT DEVELOPMENTS ............................................................................................................................. 41
SUBSCRIPTION AND SALE ............................................................................................................................. 57
GENERAL INFORMATION ............................................................................................................................. 59
PERSON RESPONSIBLE FOR THE INFORMATION CONTAINED IN THE PROSPECTUS .............. 61

4

RISK FACTORS
The Issuer believes that the following factors may affect its ability to fulfil its obligations under the Bonds. All of
these factors are contingencies which may or may not occur. Risk factors which are specific to the Issuer and
material for an informed investment decision with respect to investing in the Bonds issued under this Prospectus
are described below.
The following are certain risk factors relating to the Issuer and the Bonds of which prospective investors should
be aware. Prior to making an investment decision, prospective investors should consider carefully all of the
information set out and incorporated by reference in this Prospectus and consult with their own financial and
legal advisors as to the risks entailed by an investment in the Bonds. The following statements are not
exhaustive. In addition, investors should be aware that the risks described hereunder (i) may not describe all of
the risks the Issuer faces or all of the risks of an investment in the Bonds, and (ii) may be combined and thus
interrelated. Prospective investors should make their own independent evaluations of all investment
considerations and should also read the detailed information set out elsewhere in this Prospectus. The Bonds
should only be purchased, subject to any applicable laws and regulations, by investors who are financial
institutions or other professional investors who are able to assess the specific risks implied by an investment in
the Bonds.
The presentation of the risk factors of the Issuer is in accordance with the set of rules of the Group taking into
account the principle of criticality of the risks for the Group i.e. "high", "medium", "low" and the risk factors
in each category are presented in decreasing order of significance.
Terms defined in "Terms and Conditions of the Bonds" below shall have the same meaning where used hereafter.
1.
RISKS RELATING TO THE ISSUER
The Issuer carries out its business activities in a rapidly changing environment, which creates risks for the Issuer,
many of which are beyond its control. The risks and uncertainties described herein are not the only ones which
the Issuer faces or will face in the future. Other risks and uncertainties of which the Issuer is currently unaware
or that it deems not to be significant as of the date of this Prospectus could also adversely affect its business
activities, financial results, or future prospects.
The level of negative net impact after risk management measures, as displayed below, results from the Issuer's
assessment of the probability of occurrence of the risks and of their potential impact on the Issuer.

Category
Risk factors
Negative net impact (after risk
management measures)
Strategic
Geopolitical risks
High

Risk of non-recovery of (or Medium
failure to recover) certain assets
for which returns are insufficient
or to reposition competitively
some entities on the cost scale

Risks related to social and Medium
environmental acceptability
5

Risk of non-execution of the Medium
chosen strategy of profitable
growth
with
a
diversified
portfolio of activities
Operational
Supply chain risk
Medium

Risks inherent in production Medium
reliability and the development
of new metallurgical products

Risks related to security
Medium

Risks related to industrial and Low
environmental safety

Health and safety risks of human Low
resources
Legal
Risk
of
legislative
and Medium
regulatory changes

Significant disputes
Medium
Financial
Liquidity risk
Low

Currency risk
Low

(a)
Strategic risks
Geopolitical risks

The Group conducts its activities on a worldwide basis, including in non-OECD countries such as Gabon,
Senegal Indonesia and Argentina. The Group's political risk is therefore intrinsically linked to the extraction,
processing and/or marketing of the Group's products in countries outside of the OECD area, where the political
situation and business environment are not as stable as within the OECD area. Unfavourable political, socio-
economic and regulatory developments in the countries in which the assets are located may have a significant
adverse effect on the Group's financial position, profitability and outlook. The same applies in the event of
terrorist activities, war, health crises or the blocking of public services, access to deposits, logistics or transport.

Risk of non-recovery of (or failure to recover) certain assets for which returns are insufficient or to reposition
competitively some entities on the cost scale

The Group is exposed to the cycles of the Chinese economy, the aerospace market cycle, and the volatility of the
commodities market and the variation of the US dollar ("USD"), which impact the Group's results, and which
can be measured as follows, with respect to USD/oil/nickel/manganese variations on current operating income
assuming a EUR/USD exchange rate of 1.175):
Nickel: 100 million for a variation in the LME nickel price of USD 1/lb;
Manganese ore: 130 million for a variation of USD 1/dmtu;
Manganese Alloys: 70 million for an average manganese alloy price variation of USD 100/t;
Oil: difference of 16 million for a variation of USD 10/ bbl;
USD: +/-105 million for a difference of +/-10 cents in EUR/USD.
6

The Group's turnover and profitability are therefore directly dependent on these exogenous and highly volatile
factors. The Group must constantly improve the performance of its assets in order to withstand cyclical lows.
This is especially true for Société Le Nickel ("SLN") whose cash cost must be repositioned compared to its
competitors, thanks to success in the performance of back-to-competitiveness and cost reduction plans. A delay
in these various progress plans would impact its profitability.
The risk of loss of competitiveness of the assets is dependent on access to electricity, in particular the
construction and commissioning of the new electricity generation plant in New Caledonia which will take over
from the current power station that is reaching end-of-life, the investment scheme for which is described in
Chapter 2 "Nickel BU Activities" of the Issuer's 2018 registration document and the optimisation of the
distribution methods of this energy. Any significant obstacle in electricity access could therefore negatively
impact the Group's competitiveness.
The competitiveness of some of the Group's assets is also dependent on the valuation of mineral resources and
reserves, the evolution of which over time is directly linked to the technical and economic assumptions used for
their exploitation and processing (geological data, techniques and operating costs, conversion factors, choice of
process, environmental, legal and tax regulations). Any significant variation in such technical and economic
assumptions could therefore negatively impact the Group's competitiveness.

Risks related to social and environmental acceptability

The Group is exposed to the risk of a change in the perception of its mining and industrial activities by the
market and by civil society, which could impact the Group's reputation and generate difficulties or obstacles to
operating and marketing its products.
In particular, the assessment of the reserves indicated in Chapter 2 of the Issuer's 2018 registration document
requires unimpeded access to the deposits. Administrative bottlenecks or obstacles caused by social or
community movements would reduce the amount and, as a result, modify the quality of these reserves.
Risk of non-execution of the chosen strategy of profitable growth with a diversified portfolio of activities
The Issuer's business model is based on the extraction and recovery of metals (manganese, nickel, mineral
sands) and the production and processing of parts and semifinished products in high valueadded alloys
(highperformance steels, aluminum and titanium-based super alloys). The market is cyclical, and, at the same
time, capital intensive; access to limited first-class mineral resources and the successful development of new
projects specifically demand long-term investments.
Given their capital intensity, the decision to launch new mining operations or to rehabilitate existing ones
depends on the outcome of technical and financial feasibility studies directly influenced by the evolution of raw
material prices, the exchange rates concerned, the cost of credit and the financing chosen. In periods of slower
demand, some of these decisions may be delayed or abandoned, which may have a negative impact on the
Group's financial situation.
Today, the Group is engaged in a balanced strategy of profitable growth to play a key role in the energy
transition and mobility of the future. A delay in successfully achieving its projects and return on investments in
the competitive and complex environment described above could affect the Issuer's financial position and
degrade its competitive positioning, therefore affecting the ability of its business model to create value over the
long term.

(b)
Operational risks
Supply chain risk
The profitability of the Group's mining activities and the competitiveness of its mining assets depend on the
transport conditions for ore to the port areas of the countries in which it operates and the use of shipping to
transport its products in various stages to production sites prior to delivery to customers. This is due to the long
distances between the mines where the raw materials are extracted and the sites where they are processed, and
between those sites and the markets. Any interruption in sea or rail transport or a sharp rise in transport prices
would have a negative impact on results and asset profitability.
Against a backdrop of increasing traffic, one of the most important points is the much-needed increase in the
capacity of the Gabonese railway (Transgabonais), which allows the evacuation of all of Comilog's manganese
ore.
7

Risks inherent in production reliability and the development of new metallurgical products
Aubert & Duval, a subsidiary of the Group's High Performance Alloys division, produces high power forged or
die-forged parts, as well as high-performance steels and super alloys, particularly for the aerospace and energy
markets. The failure of the design or manufacturing process or the chain of controls could result in legal and
financial consequences for Aubert & Duval related to production downtime or the inability of the customer to
use the product and the resulting product recall campaign.
As a result, the Issuer may be exposed to reputational risks and potential loss of confidence from customers.
Additional financial risks may be incurred if the deficiencies from Aubert & Duval are proved due to the need
for additional manufacturing work, legal costs and customers extra costs transfers.

Risks related to security
In relation to its business activities in certain countries where, according to publicly-recognized security
indicators, exposure to the threat of terrorism, political instability and the risk of social violence is relatively
high, the Issuer may be particularly exposed to risks of attacks on the security of persons and property.

While it is recognized that the risk of malicious acts affects all organizations, the disruption of activities in
process manufacturing industries such as metallurgy can result in significant costs for damages, impact on the
environment and the complexity involved in the resumption of operations to normal levels. This may severely
affect the Group's public image and the high generating cashflow entities of the Group and therefore the overall
profitability of the Group.

Risks related to industrial and environmental safety
The Group is exposed to the risk of accident or major industrial and/or environmental damage that could affect
one of its sites, which could in turn affect the safety or health of people on-site and/or in the surrounding area,
and/or significantly impact the environment. Such an event could lead to an interruption of business,
jeopardising the continuity of a strategic Group asset, as well as additional costs related to legal claims against
the Issuer and damage to its reputation.
Health and safety risks for human resources
The Group uses processes and industrial equipment that are a potential hazard for users. Molten metal, industrial
machinery, heavy machinery, chemicals, noise and vibrations are all examples of dangers intrinsic to the
Group's activities. These hazards generate risks of potentially serious accidents and damage to the health of the
Issuer's employees, external contractors, and in some cases, local residents. On a general level, poor
enforcement of safety rules and the behavior of staff could damage the health of stakeholders (employees,
temporary staff and subcontractors) throughout the Group companies. The occurrence of any such incident may
lead to legal action against the Group and the payment of damages, which could be significant. In addition, it
may create a reputational risk that would prevent the Group from recruiting employees with the required skills
and expertise, thus causing a shortage of skills that are critical for the Group's operations and which could
negatively affect the Group's activities and profitability.
The Issuer's Gabonese subsidiary (Comilog) manages a hospital structure providing first-level care (General
Medicine -- General Surgery -- Pediatrics -- Maternity) for all of its employees and their dependents and has a
public service mission treating external persons by agreement with Gabon's public health authorities "Caisse
nationale d'assurance maladie et de garantie sociale". This non-core business of the Group exposes Eramet to
health crisis risks and to public care management general risks.
(c)
Legal risks
Risk of legislative and regulatory changes
Mining operations are subject to specific regulations, depending on extraction locations and activities. These
regulations primarily relate to:
research permit and mining concession regimes;
obligations specific to mining operations;
environmental protection and biodiversity limits and controls;
site restoration following depletion.
8

In addition to actual mining activity, industrial operations are also subject to specific regulations, depending on
the industrial site. These regulations mainly cover:
authorisations to operate the installations (technical studies to be carried out prior to the authorisation,
applicable procedure, etc.);
the limitation of the impact of the installations on the environment, health and the surrounding area
(discharges into the natural environment, industrial risks, waste disposal, etc.);
the cessation of activity and the rehabilitation of sites at the end of their operation (risks related to
polluted sites and soils, etc.).
These regulations may change with a possible negative impact on the Group's operations and commercial
activities. Additional capital expenditures, extensive adaptations of production processes and additional
measures to protect the health of employees and the environment may be required, which would affect the
overall profitability of the Issuer. Failure to comply with regulations may lead to financial penalties or fines to
the Issuer.
Significant disputes
Apart from the following matters, as far as the Issuer is aware no government, judicial or arbitration proceedings
exist, pending or imminent, that are liable to have or in the last 12 months have had any material effects on the
financial position or profitability of the Issuer and/or the Group.
On April 16, 2019, the Government of New Caledonia issued 10-year export permits to SLN for the export of
low-grade nickel ore amounting to 4 million wet tons per year.
On June 14, 2019, the Northern Province of New Caledonia lodged an appeal with the Administrative Court of
New Caledonia against this Government order. This appeal does not have a suspensive effect and export
authorizations therefore remain in force. The ruling of the Administrative Court is expected in 2020. Eramet and
SLN consider this appeal to be unfounded. If such Court were to rule otherwise, however, this would prevent
SLN from exporting a sufficient quantity of low-grade nickel ore which would negatively impact SLN's capacity
to restore its profitability and therefore the overall profitability of the Group, as indicated above (see "Risk of
non-recovery (or failure to recover) certain assets which returns are insufficient or to reposition competitively
some entities on the cost scale").

(d)
Financial risks
Liquidity risk
The Issuer's business environment is characterized by a cyclical market. At the same time, capital is highly
intensive resulting in long-term investments in mining and manufacturing equipment and a high level of fixed
costs in relation to maintenance costs and labor-intensive activities. In this context, the Group entered into
several credit facilities, which provide for financial covenants depending on, among other things, the Issuer's net
debt and shareholders' equity.
Furthermore, in 2018, SLN, one of the Group's main subsidiaries, benefited from the rise in nickel prices due to
the growth in volume of exported ore. However, the euro/dollar exchange rate, the increase in fuel oil prices and
difficulties in mining operations prevented the generation of a positive operating result. SLN therefore developed
a new economic model and improved its operational performance. Based on these improvements and expected
developments in nickel prices, the financing of 525 million (out of which 320 million are used, as at 31
December 2018) implemented by the Issuer and the French government will enable SLN to meet its
commitments until mid-2020.
As a result, any market downturn and/or slowdown in demand may create liquidity risks for the Group.
Currency risk
The Issuer products trade on international markets, mostly denominated in USD, while a relatively small portion
of its costs and expenditures are in USD. Transactional currency risks are therefore significant especially when
USD/EUR exchange rates are unfavorable to Group cash flows, as the ability to efficiently cover currency risk
exposures is limited in the long term.

9

2.
RISKS RELATING TO THE BONDS
(a)
Risks related to the particular structure of the Bonds
The Bonds may be redeemed prior to maturity

In the event that the Issuer would be obliged to pay additional amounts in respect of any Bonds due to any
withholding as provided in "Terms and Conditions of the Bonds Taxation", the Issuer may and, in certain
circumstances shall, redeem all of the Bonds then outstanding in accordance with such Terms and Conditions.

The Terms and Conditions of the Bonds also provide that the Bonds are redeemable at the option of the Issuer in
certain other circumstances (see "Terms and Conditions of the Bonds - Early redemption at the Make-whole
Redemption Amount ", "Terms and Conditions of the Bonds Residual maturity call option" and "Terms and
Conditions of the Bonds - Clean-up call option") and, accordingly, the Issuer may choose to redeem the Bonds at
times when prevailing interest rates may be relatively low. During a period when the Issuer elects to redeem
Bonds, such Bonds may feature a market value not substantially above the price at which they can be redeemed.

With respect to the Clean-up call option provided under "Terms and Conditions of the Bonds Clean-up call
option", there is no obligation under the Terms and Conditions of the Bonds for the Issuer to inform the
Bondholders if and when the threshold of eighty (80%) per cent. of the initial aggregate principal amount of the
Bonds (including for the avoidance of doubt the initial aggregate principal amount of any future Bonds issued)
has been reached or is about to be reached. In addition, the Issuer's right to redeem will exist notwithstanding
that immediately prior to the serving of a notice in respect of the exercise of this option, the Bonds may have
been trading significantly above par, thus potentially resulting in a loss of capital invested.

Further, if an Event of Default occurred and has not been remedied, as provided in "Terms and Conditions of the
Bonds Events of Default", then any Bondholder may cause all, but not some only, of the Bonds held by it to
become immediately due and payable in accordance with such Terms and Conditions.

Any early redemption of the Bonds may result, for the Bondholders, in a yield that is considerably lower than
anticipated. In addition, investors may not be able to reinvest the monies they receive upon such early
redemption in securities with the same yield as the redeemed Bonds.

Early redemption at the option of the Bondholders

In the event of a Change of Control of the Issuer (as more fully described in "Terms and Conditions of the Bonds
- Redemption following a Change of Control"), each Bondholder will have the right to request the Issuer to
redeem or purchase all of its Bonds at their principal amount together with any accrued interest. In such case,
any trading market in respect of those Bonds for which such redemption right is not exercised may become
illiquid. In addition, investors may not be able to reinvest the monies they receive upon such early redemption in
securities with the same yield as the redeemed Bonds.

The Bonds are not protected by restrictive covenants and the Issuer may incur additional indebtedness.

The Terms and Conditions of the Bonds contain a negative pledge undertaking that prohibits the Issuer and its
Material Subsidiaries from creating any Security to secure any Relevant Debt unless, at the same time or prior
thereto, the Issuer's obligations under the Bonds are equally and rateably secured therewith (see "Terms and
Conditions of the Bonds Negative Pledge"). Such Terms and Conditions of the Bonds do not contain any
financial covenant.

Subject to this negative pledge, the Issuer and its subsidiaries may incur significant additional debt that could be
considered before, or rank equally with, the Bonds. Accordingly, if the Issuer incurs significant additional debt
ranking equally with the Bonds, it will increase the number of claims that would be entitled to share rateably
with the Bondholders in any proceeds distributed in connection with an insolvency, bankruptcy or similar
proceeding.

(b)
Risks related to legislation
French Insolvency Law
Under French insolvency law, notwithstanding any clause to the contrary, holders of debt securities (obligations)
are automatically grouped into a single assembly of holders (the "Assembly") in order to defend their common
interests if a preservation procedure (procédure de sauvegarde), an accelerated preservation procedure
(procédure de sauvegarde accélérée), an accelerated financial preservation procedure (procédure de sauvegarde
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