Michelin launches issue of non-dilutive cash-settled convertible bonds

Today, Michelin has announced the launch of a US$500 million offering of non-dilutive cash-settled convertible bonds due 2023 (the Bonds), which may be increased up to $600 million if the increase option is exercised in full. Michelin will purchase cash-settled call options (the Call Options) to hedge its economic exposure to the potential exercise of the conversion rights embedded in the Bonds. Since they will only be cash-settled, the Bonds will not result in the issuance of new shares or the delivery of existing shares of Michelin (the Shares) upon conversion. This US dollar‑denominated debt will be immediately converted into euros.

Michelin intends to use the net proceeds of the issuance of the Bonds for general corporate purposes, including purchase of cash-settled call options.

The Bonds will have a nominal value of $200,000 per Bond and will not bear interest. The Bonds will be issued at an issue price of 95.50 per cent to 100 per cent of their nominal value, corresponding to an annual gross yield to maturity of 0 per cent to 0.79 per cent, on 10 January 2018, the expected settlement date of the Bonds. The Bonds will be redeemed at par on 10 November 2023.

The initial conversion price (the Initial Conversion Price) will represent an issue premium of 30 per cent over the Share Reference Price (as defined below). The reference price of the Share (the Share Reference Price) will be determined as the arithmetic average of the daily volume-weighted average prices of the Share in euros on the regulated market of Euronext in Paris (Euronext Paris) over the ten consecutive trading days commencing on (and including) 8 January 2018 (the Reference Period). The initial conversion ratio of the Bonds will correspond to the nominal value converted in euros and divided by the Initial Conversion Price.

The Bonds will be offered via an accelerated bookbuilding process through a private placement to institutional investors only, outside the United States of America, Australia, Canada and Japan. No prospectus, offering circular or similar document will be prepared in connection with the offering.

After the determination of the final terms of the Bonds, other than the Share Reference Price and the Initial Conversion Price, it is anticipated that the hedge counterparties to the Call Options will enter into transactions to hedge their respective positions under the Call Options through the purchase or sale, of Shares or any other transactions, on the market and off-market, at any time, and in particular during the Reference Period and at the conversion or redemption of the Bonds.

The final terms of the Bonds will be announced later today, except for the Share Reference Price and the Initial Conversion Price that will be announced through a press release at the end of the Reference Period, expected to occur on 19 January 2018.

Application will be made for the Bonds to be admitted to trading on Euronext AccessTM, the open market of Euronext Paris,and such admission to trading is expected no later than 30 days following the expected settlement date.

In the context of the offering, Michelin will agree to a lock-up undertaking in relation to its Shares and equity-linked securities for a period ending 60 calendar days after the settlement and delivery date, subject to certain exceptions.

This offering is managed by Société Générale Corporate & Investment Banking acting as Global Coordinator, Joint Lead Manager and Joint Bookrunner, and BNP PARIBAS, HSBC and J.P. Morgan Securities plc as Joint Lead Managers and Joint Bookrunners (together with Société Générale Corporate & Investment Banking, the Joint Bookrunners).

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