RISK FACTORS AND INTERNAL CONTROL delay acquisitions or capital expenditures, sel l a certificate of compl iance with the relevant assets, refinance its debt or seek additional funding, undertakings. This certificate must show how the which may adversely affect its business or financial items were calculated so that compliance with such condition. The Rexel Group may not be able to undertakings may be assessed, including the pro refinance its debt or obtain additional financing on forma indebtedness ratio (i.e., adjusted consolidated acceptable terms. net debt compared to adjusted consol idated EBITDA). The Rexel Group’s Statutory Auditors issue Management of risk their own attestation on this certificate. The measures implemented to manage these risks Rexel’s abi l ity to meet these commitments wi l l are described in paragraphs 2.1.3.2 “Risks relating to depend on the financial and operating performance bank and bond financing (excluding securitizations)” of the Rexel Group as wel l as on various factors, and 2.1.3.3 “Risks related to securitization programs” some of which are beyond the Rexel Group’s control. of this Registration document. In addition, this debt Non-compliance by the Rexel Group with its financial 2 exposes the Rexel Group to interest rate risk, which covenants, in particular with the financial ratios set is described in paragraph 2.1.4.2 “Interest rate risk” out in the Senior Credit Agreement, the 2016 Bonds of this Registration document. and the 2017 Bonds may result in early termination by the borrowers of the agreements entered into 2.1.3.2 Risks relating to bank and bond with the Rexel Group. Under such agreements, financing (excluding securitizations) the borrowers may require early repayment of any Risk amounts of principal or interest that are due. Certain bank loans and bond financings, including In such cases, the Rexel Group may not be in a the Senior Credit Agreement, the 2016 Bonds and position to refinance its indebtedness under similar the 2017 Bonds (as described in note 22.1 of the terms, which may have a material adverse effect on Notes to the Rexel Group’s consolidated financial its financial condition or results of operations. statements for the year ended December 31, 2017 As the group holding company without business set forth in section 5.2 “Consol idated Financial operations of its own, Rexel relies on distributions Statements” of this Registration document), contain from its subsidiaries. Rexel’s inabi l ity to obtain customary restrictions limiting the Rexel Group’s sufficient funds from its subsidiaries could have an operations. In particular, these restrictions limit its adverse effect on its capacity to meet its obligations capacity to grant guarantees on assets, dispose under its indebtedness or to distribute dividends. of certain assets, carry out acquisitions, merger or restructuring transactions, borrow or lend money, Management of risk provide collateral and make certain investments, set In order to monitor compliance with its financial up joint ventures, or change the business operations ratio and its financing agreements, the Rexel of the Rexel Group. The Senior Credit Agreement, Group’s Management regularly reviews the current the 2016 Bonds and the 2017 Bonds also contain and forecasted situation and corrective action is provisions under which the Rexel Group’s creditors proposed to the Board of Directors if needed. The could demand ful l or partial early repayment of Audit and Risk Committee fol lows up on these borrowings, particularly in the event of the disposal situations on a regular basis. of certain assets or change of control . These restrictions may impact the Rexel Group’s ability to respond to competitive pressures, downturns in its 2.1.3.3 Risks relating to securitization programs markets or, in general, overall economic conditions. Risk The Rexel Group’s borrowings include various Certain Rexel Group companies are engaged in financial commitments described in note 22.1 of the securitization programs. Such programs are Notes to the Rexel Group’s consolidated financial subject to customary terms appl icable to these statements for the year ended December 31, 2017 types of financial transactions and impose set forth in section 5.2 “Consol idated Financial certain obligations with respect to service levels Statements” of this Registration document. As of and col lection of assigned accounts receivable December 31, 2017, the Rexel Group complied with (within the terms described in note 22.1.3 to the all of its applicable financial commitments. The Rexel Rexel Group’s consol idated financial statements Group must provide for each financial commitment for the year ended December 31, 2017, set forth in REXEL 2017 – REGISTRATION DOCUMENT 43