26 Apr 2010 17:16
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR TO AUSTRALIA, CANADA, JAPAN OR THE UNITED STATES, OR TO US PERSONS
GSO Capital Partners Employee Side by Side Fund LLC and
Miguel Ramos-Fuentenebro (together the "Tendering Parties")
26 April 2010
CIRCULAR RELATING TO A TENDER OFFER BY GSO CAPITAL PARTNERS EMPLOYEE SIDE BY SIDE FUND LLC AND MIGUEL RAMOS-FUENTENEBRO TO PURCHASE SHARES IN CARADOR PLC
GSO Capital Partners Employee Side by Side Fund LLC and Miguel Ramos-Fuentenebro announce the posting today to shareholders (other than certain overseas shareholders) in Carador plc (the "Company") of a Circular relating to a Tender Offer by the Tendering Parties to purchase up to 2 million US Dollar Shares in the Company at $0.50 per US Dollar Share and/or Euro Shares in the Company of up to an equivalent value at €0.37 per Euro Share.
Details of the Tender Offer being made for the shares in the Company are set out in the Tender Offer Circular which accompanies this notice.
END OF ANNOUNCEMENT
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE IN ANY DOUBT ABOUT THE CONTENTS OF THIS DOCUMENT OR THE ACTIONS YOU SHOULD TAKE, YOU ARE RECOMMENDED TO SEEK INDEPENDENT FINANCIAL ADVICE FROM YOUR STOCKBROKER, SOLICITOR, ACCOUNTANT OR OTHER INDEPENDENT FINANCIAL ADVISER DULY AUTHORISED PURSUANT TO THE FINANCIAL SERVICES AND MARKETS ACT 2000 (OR DULY AUTHORISED IN THE JURISDICTION IN WHICH YOU ARE RESIDENT).
If you have transferred all of your Shares in Carador plc, please send this Tender Offer Circular, together with the accompanying Tender Form, as soon as possible to the transferee or to the stockbroker, bank or other agent through whom the transfer was effected for delivery to the transferee. However, these documents should not be forwarded to or sent in or into Australia, Canada, Japan or the United States of America.
The Tender Offer is not being made, directly or indirectly, in, into or from or by use of the mails of, or by any means or instrumentality (including, without limitation, telephonically or electronically) of interstate or foreign commerce, or any facility of a national securities exchange of, Australia, Canada, Japan or the United States of America and will not be capable of acceptance, by any such use, means, instrumentality or facility from within Australia, Canada, Japan or the United States of America. Doing so may render invalid any purported tender. Accordingly, neither this document nor the accompanying Tender Form is being, nor may they be, mailed or otherwise forwarded, distributed or sent in, into or from (whether by use of the mails or any means or instrumentality (including, without limitation, telephonically or electronically) of interstate or foreign commerce of, or any facilities of a national securities exchange) of Australia, Canada, Japan or the United States of America or into any other jurisdictions if to do so would constitute a violation of the relevant laws and regulations in such jurisdictions for the account or benefit of any Overseas Shareholders. All Shareholders (including, without limitation, nominees, trustees or custodians) who would, or otherwise intend to or who may have a contractual or legal obligation to, forward this document and/or the accompanying Tender Form to any jurisdiction outside the United Kingdom, should read the details in this regard, which are contained in the section headed "Overseas Shareholders" in Part II of this document, before taking any action.
This Tender Offer Circular should be read in conjunction with the accompanying Tender Form, the terms and conditions of which are incorporated into and form part of this Tender Offer Circular. Certain terms used in this Tender Offer Circular, including certain capitalised terms, are defined in Part III of this document.
This document, which constitutes a financial promotion, has been approved by GSO Capital Partners International LLP for the purposes of Section 21 of the Financial Services and Markets Act 2000.
CARADOR PLC(a closed-end investment company with variable capital incorporated with limited liability under the laws of Ireland with registered number 415764)
Tender offer by GSO Capital Partners Employee Side by Side Fund LLC and Miguel Ramos-Fuentenebro to purchase up to 2 million US Dollar Shares at $0.50 per US Dollar Share and/or Euro Shares of up to an equivalent value at €0.37 per Euro Share
TENDER OFFER CIRCULAR
IF YOU WANT TO TENDER ANY OR ALL OF YOUR SHARES IN THE TENDER OFFER, PLEASE SEND THE ACCOMPANYING TENDER FORM BY POST IN THE ACCOMPANYING REPLY-PAID ENVELOPE (FOR USE IN THE UK ONLY), OR BY HAND (DURING NORMAL BUSINESS HOURS), TO COMPUTERSHARE INVESTOR SERVICES (IRELAND) LIMITED (THE "REGISTRAR"), HERON HOUSE, CORRIG ROAD, SANDYFORD, DUBLIN 18, IRELAND, AS SOON AS POSSIBLE BUT, IN ANY EVENT, SO AS TO BE RECEIVED NO LATER THAN 5.00 P.M. ON 11 MAY 2010.
In respect of tendered Shares that are held in certificated form, Share Certificate(s) relating to such tendered Shares must also be returned to the Registrar at the same time as the completed Tender Form is submitted. For tendered Shares that are held in uncertificated form, a transfer to escrow ("TTE") instruction in respect of such tendered Shares must be submitted through CREST by 5.00 p.m. on 11 May 2010.
Shareholders do not have to tender all or any of their Shares. Shareholders who do not wish to sell any Shares under the Tender Offer should take no action.
Please read this Tender Offer Circular and the Tender Form carefully. If you have any questions with regard to the Tender Offer or on how to complete the Tender Form, please write the Registrar at computersharefunds@computershare.ie
26 April 2010
CONTENTS
|
| Page |
| EXPECTED TIMETABLE OF PRINCIPAL EVENTS | 2 |
| PART I LETTER FROM GSO CAPITAL PARTNERS EMPLOYEE SIDE BY SIDE FUND LLC AND MIGUEL RAMOS-FUENTENEBRO | 4 |
| PART II TERMS AND CONDITIONS OF THE TENDER OFFER | 8 |
| PART III DEFINITIONS | 15 |
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
| Tender Offer opens | Wednesday 28 April 2010 |
| Latest time and date for receipt of Tender Forms and Share Certificates or TTE settlement instructions (as applicable) | 5.00 p.m. on Tuesday 11 May 2010 |
| Record Date for Tender Offer | 5.00 p.m. on Tuesday 11 May 2010 |
| Publication of results of the Tender Offer | Thursday 13 May 2010 |
| CREST accounts debited in respect of uncertificated Shares sold under the Tender Offer | Friday 21 May 2010 |
| Despatch of cheques for Tender Offer proceeds in respect of Shares sold under the Tender Offer | Friday 21 May 2010 |
| Despatch of replacement Share Certificates (where applicable) | Friday 21 May 2010 |
The dates and times (which are London times) given are based on the current expectations of GSO Capital Partners Employee Side by Side Fund LLC ("GESSF") and Miguel Ramos-Fuentenebro (together the "Tendering Parties", "our", "us" or "we") and may be subject to change. If there are any changes to any dates or times, a revised timetable will be published by way of announcement through a Regulatory Information Service.
Shareholders who hold their Shares in certificated form and who wish to tender their Shares in the Tender Offer should ensure that their completed Tender Form and Share Certificate(s) are returned either by post or by hand (during normal business hours) to the Registrar at Heron House, Corrig Road, Sandyford, Dublin 18, Ireland by 5.00 p.m. on 11 May 2010.
Shareholders who hold their Shares in uncertificated form through CREST and who wish to tender their Shares in the Tender Offer should ensure that the relevant TTE settlement instruction is submitted against ComputerShare Investor Services (for US Dollar Shares, receiving agent identification "RA72" and member account "TENDERU" and, for Euro Shares, receiving agent identification "RA73" and member account "TENDERE") through CREST by 5.00 p.m. on 11 May 2010. A completed Tender Form in respect of any such tendered Shares must also be returned either by post or by hand (during normal business hours) to the Registrar at Heron House, Corrig Road, Sandyford, Dublin 18, Ireland by 5.00 p.m. on 11 May 2010.
Proceeds in respect of any Shares sold under the Tender Offer will be paid by cheque, despatched on or around 21 May 2010.
PART I
LETTER FROM GSO CAPITAL PARTNERS EMPLOYEE SIDE BY SIDE FUND LLC AND MIGUEL RAMOS-FUENTENEBRO
GSO Capital Partners Employee Side By Side Fund LLC280 Park Avenue 11th Floor, East Building New York, New York 10017
Miguel Ramos-Fuentenebroc/o 280 Park Avenue 11th Floor, East Building New York, New York 10017
26 April 2010
To Shareholders of Carador plc
Dear Shareholders,
Tender offer by GSO Capital Partners Employee Side by Side Fund LLC and Miguel Ramos-Fuentenebro to purchase up to 2 million US Dollar Shares at $0.50 per US Dollar Share and/or Euro Shares of up to an equivalent value at €0.37 per Euro Share
1. INTRODUCTION
We are writing to you today to provide you with details of the terms of a tender offer to purchase Shares in the issued capital of Carador plc ("Carador" or the "Company"). As set out in further detail below, we have decided to offer to purchase up to 2 million US Dollar Shares at $0.50 per US Dollar Share and/or Euro Shares of up to an equivalent value at €0.37 per Euro Share (the "Tender Offer").
2. REASONS FOR THE TENDER OFFER
Introduction
We believe that the Shares in Carador represent an attractive investment opportunity based on the following factors.
Market Opportunity
We believe that there is currently an emergence from a severe downturn in the credit markets and economy. Companies have been focusing on and will likely continue to focus on improving their balance sheets and, as a result, leveraged loans represent a compelling long-term investment opportunity in the repair and recovery phase of the current credit cycle.
We consider that senior secured loans are a relatively defensive investment in uncertain economic environments since historically loans have typically experienced higher recovery in the event of distress or default as a result of secured status.
In this context, we believe that collateralized loan obligations ("CLOs") have the potential to offer attractive absolute and relative value versus the underlying assets, senior and mezzanine CLO tranches offer an alternative to investing in the underlying loan portfolios with the protection of additional subordination and with target returns in some cases in excess of the underlying loans, and subordinated CLO tranches enjoy efficient term, non-recourse financing at rates not available in the current market environment.
Quality of Portfolio and Potential for Cash Flow Generation
The Company has the ability to invest across the capital structure of CLOs, including senior, mezzanine and subordinated tranches.
We believe that GSO Capital Partners International LLP's (the "Manager's") experience and resources have resulted in a degree of positive selection in the Company's investments. Citigroup(*) reported that through the end of 2009 roughly only 35% of US CLO deals delivered an uninterrupted stream of payments to equity. As a comparison, only 0.41% of the Company's US CLO portfolio was, as of the end of March, non-performing.
According to the Manager's 2010 Monthly Reports, during the first quarter of 2010 the Company's investments in subordinated tranches generated annualized cash on cash payments, based on original purchase price, ranging from 5.26% to 57.45% or 13.91% to 68.65% based on the relevant valuations, generating an estimated €1,268,476 or €0.0091 per Share available for dividend distributions in the first quarter of 2010, implying a dividend yield for Euro Shares of 7.97% of net asset value ("NAV") as at the NAV calculation date on 31 March 2010 or 12.04% based on the closing price for Euro Shares as at 31 March 2010.
According to the Manager's 2009 and 2010 Monthly Reports, the Company took advantage of the market dislocation in 2009 to acquire senior and mezzanine tranches at depressed levels. The Company's subsequent realisations (with multiples over original investment of 1.40x to 2.84x over a short holding period) showed the potential for these investments to enhance NAV despite the lower income they generate. As the CLO market normalises, it is expected that Carador will have the opportunity to realise the capital gains generated in senior investments and allocate the proceeds to higher yielding subordinated and mezzanine CLO tranches.
The Company's prospectus (dated 30 September 2008) states that it can only distribute net income as dividends. Subordinated CLO cash flows are variable and the initial target internal rate of return calculation does not normally imply full redemption at par. As a result, the Company retains a variable percentage of these cash flows to compensate for any potential par shortfalls at maturity. This policy subjects any interest allocation in a subordinated investment to a 20% cap until the future value of retained cash flows reaches 105% of the original investment. The Company disclosed in its Monthly Reports that three subordinated investments have already reached this target. As a result, any future cash flows from these investments will be allocated to income available for distributions.
Although the Company's dividend rate was reduced in 2009, Carador was able to continue paying dividends without interruption during one of the worst credit crises in history.
Misalignment between Share Price and NAV Performance
The Company's Share performance in 2009 and 2010 has not reflected its NAV performance. Based on the Company's market announcements and Bloomberg data for share prices, we estimate that the NAV and dividends paid by Carador resulted in a total return of -1.82% for the Euro Shares and +0.43% for the US Dollar Shares in 2009, versus a total return of -29.20% and -29.65% for the Euro Shares and US Dollar Shares, respectively.
Approach to Calculation of Net Asset Value
The Manager disclosed in the March Monthly Report that 84% of its assets were valued using traded prices, firm bids or counterparty valuations with the remaining 16% of the investments being valued using cash flow models and discount rates ranging from 34.69% to 42.19%.
The Manager has also disclosed, when available, the difference between firm bids or traded prices and its valuations.(**)
The Manager further disclosed in its March Monthly Report the par notional for the Company's investments in senior, mezzanine and subordinated investments which imply average prices for these assets of 78c, 57c and 41c respectively.
Alignment of Interest
We believe that there is a strong alignment of interest between the Manager, its affiliates and investors. Miguel Ramos-Fuentenebro and GESSF have been investors in Carador since inception of the Company and the amalgamation with Abingdon Investment Limited, respectively, and have not disposed of any shares.
Furthermore, Carador's performance fee is subject to a threshold and a high watermark, ensuring that the Manager is only entitled to this performance fee once this watermark has been reached.
Discount to NAV
We believe that the current discount to NAV in the Company's Shares does not reflect the fundamental value of the Company and we consider the opportunity to purchase Shares at a discount to NAV compelling.
3. TERMS AND CONDITIONS OF THE TENDER OFFER
Full details of the Tender Offer, including the terms and conditions on which it is made, are set out in this document and the Tender Form enclosed with this document.
The Tender Offer is being made to all Shareholders of Carador who are on the Register at 5.00 p.m. on 11 May 2010 and whose registered address is outside Australia, Canada, Japan and the United States of America. Overseas Shareholders should see the section headed "Overseas Shareholders" in Part II of this document.
Shareholders can, but are not obliged, to tender all or any of their Shares.
All Euro Shares will be purchased at the same Euro Tender Price of €0.37 per Euro Share. All US Dollar Shares will be purchased at the same US Dollar Tender Price of £0.50 per US Dollar Share. In setting the Euro Tender Price and US Dollar Tender Price, regard was had to a number of factors including Carador's most recent accounts and prevailing market conditions.
It is intended that the number of Shares to be acquired pursuant to the Tender Offer will not exceed the value of 2 million US Dollar Shares at $0.50 per US Dollar Share and/or Euro Shares of up to an equivalent value at €0.37 per Euro Share.
The Registrar of Carador has informed us that, after the completion of the Tender Offer, those Shareholders who have participated in the tender, and who hold Shares in certificated form, will receive a replacement Share Certificate for the balance of any remaining Shares.
For Shares held in uncertificated form, the relevant number of Shares sold under the Tender Offer will be debited from escrow in CREST on or around 21 May 2010.
4. ACTION TO BE TAKEN
All Shareholders who wish to tender all or any of their Shares should complete a Tender Form in accordance with the instructions printed thereon and return it by post or by hand (during normal business hours) to the Registrar, Heron House, Corrig Road, Sandyford, Dublin 18, Ireland, as soon as possible and in any event to be received no later than 5.00 p.m. on 11 May 2010.
In respect of tendered Shares that are held in certificated form, Share Certificate(s) relating to such tendered Shares must also be returned to the Registrar at the same time as the completed Tender Form is submitted. For tendered Shares that are held in uncertificated form, a TTE settlement instruction against ComputerShare Investor Services (for US Dollar Shares, receiving agent identification "RA72" and member account "TENDERU" and, for Euro Shares, receiving agent identification "RA73" and member account "TENDERE") in respect of such tendered Shares must also be submitted through CREST by 5.00 p.m. on 11 May 2010.
After a Tender Form and Share Certificate(s) or a TTE settlement instruction have been submitted, a Shareholder will be unable to access or otherwise deal in the Shares for which a tender has been made, pending completion of the Tender Offer. Shares will be held in escrow subject to the completion of the Tender Offer.
Shareholders who do not wish to sell any Shares under the Tender Offer should take no further action.
If you require any assistance in completing the Tender Form please write to the Registrar at computersharefunds@computershare.ie
5. RECOMMENDATION TO SHAREHOLDERS
As the Tendering Parties, we are making no recommendation to Shareholders in relation to participation in the Tender Offer. Whether or not Shareholders decide to tender their Shares will depend, among other things, on their view of Carador's prospects and their own individual circumstances, including their tax position.
Neither the Tendering Parties, nor GESSF's managing member, makes any representation or warranty in relation to the information contained in this letter, the enclosed documents or the value of the Shares.
If you have any questions about the Tender Offer, this document or the Tender Form you are recommended to seek independent financial advice from your stockbroker, solicitor, accountant or other independent financial adviser duly authorised pursuant to the Financial Services and Markets Act 2000 (or duly authorised in the jurisdiction in which you are resident).
Yours faithfully,
GSO Capital Partners Employee Side by Side Fund LLC and Miguel Ramos-Fuentenebro
PART II
TERMS AND CONDITIONS OF THE TENDER OFFER
1. INTRODUCTION
1.1 Shareholders on the Register at the Record Date (other than certain Overseas Shareholders - see the provisions of the section headed "Overseas Shareholders" below) are hereby invited to tender Shares for purchase by the Tendering Parties on the terms and subject to the conditions set out in this document and in the accompanying Tender Form.
1.2 It is intended that the number of Shares to be acquired pursuant to the Tender Offer will not exceed the value of 2 million US Dollar Shares at $0.50 per US Dollar Share and/or Euro Shares of up to an equivalent value at €0.37 per Euro Share.
2. TERMS AND CONDITIONS OF THE TENDER OFFER
2.1 All or any proportion of a holding of Euro Shares may be tendered under the Tender Offer at the Euro Tender Price. All or any proportion of a holding of US Dollar Shares may be tendered under the Tender Offer at the US Dollar Tender Price.
2.2 Tender Forms submitted by Shareholders where the number of Euro Shares and/or US Dollar Shares is not specified will be deemed to have been made in respect of the Shareholder's entire holding of Euro Shares and/or US Dollar Shares (as the case may be and as so registered).
2.3 The Tender Offer is only available to Shareholders (outside Australia, Canada, Japan and the United States of America) on the Register at the Record Date and in respect of the number of Shares registered in their names on that date. Overseas Shareholders should see the section headed "Overseas Shareholders" in this Part II.
2.4 Tenders of Shares may be revoked by written notice received by the Registrar at any time until 5.00 p.m. on the Closing Date. After 5.00 p.m. on the Closing Date all tenders will be irrevocable. All questions as to the validity of notices of withdrawal will be determined by the Tendering Parties, in their sole discretion, which determination shall be final and binding (except as otherwise required under applicable law).
2.5 The Tender Offer will close at 5.00 p.m. on the Closing Date and, save as determined by the Tendering Parties in their sole discretion or as otherwise required under applicable law, Tender Forms received after that time will not be accepted.
2.6 Shares successfully tendered will be acquired by the Tendering Parties with full title guarantee and free from all liens, charges, encumbrances, equitable interests, rights of pre-emption or other third party rights of any nature and together with all rights attached thereto, on or after the Closing Date.
2.7 All tenders must be made by completing the Tender Form in accordance with the instructions thereon, which constitutes part of the Tender Offer. A tender will only be valid where the procedures herein and on the Tender Form are complied with. Tenders may be treated by the Tendering Parties, in their sole discretion, as valid and binding on the person(s) by whom or on whose behalf they are lodged even if not completed in accordance with the relevant instructions, received after the Closing Date or not accompanied by a power of attorney where required.
2.8 The Tender Offer and all tenders will be governed by, and construed in accordance with, English law. Delivery or posting of a Tender Form will constitute submission by the Shareholder to the jurisdiction of the Courts of England. On execution by a Shareholder, a Tender Form shall take effect as a deed.
2.9 Each Shareholder by whom, or on whose behalf, a Tender Form is executed irrevocably undertakes, represents, warrants and agrees to and with the Tendering Parties, the Company and the Registrar (so as to bind him or her, his or her personal representatives and his or her heirs, successors and assigns) that:
2.9.1 the execution of the Tender Form shall constitute an offer to sell to the Tendering Parties such number of Shares as inserted in Box 2A and/or Box 2B of the Tender Form on or subject to the terms and conditions set out or referred to in this document and that, once lodged, such tenders shall be irrevocable after 5.00 p.m. on the Closing Date;
2.9.2 such Shareholder has full power and authority to tender, sell, assign or transfer the Shares in respect of which such offer is accepted and when purchased by the Tendering Parties, will be acquired with full title guarantee and free from all liens, charges, encumbrances, equitable interests, rights of pre-emption or other third party rights of any nature and together with all rights attaching thereto, on or after the Closing Date;
2.9.3 the execution of the Tender Form will constitute the irrevocable appointment of the Tendering Parties as such Shareholder's attorney and/or agent, and an irrevocable instruction to such attorney to complete and execute all or any instruments of transfer and/or other documents at the attorney's/agent's discretion in relation to the Shares referred to in paragraph 2.9.1 above in favour of the Tendering Parties;
2.9.4 such Shareholder agrees to ratify and confirm each and every act or thing which may be done or effected by the Tendering Parties, Carador or any of their agents;
2.9.5 the provisions of the Tender Form shall be deemed incorporated into the terms and conditions of the Tender Offer;
2.9.6 such Shareholder shall do all such acts and things as shall be necessary or expedient and execute any additional documents deemed by the Tendering Parties to be desirable, in each case to complete the purchase of Shares and/or to perfect any of the authorities expressed to be given hereunder;
2.9.7 such Shareholder, if an Overseas Shareholder, has fully observed any applicable legal requirements that the invitation under the Tender Offer may be made to him under the laws of the relevant jurisdiction;
2.9.8 the execution of the Tender Form takes effect as a deed; and
2.9.9 the execution of the Tender Form constitutes submission to the jurisdiction of the Courts of England in relation to all matters arising out of or in connection with the Tender Offer or the Tender Form.
2.10 If the aggregate number of all Shares validly tendered exceeds $1 million in value, valid tenders by Shareholders will be scaled back in the manner determined by the Tendering Parties in their absolute discretion.
2.11 If a Shareholder tenders more Euro Shares and/or US Dollar Shares than the balance of the number of Euro Shares and/or US Dollar Shares (as the case may be) held by the Shareholder, the tender will be treated as invalid. At the discretion of the Tendering Parties, however, the number of Euro Shares and/or US Dollar Shares tendered (as applicable) may be reduced to the balance of the relevant number of Euro Shares and/or US Dollar Shares (as applicable) held by the Shareholder and the tender treated as valid.
2.12 Should any fraction arise from any scaling back, the number of Shares accepted under the Tender Offer shall be rounded down to the nearest whole Share.
2.13 All questions as to the number of Shares tendered and the validity, form, eligibility (including the time of receipt) and acceptance of any tender of Shares will be determined by the Tendering Parties, in their sole discretion, which determination shall be final and binding on all parties (except as otherwise required under applicable law). The Tendering Parties reserve the absolute right to reject any and all tenders they determine not to be in the proper form or the acceptance of which may, in the opinion of the Tendering Parties, be unlawful or result in adverse or undesirable consequences for the Company or its Shares (including, but not limited to, any requirement to register the Company or its Shares under any law or with any securities regulatory authority of any State or other jurisdiction of the United States of America). The Tendering Parties also reserve the right to waive any of the terms and conditions of this Tender Offer either generally or in a particular case and any defect or irregularity in the tender of any particular Shares or any particular holder thereof. None of Registrar, the Tendering Parties, Carador or any other person will be obliged to give notice of any defects or irregularities in tenders and none of them will incur liability for failure to give any such notice.
2.14 The Tendering Parties reserve the right, subject to applicable law and regulatory requirements, to withdraw the Tender Offer, or reduce the maximum number or value of Shares to be purchased under the Tender Offer, at any time prior to publication of the results of the Tender Offer.
2.15 The failure by any person to receive a copy of this document or the Tender Form shall not invalidate any aspect of the Tender Offer. All documents and remittances delivered by, sent to or from any Shareholders will be delivered by or sent to or from them at their own risk. No acknowledgment of receipt of any Tender Form, communication or notice will be given by or on behalf of the Tendering Parties, Carador or the Registrar.
3. OVERSEAS SHAREHOLDERS
3.1 The making of the Tender Offer in, or to persons who are resident in, or citizens or nationals of, jurisdictions outside the United Kingdom or custodians, nominees or trustees for citizens, nationals or residents outside the United Kingdom may be prohibited or affected by the laws of the relevant overseas jurisdiction. No steps have been or will be taken to qualify the Tender Offer or to authorise the distribution of this document or any Tender Form in any jurisdiction outside the United Kingdom. No person receiving a copy of this document in any jurisdiction outside the United Kingdom may treat the same as constituting an invitation or offer to him or her, nor should he or she in any event use or permit the use of such Tender Form, unless in the relevant jurisdiction such an invitation or offer could lawfully be used without contravention of, or without any non-compliance with, any unfulfilled registration or other legal requirements. Accordingly, persons receiving a copy of this document or a Tender Form should not, in connection with such offer, distribute or send the same in or into any jurisdiction where to do so would or might contravene local securities laws or regulations.
3.2 A Shareholder (including any custodian, nominee or trustee) who is an Overseas Shareholder that wishes to take up the Tender Offer must inform and satisfy himself or herself as to the full observance of the laws of any relevant jurisdiction, including obtaining requisite governmental, exchange control or other consents, observing any other requisite formalities and paying any issue, transfer or other taxes or other requisite payments due in such jurisdiction. Any such Shareholder will be responsible for payment of any such transfer or other taxes or other requisite payments due by whomsoever payable, and Carador and the Tendering Parties and any person acting on their behalf shall be fully indemnified and held harmless by such Shareholder for any such transfer or other taxes or other requisite payments such person may be required to pay. In tendering, the person doing so warrants and represents to the Tendering Parties and Carador that the relevant offer or invitation may lawfully be made to him or her and that he or she has taken appropriate steps to satisfy himself or herself as described above. The Tendering Parties reserve the right to treat as invalid any Tender Form which the Tendering Parties, the Registrar or their agents believe may violate applicable legal or regulatory requirements.
3.3 This Tender Offer is not being made, and will not be made, directly or indirectly, in or into or by use of the mails of, or by any means or instrumentality (including without limitation, telephonically or electronically) of interstate or foreign commerce of, or any facility of a national securities exchange of, Australia, Canada, Japan or the United States of America and will not be capable of acceptance by any such use, means, instrumentality or facility from within Australia, Canada, Japan or the United States of America. Accordingly, neither this document nor the accompanying Tender Form is being or may be mailed or otherwise forwarded, distributed, or sent in, into or from Australia, Canada, Japan or the United States of America and persons receiving such documents (including custodians, nominees and trustees) must not distribute or send the same in, into or from Australia, Canada, Japan or the United States of America. Persons wishing to tender pursuant to the Tender Offer should not use such mails or any such means, instrumentality or facility for any purpose, directly or indirectly, relating to any tender under the Tender Offer. Doing so may invalidate any purported tender. Envelopes containing Tender Forms should not be postmarked in Australia, Canada, Japan or the United States of America or otherwise despatched from Australia, Canada, Japan or United States of America and all accepting Shareholders must provide addresses outside Australia, Canada, Japan or the United States of America for the remittance of cash or return of any documents.
3.4 A Shareholder will be deemed not to have tendered Shares pursuant to the Tender Offer if:
3.4.1 such Shareholder is unable to make the representations and warranties set out in paragraph 3.8 in this Part II;
3.4.2 such Shareholder completes Box 4 of the Tender Form with an address in any of Australia, Canada, Japan or the United States of America or has a registered address in any of Australia, Canada, Japan or the United States of America;
3.4.3 such Shareholder inserts in Box 4 of the Tender Form the name and address of a person or agent in any of Australia, Canada, Japan or the United States of America to whom he wishes the consideration to which such Shareholder is entitled under the Tender Offer to be sent;
3.4.4 the Tender Form received from such Shareholder is in an envelope postmarked in, or which otherwise appears to the Tendering Parties or its agents to have been sent from any of Australia, Canada, Japan or the United States of America.
3.5 The Tendering Parties reserve the right, in their absolute discretion, to investigate in relation to any tender, whether the representations and warranties referred to in paragraph 3.8 in this Part II given by any Shareholder are correct and, if such investigation is undertaken and, as a result, the Tendering Parties determine (for any reason) that such representation and warranty is not correct, such tender shall not be valid.
3.6 If, in connection with making the Tender Offer, notwithstanding the restrictions described above, any person (including, without limitation, custodians, nominees and trustees), whether pursuant to a contractual or legal obligation or otherwise, forwards this document, the Tender Form or any related documents in, into or from any of Australia, Canada, Japan or the United States of America, such person should:
3.6.1 inform the recipient of such fact;
3.6.2 explain to the recipient that such action may invalidate any purported tender by the recipient; and
3.6.3 draw the attention of the recipient to this section headed "Overseas Shareholders" in this Part II.
3.7 The Tendering Parties reserve the right to notify any matter, including the fact that the Tender Offer has been made, to all or any Shareholders:
3.7.1 who are Overseas Shareholders; or
3.7.2 whom the Tendering Parties know to be a custodian, trustee or nominee holding Shares for persons who are Overseas Shareholders,
by announcement or by paid advertisement in a daily national newspaper published and circulated in the United Kingdom (in which event such notice shall be deemed to have been sufficiently given, notwithstanding any failure by any such Shareholders to receive or see such notice) and all references in this document to notices or the provision of information in writing by or on behalf of the Tendering Parties shall be construed accordingly.
3.8 Each Shareholder by whom, or on whose behalf, a Tender Form is executed irrevocably undertakes, represents, warrants and agrees to and with the Tendering Parties, the Company and the Registrar (so as to bind him, his personal or legal representatives, heirs, successors and assigns) that such Shareholder:
3.8.1 is not an Overseas Shareholder;
3.8.2 does not hold any Shares which he has tendered on behalf of an Overseas Shareholder;
3.8.3 has not received or sent copies or originals of this document, the Tender Form or any related document in, into or from any of Australia, Canada, Japan or the United States of America;
3.8.4 is tendering Shares pursuant to the Tender Offer from outside Australia, Canada, Japan or the United States of America;
3.8.5 is not an agent or a fiduciary acting on a non-discretionary basis for the principal who has given any instructions with respect to the Tender Offer from within any of Australia, Canada, Japan or the United States of America;
3.8.6 has not received this document or the accompanying Tender Form relating to the Tender Offer, and has not otherwise utilised in connection with the Tender Offer, directly or indirectly, the mails of or any means or instrumentality (including, without limitation, telephonically or electronically) of interstate or foreign commerce of, or any facility of a national securities exchange of, any of Australia, Canada, Japan or the United States of America, or into any other jurisdictions if to do so would constitute a violation of the relevant laws and regulations in such jurisdictions;
3.8.7 acknowledges that any Tender Form received from an Overseas Shareholder, or from a person acting for, of for the account of benefit of, an Overseas Shareholder, or that otherwise appears to have been sent or submitted from Australia, Canada, Japan or the United States of America, will be rejected as invalid and will be treated as stated in this section headed "Overseas Shareholders" in Part II of this document;
3.8.8 acknowledges that the Shares have not been, and will not be, registered under the US Securities Act 1933 or under any relevant securities laws of any state or territory, or other jurisdiction of the United States of America and may not be, offered, sold, resold, delivered or distributed, directly or indirectly, in or into the United States of America, or for the account or benefit of, any US Person, and that the Shares has not been and will not be registered under the US Investment Company Act and Shareholders have not been and will not be, entitled to the benefits of the US Investment Company Act;
3.8.9 wishes to participate in the Tender Offer on the conditions set out in this document; and
3.8.10 has read and understood this section headed "Overseas Shareholders" in Part II of this document.
3.9 References in this section "Overseas Shareholders" in this Part II to a Shareholder shall include the person or persons executing a Tender Form and, in the event of more than one person executing a Tender Form, the provisions of this section shall apply to them jointly and to each of them.
3.10 The provisions in this section "Overseas Shareholder" and/or any terms of the Tender Offer relating to Overseas Shareholders may be waived, varied or modified as regards a specific Shareholder or on a general basis by the Tendering Parties in their absolute discretion but only if the Tendering Parties are satisfied that such waiver, variation or modification will not constitute or give rise to a breach of applicable securities or other laws.
3.11 Overseas Shareholders should inform themselves about and observe any applicable legal or regulatory requirements. If you are in any doubt about your position you should consult your professional adviser in the relevant jurisdiction.
3.12 The provisions of this section headed "Overseas Shareholders" supersede any terms of the Tender Offer inconsistent herewith.
4. PROCEDURE FOR TENDERING
4.1 Shareholders who wish to tender all or part of their holding of Shares should complete and sign the Tender Form in accordance with the instructions printed thereon, indicating the number of Shares tendered at the US Dollar Tender Price and/or the Euro Tender Price and return it in accordance with instructions printed thereon.
4.2 In respect of tendered Shares that are held in certificated form, Share Certificate(s) relating to such tendered Shares must also be returned to the Registrar at the same time as the completed Tender Form is submitted.
4.3 For tendered Shares that are held in uncertificated form, a TTE settlement instruction against ComputerShare Investor Services (for US Dollar Shares, receiving agent identification "RA72" and member account "TENDERU" and, for Euro Shares, receiving agent identification "RA73" and member account "TENDERE") in respect of such tendered Shares must also be submitted through CREST by 5.00 p.m. on the Closing Date.
4.4 After a Tender Form and Share Certificate(s) or a TTE settlement instruction have been submitted, a Shareholder will be unable to access or otherwise deal in the Shares for which a tender has been made, pending completion of the Tender Offer. Shares will be held in escrow subject to the completion of the Tender Offer.
4.5 After the completion of the Tender Offer, Shareholders who hold Shares in certificated form, and who have participated in the Tender Offer, will receive a replacement Share Certificate in respect of the balance of any remaining Shares. Replacement Share Certificates are expected to be despatched on or around 21 May 2010.
4.6 The Registrar will effect such procedures as are required to transfer your tendered Shares to the Tendering Parties under the Tender Offer.
5. SETTLEMENT
5.1 The result of the Tender Offer and (if applicable) the extent to which tenders will be scaled back are expected to be published on or around 13 May 2010.
5.2 Proceeds in respect of any Shares sold under the Tender Offer will be paid by cheque, to be despatched on or around 21 May 2010. All cheques will be sent at the risk of Shareholders.
5.3 In the case of joint holders of Shares, all Tender Offer proceeds will be paid to the Shareholder whose name stands first in the register of Shareholders.
5.4 Uncertificated Shares sold under the Tender Offer will be debited from CREST accounts on or around 21 May 2010.
5.5 Fractions of a Euro cent or a US Dollar cent arising as a result of any scaling back will be rounded down to the nearest whole Euro cent or US Dollar cent (as the case may be).
5.6 All payments in respect of Shares sold under the Tender Offer are expected to be made in the currency of the Shares being sold and are expected to be drawn on a branch of an Irish clearing bank.
6. CUSTODIANS, NOMINEES AND TRUSTEES
6.1 Custodians, nominees and trustees who hold Shares for the account of others, should not notify or distribute this document or the Tender Form to the respective beneficial owners of such Shares where such beneficial owner is resident in, or citizens or nationals of, Australia, Canada, Japan or the United States of America.
6.2 Beneficial owners whose holdings are registered in the name of a custodian, trustee or nominee will not receive this document or a Tender Form. Acceptance must instead be made in accordance with instructions from the relevant custodian, nominee or trustee.
6.3 The attention of custodians, nominees and trustees is drawn to the provisions of this Part II headed "Overseas Shareholders".
PART III
DEFINITIONS
The following definitions apply throughout this document and the Tender Form, as appropriate, unless the context requires otherwise:
| "Business Day" | any day other than a Saturday, Sunday or public holiday in England or Wales or Ireland |
| "Carador" or the "Company" | a closed-end investment company with variable capital incorporated with limited liability under the laws of Ireland with registered number 415764 |
| "Closing Date" | 5.00 p.m. on 11 May 2010 |
| "CREST" | the computerised settlement system to facilitate the transfer of title to Shares held in uncertificated form operated by Euroclear UK & Ireland Limited |
| "Euro Shares" | the Euro denominated Shares of no par value in the capital of the Company |
| "Euro Tender Price" | the price at which the Tendering Parties will purchase the Euro Shares pursuant to the Tender Offer, which is €0.37 per Euro Share |
| "Euro", "Euro cent" or "€" " | the currency of the member states of the European Union |
| "GESSF" | GSO Capital Partners Employee Side by Side Fund LLC, a vehicle established in Delaware through which employees of GSO Capital Partners International LLP and its affiliates can invest in GSO-managed investment funds and other vehicles, including Carador |
| "Manager" | GSO Capital Partners International LLP |
| "NAV" | net asset value |
| "Overseas Shareholders" | a Shareholder who is a resident in, or a citizen of, a jurisdiction outside the United Kingdom |
| "Record Date" | 5.00 p.m. on 11 May 2010 |
| "Register" | the register of members of Carador |
| "Registrar" | Computershare Investor Services (Ireland) Limited, the receiving agent in respect of the Tender Offer having its registered office at Herron House, Corrig Road, Sandyford Industrial Estate, Dublin 18, Ireland |
| "Shareholders" | holders of Shares |
| "Shares" | the US Dollar Shares and/or the Euro Shares, as the case may be |
| "Tender Form" | the tender form accompanying this document for use by Shareholders in connection with the Tender Offer |
| "Tendering Parties", "our", "us" or "we" | GESSF and Miguel Ramos-Fuentenebro |
| "Tender Offer Circular" | this document containing the letter from the Tendering Parties, the terms and conditions of the Tender Offer, and definitions |
| "Tender Offer" | the invitation by the Tendering Parties to Shareholders (other than certain Overseas Shareholders) to tender Shares on the terms and subject to the conditions set out in this document and in the Tender Form |
| "United Kingdom" or "UK" | the United Kingdom of Great Britain and Northern Ireland |
| "US Dollar Shares" | the US Dollar denominated Shares of no par value in the capital of the Company |
| "US Dollar Tender Price" | the price at which the Tendering Parties will purchase the US Dollar Shares pursuant to the Tender Offer, which is $0.50 per US Dollar Share |
| "US Dollars", "US cent", "$" or "c" | the currency of the United States of America |
| "US Investment Company Act" | the US Investment Company Act of 1940, as amended |
| "US Person" | as defined in Regulation S of the US Securities Act |
| "US Securities Act" | the US Securities Act of 1933, as amended |
References in this document are to London time, unless otherwise stated.
END NOTES
(*) Source: Citigroup Global Markets, Global Securitized Products Strategy, 12 March 2010
(**) Refer to Monthly Reports for November 2009, December 2009 and January 2010.