Hewett's Island CLO III, Ltd. Hewett's Island CLO III Corporation

Transcription

1 Hewett's Island CLO III, Ltd. Hewett's Island CLO III Corporation U.S.$321,500,000 Class A-1 Senior Secured Notes Due August, 2017 U.S.$14,800,000 Class A-2 Senior Secured Notes Due August, 2017 U.S.$12,700,000 Class B-1 Deferrable Amortizing Senior Secured Notes Due August, 2017 U.S.$14,800,000 Class B-2 Deferrable Senior Secured Notes Due August, 2017 U.S.$14,800,000 Class C Deferrable Secured Notes Due August, 2017 U.S.$14,800,000 Class D Deferrable Subordinated Secured Notes Due August, ,600 Preference Shares with an Aggregate Liquidation Preference of U.S.$29,600,000 Backed Primarily by a Diversified Portfolio of Bank Loans Managed by CypressTree Investment Management Company, Inc. Hewett's Island CLO III, Ltd. (the "Issuer") and Hewett's Island CLO III Corporation (the "Co-Issuer" and, together with the Issuer, the "Co-Issuers"), will issue U.S.$321,500,000 Class A-1 Senior Secured Notes Due August, 2017 (the "Class A-1 Notes"), U.S.$14,800,000 Class A-2 Senior Secured Notes Due August, 2017 (the "Class A-2 Notes" and, together with the Class A-1 Notes, the "Senior Notes" or the "Class A Notes"), U.S.$12,700,000 Class B-1 Deferrable Amortizing Senior Secured Notes Due August, 2017 (the "Class B-1 Notes"), U.S.$14,800,000 Class B-2 Deferrable Senior Secured Notes Due August, 2017 (the "Class B-2 Notes" and, together with the Class B-1 Notes, the "Class B Notes") and U.S.$14,800,000 Class C Deferrable Secured Notes Due August, 2017 (the "Class C Notes" and, together with the Senior Notes and the Class B Notes, the "Co-Issued Notes"). The Issuer will issue continued on next page Application has been made to the Irish Financial Services Regulatory Authority, as competent authority under Directive 2003/71/EC, for the prospectus to be approved. Application has been made to the Irish Stock Exchange for the Notes to be admitted to the Official List and trading on its regulated market. There can be no assurance that such approval or admission will be granted. This Offering Memorandum (the "Offering Memorandum), dated April 26, 2006, relates to the listing of the Notes, is in compliance with the requirement of the Prospective Directive, and constitutes a Prospectus. The "Prospectus Directive" refers to Directive 2003/71/EC of the European Parliament and of the Council of November, on the prospectus to be published when securities are offered to the public or admitted to trading. See "Risk Factors" beginning on page 15 in this Offering Memorandum for a discussion of some of the factors that should be considered by prospective investors in evaluating an investment in the Notes and the Preference Shares. THE SOURCE OF REPAYMENT OF THE OFFERED SECURITIES WILL BE THE ASSETS OF THE ISSUER THAT SECURE THE NOTES. THE OFFERED SECURITIES DO NOT REPRESENT AN INTEREST IN OR OBLIGATIONS OF, AND ARE NOT INSURED OR GUARANTEED BY, THE TRUSTEE, THE COLLATERAL MANAGER, THE COLLATERAL ADMINISTRATOR, THE PREFERENCE SHARE PAYING AGENT, THE PLACEMENT AGENTS OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE OFFERED SECURITIES NOR THE RELATED COLLATERAL IS INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY. The Notes are being offered by BSG Markets LLC ("BSGM") and SG Americas Securities, LLC (collectively with BSGM, the "Placement Agents"), subject to prior sale, when, as and if issued. The Placement Agents reserve the right to withdraw, cancel or modify such offer and to reject orders in whole or in part. The Preference Shares will be issued by the Issuer in individually negotiated transactions at varying prices to be determined in each case at the time of sale. It is expected that the Offered Securities will be delivered on or about August 9, 2005 (such date of delivery, the "Closing Date"), in the case of the Notes and the Regulation S Global Preference Shares, through the facilities of The Depository Trust Company ("DTC") and, in the case of the Restricted Preference Shares, in New York, New York against payment therefor in immediately available funds. APPROVAL OF THE FINANCIAL REGULATOR (IFSRA) RELATES ONLY TO THE NOTES WHICH ARE TO BE ADMITTED TO TRADING ON THE REGULATED MARKET OF THE IRISH STOCK EXCHANGE OR OTHER REGULATED MARKETS FOR THE PURPOSES OF DIRECTIVE 93/22/EEC OR WHICH ARE TO BE OFFERED TO THE PUBLIC IN ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA. BroadStreet Group LLC SG Corporate & Investment Banking Dated April 26, 2006

2 continued from prior page (a) U.S.$14,800,000 Class D Deferrable Subordinated Secured Notes Due August, 2017 (the "Class D Notes, " and, together with the Co-Issued Notes, the "Notes"), (b) 29,600 Preference Shares with an aggregate liquidation preference of U.S.$29,600,000 (the "Preference Shares" and, together with the Notes, the "Offered Securities"). The Notes will be issued and secured pursuant to an Indenture dated as of August 9, 2005 (the "Indenture") among the Issuer, the Co-Issuer and Deutsche Bank Trust Company Americas, as trustee (the "Trustee"). It is a condition to the issuance of the Offered Securities that the Class A-1 Notes be rated Aaa by Moody's Investors Service, Inc. ("Moody's") and AAA by Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P" or "Standard & Poor's" and, together with Moody's, the "Rating Agencies"), that the Class A-2 Notes be rated at least Aa2 by Moody's and at least AA by S&P, that the Class B-1 Notes be rated at least A1 by Moody's and at least A+ by S&P, that the Class B-2 Notes be rated at least A2 by Moody's and at least A by S&P, that the Class C Notes be rated at least Baa2 by Moody's and at least BBB by S&P, that the Class D Notes be rated at least Ba2 by Moody's and at least BB by S&P. The Preference Shares will not be rated. See "Ratings of the Notes." THE OFFERED SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND NEITHER OF THE CO-ISSUERS WILL BE REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "INVESTMENT COMPANY ACT"). THE OFFERED SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS SUCH TERMS ARE DEFINED UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. ACCORDINGLY, THE OFFERED SECURITIES ARE BEING OFFERED HEREBY ONLY (A) TO QUALIFIED PURCHASERS (AS DEFINED HEREIN) THAT ARE (X) "QUALIFIED INSTITUTIONAL BUYERS" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT ("RULE 144A")) OR (Y) IN THE CASE OF PREFERENCE SHARES, EITHER QUALIFIED INSTITUTIONAL BUYERS OR PERSONS ACQUIRING SUCH PREFERENCE SHARES PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S UNDER THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE ISSUER, THE PREFERENCE SHARE PAYING AGENT, THE PREFERENCE SHARE TRANSFER AGENT AND THE SHARE REGISTRAR MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT) AND (B) TO CERTAIN NON-U.S. PERSONS OUTSIDE THE UNITED STATES IN RELIANCE ON REGULATION S UNDER THE SECURITIES ACT. IN EACH CASE, PURCHASERS AND SUBSEQUENT TRANSFEREES OF OFFERED SECURITIES WILL BE REQUIRED TO EXECUTE AND DELIVER A LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS OR WILL BE DEEMED TO HAVE MADE SUCH REPRESENTATIONS AND AGREEMENTS. FOR CERTAIN RESTRICTIONS ON RESALES, SEE "TRANSFER RESTRICTIONS" HEREIN. THIS OFFERING MEMORANDUM SUPERSEDES IN ALL RESPECTS ALL EARLIER DATED OFFERING MATERIALS. NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE ISSUER, THE CO-ISSUER, THE COLLATERAL MANAGER, THE TRUSTEE, THE COLLATERAL ADMINISTRATOR, THE PREFERENCE SHARE PAYING AGENT OR THE PLACEMENT AGENTS. -ii-

3 NEITHER THE DELIVERY OF THIS OFFERING MEMORANDUM NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER OR THE CO-ISSUER OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE AS OF WHICH SUCH INFORMATION IS GIVEN HEREIN. THE CO-ISSUERS AND THE PLACEMENT AGENTS RESERVE THE RIGHT, FOR ANY REASON, TO REJECT ANY OFFER TO PURCHASE IN WHOLE OR IN PART, TO ALLOT TO ANY OFFEREE LESS THAN THE FULL AMOUNT OF OFFERED SECURITIES SOUGHT BY SUCH OFFEREE OR TO SELL LESS THAN THE AGGREGATE STATED PRINCIPAL AMOUNT OF ANY CLASS OF NOTES OR TO SELL LESS THAN THE AGGREGATE NUMBER OF PREFERENCE SHARES. The Co-Issued Notes are direct, limited recourse obligations of the Issuers and the Class D Notes are direct limited recourse obligations of the Issuer, payable solely out of the Collateral to the extent described herein and will not represent interests in, represent recourse to or be obligations of holders of the Preference Shares or any other person or entity and will not be guaranteed by any person. The interests of the holders of the Notes (the "Noteholders"), the obligations of the Co-Issuers in respect of the Co-Issued Notes and the obligations of the Issuer in respect of the Class D Notes will be limited to payments received from the Collateral and available for distribution to the Noteholders pursuant to the terms of the Indenture. The Preference Shares are part of the share capital of the Issuer and are not secured by the Collateral or any other assets of the Issuer under the Indenture. Except with respect to information relating to the Collateral Manager in the section entitled "The Collateral Manager" (other than the information contained under the heading "General" in such section), the Co- Issuers accept responsibility for the information contained in this Offering Memorandum and to the best of the knowledge and belief of the Co-Issuers the information contained in this Offering Memorandum is in accordance with the facts and does not omit anything likely to affect the import of such information. The information relating to the Collateral Manager in the section entitled "The Collateral Manager" (other than the information contained under the heading "General" in such section) has been accurately reproduced from written information provided by the Collateral Manager. Except with respect to the information herein relating to the Collateral Manager in the section entitled "The Collateral Manager" (other than the information contained under the heading "General" in such section), for which the Collateral Manager accepts responsibility and to the best of the knowledge and belief of the Collateral Manager the information contained in such section is in accordance with the facts and does not omit anything likely to affect the import of such information, the Collateral Manager makes no representation or warranty as to, and assumes no responsibility for, the accuracy or completeness of the information contained herein. Neither of the Placement Agents nor any of their affiliates has independently verified, makes any representation or warranty as to, or assumes any responsibility for, the accuracy or completeness of the information contained herein. Nothing contained in this Offering Memorandum is or should be relied upon as a promise or representation as to future results or events. Neither the Trustee, the Collateral Administrator, nor the Preference Share Paying Agent has participated in the preparation of this Offering Memorandum, and none of them assumes any responsibility for its contents. This Offering Memorandum contains summaries of certain documents. The summaries are not intended to be exhaustive and are qualified in their entirety by reference to such documents. Requests and inquiries regarding this Offering Memorandum or such documents should be directed to the Co-Issuers, in care of the Collateral Manager. The Co-Issuers will make available to any offeree of the Offered Securities, prior to the issuance thereof, the opportunity to ask questions of and to receive answers from the Co-Issuers or a person acting on their behalf concerning the terms and conditions of the offering of the Offered Securities, the Co-Issuers or any other relevant matters and to obtain any additional information to the extent the Co-Issuers possess such information or can obtain it without unreasonable expense. Although the Placement Agents may from time to time make a market in the Offered Securities, they are under no obligation to do so. In the event that either Placement Agent commences any market-making, it may discontinue the same at any time. It is unlikely that a secondary market for any of the Offered -iii-

4 Securities will develop or, if a secondary market does develop, that it will provide the holders of the Offered Securities with liquidity of investment or that it will continue for the life of the Offered Securities. BroadStreet Group LLC is the parent of, and the marketing name for corporate and investment banking businesses of, BSG Markets LLC. SG Corporate & Investment Banking is a marketing name for corporate and investment banking businesses of Société Générale and its subsidiaries worldwide. Securities, financial advisory and other investment banking activities are performed by SG Americas Securities, LLC and its broker-dealer affiliates, and lending, derivatives and other commercial banking activities are performed by Société Générale and its banking affiliates. SG Corporate & Investment Banking deal team members may be employees of any of the foregoing entities. Notwithstanding anything to the contrary contained in this Offering Memorandum, all persons (and each employee, representative or other agent of such persons) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of (i) the Co-Issuers and (ii) any of their transactions, and all materials of any kind (including opinions or other tax analyses) relating to such tax treatment and tax structure. THIS OFFERING MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY (A) ANY SECURITIES OTHER THAN THE OFFERED SECURITIES OR (B) ANY OFFERED SECURITIES IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. THE DISTRIBUTION OF THIS OFFERING MEMORANDUM AND THE OFFERING OF THE OFFERED SECURITIES IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY LAW. PERSONS INTO WHOSE POSSESSION THIS OFFERING MEMORANDUM COMES ARE REQUIRED BY THE CO-ISSUERS, THE COLLATERAL MANAGER AND THE PLACEMENT AGENTS TO INFORM THEMSELVES ABOUT, AND TO OBSERVE, ANY SUCH RESTRICTIONS. CERTAIN RESTRICTIONS ON THE DISTRIBUTION OF THIS OFFERING MEMORANDUM AND THE OFFER AND SALE OF OFFERED SECURITIES IN THE UNITED STATES, THE CAYMAN ISLANDS, THE UNITED KINGDOM AND OTHER JURISDICTIONS ARE SUMMARIZED UNDER "PLAN OF DISTRIBUTION." NOTICE TO NEW HAMPSHIRE RESIDENTS NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. THIS OFFERING MEMORANDUM IS FOR INFORMATION PURPOSES ONLY AND SHOULD NOT BE VIEWED AS THE SOLE BASIS FOR AN INVESTMENT DECISION. IN MAKING AN INVESTMENT DECISION, PROSPECTIVE INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE CO- ISSUERS AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF AN INVESTMENT IN THE OFFERED SECURITIES FOR AN INDEFINITE PERIOD OF TIME. -iv-

5 THE CONTENTS OF THIS OFFERING MEMORANDUM ARE NOT TO BE CONSTRUED AS LEGAL, BUSINESS OR TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN ATTORNEY, BUSINESS ADVISOR AND TAX ADVISOR AS TO LEGAL, BUSINESS AND TAX MATTERS. NONE OF THE CO-ISSUERS, THE PLACEMENT AGENTS, THE COLLATERAL MANAGER, THE TRUSTEE, THE COLLATERAL ADMINISTRATOR OR THE PREFERENCE SHARE PAYING AGENT MAKES ANY REPRESENTATION TO ANY OFFEREE OR PURCHASER OF OFFERED SECURITIES REGARDING THE LEGALITY OF INVESTMENT THEREIN BY SUCH OFFEREE OR PURCHASER UNDER APPLICABLE LEGAL INVESTMENT OR SIMILAR LAWS OR REGULATIONS OR THE PROPER CLASSIFICATION OF SUCH AN INVESTMENT THEREUNDER. No invitation may be made to the public in the Cayman Islands to subscribe for any of the Offered Securities. In this Offering Memorandum, references to "U.S. Dollars," "Dollars" and "U.S.$" are to United States dollars. NOTICE TO CONNECTICUT RESIDENTS THE OFFERED SECURITIES HAVE NOT BEEN REGISTERED UNDER THE CONNECTICUT SECURITIES LAW. THE RELEVANT SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND SALE. NOTICE TO FLORIDA RESIDENTS THE OFFERED SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER SECTION OF THE FLORIDA SECURITIES ACT (THE "FLORIDA ACT") AND HAVE NOT BEEN REGISTERED UNDER THE FLORIDA ACT IN THE STATE OF FLORIDA. FLORIDA RESIDENTS WHO ARE NOT INSTITUTIONAL INVESTORS DESCRIBED IN SECTION (7) OF THE FLORIDA ACT HAVE THE RIGHT TO VOID THEIR PURCHASES OF THE OFFERED SECURITIES WITHOUT PENALTY WITHIN THREE DAYS AFTER THE FIRST TENDER OF CONSIDERATION. NOTICE TO GEORGIA RESIDENTS THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13) OF CODE SECTION OF THE GEORGIA SECURITIES ACT OF 1973, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT. NOTICE TO RESIDENTS OF THE UNITED KINGDOM THE OFFERED SECURITIES MAY NOT BE OFFERED OR SOLD TO PERSONS IN THE UNITED KINGDOM EXCEPT TO PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING OR DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSE OF THEIR BUSINESS OR OTHERWISE IN CIRCUMSTANCES THAT WILL NOT RESULT IN AN OFFER TO THE PUBLIC IN THE UNITED KINGDOM WITHIN THE MEANING OF THE PUBLIC OFFERS OF SECURITIES REGULATIONS 1995 OR THE FINANCIAL SERVICES AND MARKETS ACT THIS OFFERING MEMORANDUM AND ANY OTHER DOCUMENT IN CONNECTION WITH THE OFFERING AND ISSUANCE OF THE SECURITIES MAY BE ISSUED OR PASSED ON ONLY TO A PERSON WHO IS OF A KIND DESCRIBED IN ARTICLE 11(3) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (INVESTMENT ADVERTISEMENTS) (EXEMPTIONS) ORDER 1995 (AS AMENDED) OR IS A PERSON TO WHOM THIS OFFERING MEMORANDUM OR ANY OTHER SUCH DOCUMENT MAY OTHERWISE LAWFULLY BE ISSUED OR PASSED ON. -v-

6 NOTICE TO RESIDENTS OF GERMANY THE SECURITIES WILL NOT BE OFFERED OR SOLD IN THE FEDERAL REPUBLIC OF GERMANY OTHER THAN IN ACCORDANCE WITH THE GERMAN SECURITIES SALES PROSPECTUS ACT OF DECEMBER 13, 1990 OF THE FEDERAL REPUBLIC OF GERMANY, AS AMENDED (WERTPAPIERVERKAUFSPROSPEKTGESETZ), THE GERMAN INVESTMENT ACT OF DECEMBER 15, 2003 OF THE FEDERAL REPUBLIC OF GERMANY, AS AMENDED (INVESTMENTGESETZ) AND ANY OTHER LEGAL OR REGULATORY REQUIREMENTS APPLICABLE IN THE FEDERAL REPUBLIC OF GERMANY GOVERNING THE ISSUE, OFFER AND SALE OF SECURITIES. UPON THE REQUEST OF A GERMAN INVESTOR (IF SUCH INVESTOR AGREES TO PAY THE RELATED COSTS), THE ISSUER WILL (I) MAKE AVAILABLE TO THE GERMAN INVESTORS THE INFORMATION REQUIRED PURSUANT TO 5 (1) SENTENCE 1 NOS. 1 AND 2 IN CONNECTION WITH SENTENCE 2, 5 (1) SENTENCE 1 NO. 4 AND 5 (3) SENTENCE 1 OF THE INVESTMENTSTEUERGESETZ (THE "GERMAN INVESTMENT TAX ACT"), (II) FURNISH TO THE GERMAN FEDERAL TAX OFFICE (BUNDESAMT FÜR FINANZEN) UPON ITS REQUEST WITHIN THREE MONTHS PROOF OF THE CORRECTNESS OF THE INFORMATION REFERRED TO UNDER CLAUSE (I) ABOVE IN ACCORDANCE WITH 5 (1) SENTENCE 1 NO. 5 OF THE GERMAN INVESTMENT TAX ACT AND (III) MAKE THE PUBLICATION IN THE ELECTRONIC EDITION OF THE FEDERAL GAZETTE (ELEKTRONISCHER BUNDESANZEIGER) REQUIRED PURSUANT TO 5 (1) SENTENCE 1 NO. 3 OF THE GERMAN INVESTMENT TAX ACT IN THE GERMAN LANGUAGE. ALL PROSPECTIVE GERMAN INVESTORS ARE URGED TO SEEK INDEPENDENT TAX ADVICE. THE PLACEMENT AGENTS DO NOT GIVE TAX ADVICE. AVAILABLE INFORMATION This Offering Memorandum contains summaries of certain documents. The summaries do not purport to be complete and are qualified in their entirety by reference to such documents, copies of which will be made available to offerees upon request. Requests and inquires regarding this Offering Memorandum and such documents should be directed to BSG Markets LLC, 712 Fifth Avenue, 24 th Floor, New York, New York 10019, Attention: Operations Hewett's Island CLO III or SG Americas Securities, LLC, 1221 Avenue of the Americas, New York, New York 10020, Attention: CDO Group Hewett's Island CLO III. To permit compliance with Rule 144A under the Securities Act in connection with the resale of the Offered Securities, the Co-Issuers will agree to furnish upon request of a holder of an Offered Security, to such holder or any prospective purchaser designated by such holder, the information required to be delivered under Rule 144A(d)(4) under the Securities Act if at the time of the request the Co-Issuers are not reporting companies under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or are not exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act. It is not contemplated that either of the Co-Issuers will be such a reporting company or so exempt. INFORMATION AS TO SALE OR PLACEMENT WITHIN THE UNITED STATES This Offering Memorandum is highly confidential and has been prepared by the Co-Issuers solely for use in connection with this offering. This Offering Memorandum is personal to each offeree to whom it has been delivered by the Co-Issuers, the Placement Agents, or affiliates thereof and does not constitute an offer to any other person or to the public generally to subscribe for or otherwise acquire the Offered Securities. Distribution of this Offering Memorandum to any persons other than the offeree and those persons, if any, retained to advise such offeree with respect thereto is unauthorized and any disclosure of any of its contents, without the prior written consent of the Co-Issuers, is prohibited. Each prospective purchaser in the United States, by accepting delivery of this Offering Memorandum, agrees to the foregoing and to make no copies of this Offering Memorandum or any documents related hereto and, if the offeree does not purchase Offered Securities or the offering is terminated, to return this Offering Memorandum and all documents attached hereto to: Deutsche Bank Trust Company Americas, 1761 East St. Andrew Place, Santa Ana, California 92705, Attention: CDO Business Unit Hewett's -vi-

7 Island CLO III or to BSG Markets LLC, 712 Fifth Avenue, 24 th Floor, New York, New York 10019, Attention: Operations Hewett's Island CLO III or to SG Americas Securities, LLC, 1221 Avenue of the Americas, New York, New York 10020, Attention: CDO Group Hewett's Island CLO III. FORWARD LOOKING STATEMENTS Any projections, forecasts and estimates contained herein are forward looking statements and are based upon certain assumptions that the Co-Issuers consider reasonable. Projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results. Accordingly, the projections are only an estimate. Actual results may vary from the projections, and the variations may be material. Some important factors that could cause actual results to differ materially from those in any forward looking statements include changes in interest rates, market, financial or legal uncertainties, differences in the actual allocation of the Debt Obligations among asset categories from those assumed, the timing of acquisitions of the Debt Obligations, the timing and frequency of defaults on the Debt Obligations, mismatches between the timing of accrual and receipt of Interest Proceeds and Principal Proceeds from the Debt Obligations (particularly during ramp up) and defaults under Debt Obligations and the effectiveness of the Hedge Agreements, among others. Consequently, the inclusion of projections herein should not be regarded as a representation by the Co-Issuers, the Collateral Manager, the Collateral Administrator, the Trustee, the Preference Share Paying Agent, the Placement Agents or any of their respective affiliates or any other person or entity of the results that will actually be achieved by the Issuer. None of the Co-Issuers, the Collateral Manager, the Collateral Administrator, the Placement Agents, the Trustee, the Preference Share Paying Agent, or any of their respective affiliates has any obligation to update or otherwise revise any projections, including any revisions to reflect changes in economic conditions or other circumstances arising after the date hereof or to reflect the occurrence of unanticipated events, even if the underlying assumptions do not come to fruition. -vii-

8 TABLE OF CONTENTS Page EXECUTIVE SUMMARY... 1 SUMMARY OF TERMS... 4 RISK FACTORS DESCRIPTION OF THE OFFERED SECURITIES STATUS AND RANKING INTEREST PRINCIPAL OPTIONAL REDEMPTION OF THE NOTES AND PREFERENCE SHARES TAX REDEMPTION OPTIONAL REDEMPTION AND TAX REDEMPTION PROCEDURES MANDATORY REDEMPTION SPECIAL REDEMPTION CANCELLATION PAYMENTS PRIORITY OF PAYMENTS INTEREST COVERAGE TESTS AND RATIOS OVERCOLLATERALIZATION TESTS AND RATIOS INTEREST DIVERSION TEST AND RATIO FORM, DENOMINATION, REGISTRATION AND TRANSFER OF THE OFFERED SECURITIES THE INDENTURE CERTAIN PARTICULARS OF THE PREFERENCE SHARES USE OF PROCEEDS RATINGS OF THE NOTES SECURITY FOR THE NOTES PURCHASE OF DEBT OBLIGATIONS DEBT OBLIGATIONS SYNTHETIC SECURITIES CONCENTRATION LIMITATIONS...62 COLLATERAL QUALITY TESTS DISPOSITIONS OF DEBT OBLIGATIONS ELIGIBILITY CRITERIA ACCOUNTS HEDGE AGREEMENTS viii-

9 MATURITY AND PREPAYMENT CONSIDERATIONS THE COLLATERAL MANAGER GENERAL CYPRESSTREE INVESTMENT MANAGEMENT COMPANY, INC INVESTMENT PHILOSOPHY KEY PERSONNEL THE MANAGEMENT AGREEMENT COMPENSATION REMOVAL THE COLLATERAL ADMINISTRATION AGREEMENT THE CO-ISSUERS CAPITALIZATION AND INDEBTEDNESS OF THE ISSUER INCOME TAX CONSIDERATIONS CIRCULAR 230 NOTICE IN GENERAL U.S. FEDERAL INCOME TAX CONSIDERATIONS TAX TREATMENT OF U.S. HOLDERS OF CO-ISSUED NOTES TAX TREATMENT OF U.S. HOLDERS OF PREFERENCE SHARES TAX TREATMENT OF NON-U.S. HOLDERS INFORMATION REPORTING AND BACKUP WITHHOLDING TAX SHELTER REPORTING REQUIREMENTS CAYMAN ISLANDS TAX CONSIDERATIONS ERISA CONSIDERATIONS PLAN OF DISTRIBUTION TRANSFER RESTRICTIONS LISTING AND GENERAL INFORMATION LEGAL MATTERS GLOSSARY OF CERTAIN DEFINITIONS INDEX OF DEFINED TERMS SCHEDULE A: MOODY'S LOSS SCENARIO MATRIX SCHEDULE B: PART II OF COLLATERAL MANAGER'S FORM ADV EXHIBIT A: FORM OF PURCHASER AND TRANSFEREE LETTER FOR REGULATION S GLOBAL PREFERENCE SHARES -ix-

10 EXECUTIVE SUMMARY This Executive Summary is qualified in its entirety by the detailed information appearing elsewhere in this Offering Memorandum and in the documents referred to herein. See "Risk Factors" for a discussion of certain factors that should be considered in connection with an investment in the Offered Securities. An index of defined terms appears at the back of this Offering Memorandum. Overview of the Co-Issuers The net proceeds from the offering of the Offered Securities will be used to, primarily, acquire a diverse portfolio of U.S. Dollar-denominated senior secured, senior unsecured and senior subordinated term bank loans and, to a limited extent, revolving bank loans and delayed draw loans, each made to borrowers organized under the laws of the United States and, to a limited extent, Permitted Non-U.S. Obligors, and participation interests therein, all of which is described in greater detail herein. The Co-Issued Notes will be issued by the Co-Issuers, and the Class D Notes and the Preference Shares will be issued by the Issuer. The Notes will be secured by the Collateral pursuant to the Indenture. The Issuer will not have any material assets other than the Collateral. The Co-Issuer will have no assets other than its nominal share capital and will have no debt other than as Co-Issuer of the Co-Issued Notes. Collateral Manager CypressTree Investment Management Company, Inc. (the "Collateral Manager") will perform certain management, administrative and advisory functions with respect to the Debt Obligations pursuant to the Management Agreement. Ramp-Up Completion Date The Issuer expects to purchase (or enter into binding commitments to purchase) at least U.S.$296,000,000 in aggregate Principal Balance plus Accrued Interest Purchased With Principal of Debt Obligations on or before the Closing Date and an additional approximately U.S.$104,000,000 in aggregate Principal Balance plus Accrued Interest Purchased With Principal of Debt Obligations within 120 days of the Closing Date. The ramp-up will end on the earlier of (i) such 120 th day after the Closing Date or (ii) an earlier date at the sole discretion of the Collateral Manager. Coverage Tests The Issuer will be required to maintain Interest Coverage Ratios and Overcollateralization Ratios, as specified below. If the Interest Coverage Test or Overcollateralization Test for any class of Notes other than the Class B-1 Notes is not satisfied in connection with any Distribution Date, Interest Proceeds and, to the extent Interest Proceeds are insufficient, Principal Proceeds available in accordance with the Priority of Payments under the Indenture will be applied to repay principal of the most senior class or classes of Notes then outstanding until each Coverage Test is satisfied. The Coverage Tests will be satisfied if the Interest Coverage Ratios and the Overcollateralization Ratios (as further described herein) are at least as follows: -1-

11 Test Required Level Interest Coverage Ratio for Senior Notes 130.0% Interest Coverage Ratio for Class B-2 Notes 120.0% Interest Coverage Ratio for Class C Notes 115.0% Interest Coverage Ratio for Class D Notes 110.0% Overcollateralization Ratio for Senior Notes 109.0% Overcollateralization Ratio for Class B % Notes Overcollateralization Ratio for Class C Notes 103.0% Overcollateralization Ratio for Class D Notes 100.5% The Overcollateralization Tests referred to above will not apply until on and after the Ramp-Up Completion Date. The Interest Coverage Tests referred to above will not apply until on and after the second Distribution Date. Interest Diversion Test The Issuer will also be required to meet an Interest Diversion Test during the Reinvestment Period. If the Interest Diversion Ratio falls below the required level, Interest Proceeds available in accordance with the Priority of Payments under the Indenture will be applied to purchase additional collateral until the Interest Diversion Test is satisfied. The required level will be 107.0%. The Interest Diversion Test referred to above will not apply until on and after the Ramp-Up Completion Date. Certain Limitations The composition of the portfolio of Debt Obligations will be subject to certain limitations on and after the Ramp-Up Completion Date, including but not limited to the following (expressed as a percentage of the Maximum Investment Amount at the time of investment): (1) High-Yield Bonds <5.0% (2) Fixed Rate Obligations <5.0% (3) Structured Finance Obligations provided, however that: Structured Finance Obligations with a rating from <5.0% <2.5% Moody's of "Ba1" or below or a rating from S&P of "BB+" or below; (4) Delayed Draw Loans Revolving Bank Loans <5.0% <5.0% (5) DIP Debt Obligations <5.0% (6) Debt Obligations that pay interest less frequently than semi-annually Debt Obligations that pay interest less frequently than quarterly <5.0% <10.0% (7) Deferrable Debt Obligations, Step-Up Coupons Securities or other obligations that do not pay cash interest on a current basis <5.00% -2-

12 (8) Bank Loans which are Senior Secured Loans or Synthetic Securities, the Reference Obligations of which are Bank Loans which are Senior Secured Loans, Cash or Eligible Investments (9) Bank Loans issued by any single issuer or any of its affiliates; provided, however, that Aggregate Bank Loans issued by each of five single issuers (and their respective affiliates) (10) Non-Bank Loans issued by any single issuer or any of its affiliates (11) Debt Obligations of Permitted Non-U.S. Obligors; provided, however that: Permitted Non-U.S. Obligor in a Group 2 Country Permitted Non-U.S. Obligor in a Group 3 Country >85.0% <1.75% <2.25% <1.00% <10.0% <5% <2.5% Permitted Non-U.S. Obligor in a Group 4 Country Individual Debt Obligations from a Group 3 <2.5% <1% Country Individual Debt Obligations from a Group 4 Country <1% (12) Debt Obligations which are (i) Participations or (ii) <20.0% Synthetic Securities; provided however, that Participations or Synthetic Securities with a common Participating Institution or Synthetic <10.0% Security Counterparty (13) Debt Obligations with attached Equity Securities <5.0% (14) Debt Obligations rated "Caa1" or below or <5.0% "CCC+" or below (15) Debt Obligations issued in an aggregate issuance of less than U.S.$75,000,000 (16) Debt Obligations issued by obligors in the same S&P Industry Classification; provided, however, that: <10.0% <8.0% Aggregate Debt Obligations issued by obligors in any one S&P Industry Classification Aggregate Debt Obligations issued by obligors in any two other S&P Industry Classifications (17) Senior Secured Second Lien Loans or senior unsecured loans in the aggregate (18) Senior Secured Second Lien Loans, senior unsecured loans, High-Yield Bonds or Structured Finance Obligations in the aggregate <12.0% <10.0% <10.0% <15.0% -3-

13 SUMMARY OF TERMS This Summary of Terms does not purport to be complete and is qualified in its entirety by reference to the detailed information appearing elsewhere in this Offering Memorandum and in the documents referred to herein. See Risk Factors for a discussion of certain factors that should be considered in connection with an investment in the Offered Securities. An index of defined terms appears at the back of this Offering Memorandum. Issuer:... Hewett's Island CLO III, Ltd. is a Cayman Islands exempted company incorporated with limited liability and existing for the purpose of acquiring and disposing of the Debt Obligations, issuing the Offered Securities and engaging in certain related transactions. As of the Closing Date and after giving effect to the issuance of the Issuer's ordinary shares, the capitalization of the Issuer will consist of the Notes, the Preference Shares and its 250 ordinary shares, par value U.S.$1.00 per share. The Issuer has no prior operating history other than as described herein and will not have any material assets other than the Collateral. Co-Issuer:... Hewett's Island CLO III Corporation is a Delaware corporation incorporated for the sole purpose of co-issuing the Co-Issued Notes. The Co-Issuer will have nominal capitalization only to the extent of its U.S.$250 share capital, has no prior operating history, will have no assets, and will have no debt other than as Co-Issuer of the Co- Issued Notes. Collateral Manager:... CypressTree Investment Management Company, Inc. Trustee:... Deutsche Bank Trust Company Americas. Preference Share Paying Agent:... Deutsche Bank Trust Company Americas. Collateral Administrator:... Deutsche Bank Trust Company Americas. Placement Agents:... BSG Markets LLC and SG Americas Securities, LLC. Securities Offered: Aggregate (U.S.$) Principal Amount/Number Rating Class (Moody's/S&P) Interest Rate U.S.$321,500,000 Class A-1 Notes Aaa/AAA LIBOR % U.S.$14,800,000 Class A-2 Notes Aa2/AA LIBOR U.S.$12,700,000 Class B-1 Notes A1/A+ LIBOR U.S.$14,800,000 Class B-2 Notes A2/A LIBOR U.S.$14,800,000 Class C Notes Baa2/BBB LIBOR U.S.$14,800,000 Class D Notes Ba2/BB LIBOR ,600 Preference Shares Not Rated N/A -4-

14 The Preference Shares will not have a stated rate of interest or principal balance. Each Preference Share will be entitled to distributions pursuant to the Priority of Payments. The Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes are referred to herein as the "Notes" and each of the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes are referred to herein as a "Class." The Notes together with the Preference Shares are referred to herein as the "Offered Securities." All of the Offered Securities will be issued on the Closing Date. Notwithstanding anything herein to the contrary, any or all Classes of Notes may be issued on the Closing Date bearing interest at a fixed rate. Ranking:... Distributions on the Class A-1 Notes rank senior to distributions on the other Offered Securities; distributions on the Class A-2 Notes rank senior to distributions on the Class B-1 Notes, the Class B-2 Notes, the Class C Notes, the Class D Notes and the Preference Shares; distributions on the Class B-1 Notes rank senior to distributions on the Class B-2 Notes, the Class C Notes, the Class D Notes and the Preference Shares; distributions on the Class B-2 Notes rank senior to distributions on the Class C Notes, the Class D Notes and the Preference Shares; distributions on the Class C Notes rank senior to payments on the Class D Notes and the Preference Shares; and distributions on the Class D Notes rank senior to payments on the Preference Shares. Distribution Dates:... February 9, May 9, August 9 and November 9 of each year (or, if any such day is not a Business Day, the next Business Day), commencing February Interest Payments:... Interest will accrue during each Interest Period on the outstanding principal amount of the Notes (determined in each case as of the first day of each Interest Period and after giving effect to any redemption or other payment of principal), and accrued and unpaid interest will be payable in U.S. Dollars in arrears on each Distribution Date. Each of the Class A-1 Notes, Class A-2 Notes, Class B-1 Notes, Class B-2 Notes, Class C Notes and Class D Notes will bear interest calculated on its aggregate outstanding principal amount, at a per annum floating rate (each, a "Floating Rate"), equal to the sum of LIBOR for the relevant period and the applicable margin specified above under " Securities Offered." Interest on the Floating Rate Notes will be computed on the basis of the actual number of days elapsed in the applicable Interest Period divided by 360. "LIBOR" with respect to any Interest Period will be established by the Trustee, as calculation agent (in such capacity, the "LIBOR Calculation Agent"), as described above under "Description of the Offered Securities Interest." With respect to the first Distribution Date, the Floating Rate Notes will accrue interest at a rate based on the LIBOR for the term of the -5-

15 first Interest Period, which is approximately 6 months and which will be calculated by interpolation. Any interest accrued on the Class B-1 Notes, the Class B-2 Notes, the Class C Notes and the Class D Notes (the "Deferred Interest Notes") that is not paid because funds are not available for that purpose under the Priority of Payments will be deferred (unless such class is the Controlling Class). Thereafter, interest will accrue on such deferred interest at the rate applicable to the relevant class until paid. The Preference Shares will not bear a stated rate of interest or dividends but will receive distributions on each Distribution Date from Interest Proceeds (and, after the Notes have been paid in full, from Principal Proceeds) if and to the extent funds are available for such purpose in accordance with the Priority of Payments. Maturity; Average Life:... The "Stated Maturity" of each Class of Notes is the Distribution Date in August The Notes will mature at the Stated Maturity, unless they have been fully redeemed or repaid prior thereto. The average lives of the Notes are expected to be less than the number of years until the Stated Maturity. Under certain assumptions described under "Maturity and Prepayment Considerations," including an assumed Optional Redemption on the Distribution Date in August, 2013 and without such redemption, the range of the average lives of each Class of Notes are expected to be as follows: -6- Expected Average Life Assuming an Optional Redemption in August, 2013 (in years) Assuming No Optional Redemption (in years) Class A A B B C D See "Description of the Offered Securities Optional Redemption of Offered Securities" and "Maturity and Prepayment Considerations." Principal Repayments on the Offered Securities:... No payments of principal (other than with respect to the Class B-1 Notes and the Class D Notes, as described herein) will be made on any Offered Security until all Offered Securities senior to it, if any, are paid in full. No principal payments will be made on the Notes (other than the Class B-1 Notes and the Class D Notes) until after the Reinvestment Period except in connection with (a) a failure to meet any of the Coverage Tests, (b) a Special Redemption, (c) an Optional Redemption, (d) a Mandatory Redemption caused by a Rating Confirmation Failure or (e) a Tax Redemption; provided that principal

16 on the Class D Notes will be payable from Interest Proceeds in accordance with the Priority of Payments. Principal on the Class B-1 Notes will be payable, first, from Interest Proceeds and, second, from Principal Proceeds to the extent not paid in full with Interest Proceeds in accordance with the Priority of Payments. No distributions on the Preference Shares will be made from Principal Proceeds unless the Notes have been redeemed in full. After the Reinvestment Period, the amount and frequency of principal payments on the Notes and distributions in respect of the Preference Shares from Principal Proceeds will depend upon, among other things, the amount and frequency of payments of principal and interest received with respect to the Debt Obligations as well as any sales resulting from defaults or other events. Non-Call Period:... The period from the Closing Date to (but not including) the August, 2009 Distribution Date (the "Non-Call Period"). Optional Redemption of the Notes:... On any Distribution Date after the Non-Call Period, the Notes may, subject to satisfaction of certain conditions described herein, be redeemed (in whole but not in part) by the Co-Issuers or the Issuer, as applicable, at the direction of (i) holders of two-thirds of the Preference Shares (including Preference Shares beneficially owned by the Collateral Manager, its principals, its employees and/or its affiliates or by any account for which the Collateral Manager or an affiliate of the Collateral Manager acts as investment adviser (and for which the Collateral Manager or such Affiliate has discretionary authority)) or (ii) the Collateral Manager unless a majority of the Preference Shares (including Preference Shares beneficially owned by the Collateral Manager, its principals, its employees and/or its affiliates or by any account for which the Collateral Manager or an affiliate of the Collateral Manager acts as investment adviser (and for which the Collateral Manager or such Affiliate has discretionary authority)) direct the Co-Issuers to refrain from such redemption. See "Description of the Offered Securities Optional Redemption of the Securities." Tax Redemption:... On any Distribution Date, the Notes may, subject to satisfaction of certain conditions described herein, be redeemed (in whole but not in part) by the Co-Issuers or the Issuer, as applicable, at the direction of holders of two-thirds of the Preference Shares, if a Withholding Tax Event occurs. See "Description of the Offered Securities Tax Redemption." Optional Redemption of the Preference Shares:... On any Distribution Date on or after payment in full of the Notes, at the direction of the holders of a majority of the Preference Shares, payments will be made by the Trustee to the Preference Share Paying Agent for distribution to the holders of the Preference Shares by way of redemption of their Preference Shares. See "Description of the Offered Securities Optional Redemption of the Securities." Special Redemption:... On any Distribution Date during the Reinvestment Period, the Notes may be redeemed in accordance with the Priority of Payments, in whole or in part by the Co-Issuers or the Issuer, as applicable, if the -7-

17 Collateral Manager elects to notify the Trustee that the Collateral Manager has been unable, for a period of 20 consecutive Business Days, to identify additional Debt Obligations that are deemed appropriate by the Collateral Manager in its sole discretion and which meet the criteria for reinvestment described under "Security for the Notes Eligibility Criteria." See "Description of the Offered Securities Special Redemption." Mandatory Redemption of the Notes:... On and after the Ramp-Up Completion Date, if any Overcollateralization Test is not satisfied on any Determination Date, the Notes will be subject to redemption to the extent necessary to satisfy such test and to the extent funds are available to be applied to redeem the Notes in accordance with the Priority of Payments on the related Distribution Date. On and after the second Distribution Date, if any Interest Coverage Test is not satisfied on any Determination Date, the Notes will be subject to redemption to the extent necessary to satisfy such test and to the extent funds are available to be applied to redeem the Notes in accordance with the Priority of Payments on the related Distribution Date. See "Description of the Offered Securities Mandatory Redemption" and " Priority of Payments." If the Co-Issuers are unable to obtain a Rating Confirmation from each Rating Agency (or from S&P only if the Collateral Quality Tests (other than the S&P CDO Monitor Test), the Coverage Tests and the Concentration Limitations are satisfied) by the 30th day following the Ramp-Up Completion Date (a "Rating Confirmation Failure"), the Notes will be subject to redemption on each successive Distribution Date to the extent necessary for each Rating Agency to confirm the ratings assigned by it on the Closing Date to the Notes and to the extent of funds available in accordance with the Priority of Payments. See "Description of the Offered Securities Mandatory Redemption" and " Priority of Payments." Coverage Tests and Ratios:... The Coverage Tests will be satisfied if the Interest Coverage Ratios and the Overcollateralization Ratios are at least as follows: Test Required Level Interest Coverage Ratio for Senior Notes 130.0% Interest Coverage Ratio for Class B-2 Notes 120.0% Interest Coverage Ratio for Class C Notes 115.0% Interest Coverage Ratio for Class D Notes 110.0% Overcollateralization Ratio for Senior Notes 109.0% Overcollateralization Ratio for Class B-2 Notes 106.0% Overcollateralization Ratio for Class C Notes 103.0% Overcollateralization Ratio for Class D Notes 100.5% See "Description of the Offered Securities Interest Coverage Tests and Ratios" and " Overcollateralization Tests and Ratios." Interest Diversion Test:... The Interest Diversion Test will be satisfied if the Interest Diversion Ratio is at least 107.0%. -8-

18 See "Description of the Offered Securities Interest Diversion Test." The Collateral Manager:... As Collateral Manager, CypressTree Investment Management Company, Inc. will perform certain management, administrative and advisory functions for the Issuer with respect to the Debt Obligations pursuant to the Management Agreement. See "The Collateral Manager." Indenture:... The Notes will be issued and secured pursuant to an Indenture dated as of August 9, 2005 (the "Indenture") among the Issuer, the Co- Issuer and the Trustee. Preference Share Documents:... The terms of the Preference Shares will be set out in the Issuer's memorandum of association and articles of association, as amended (the "Memorandum and Articles of Association") and board resolutions of the Issuer. The Preference Shares will be issued in accordance with a Preference Share Paying and Transfer Agency Agreement, dated as of the Closing Date (the "Preference Share Paying and Transfer Agency Agreement"), among the Issuer, Deutsche Bank Trust Company Americas, as preference share paying agent and preference share transfer agent (in such capacities, the "Preference Share Paying Agent" and "Preference Share Transfer Agent," respectively) and Maples Finance Limited as preference share registrar (the "Share Registrar"). Amounts available for distribution to the Preference Shares will be distributed pursuant to the terms of the Indenture, the Issuer's Memorandum and Articles of Association and in accordance with the Preference Share Paying and Transfer Agency Agreement. Legal Provisions Applicable to Distributions on the Preference Shares:... Any amounts paid by the Preference Share Paying Agent as distributions by way of dividend on the Preference Shares pursuant to the Preference Share Documents will be payable out of distributable profits of the Issuer and/or out of the Issuer's share premium account. In addition, such distributions and the final payment of amounts distributable upon redemption of the Preference Shares will be payable only to the extent that the Issuer is and will remain solvent (which term, when used in this context throughout this document, shall mean able to pay its debts as they fall due in the ordinary course of business) after such distributions are paid. Use of Proceeds:... The gross proceeds received from the sale of the Offered Securities and the Up Front Payment received in respect of the Hedge Agreement will be approximately U.S.$410,093,000. The net proceeds (after payment of organizational, structuring and offering expenses of the Co-Issuers) are expected to be approximately U.S.$404,086,000. The net proceeds from the sale of the Offered Securities and the Up Front Payment received in respect of the Hedge Agreements will be used by the Issuer (i) to purchase a diversified portfolio of interests in U.S. Dollar-denominated senior secured, senior secured second lien, senior unsecured and senior subordinated bank loans and, to a lesser extent, high-yield bonds and structured finance obligations and (ii) with respect to Closing Date Accrued Interest Purchased With Principal, to deposit approximately U.S.$1,084,033 into the Collection Account when -9-