CARADOR INCOME FUND PLC

Transcription

1 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IT CONTAINS PROPOSALS RELATING TO CARADOR INCOME FUND PLC (THE "COMPANY" OR "CARADOR") ON WHICH YOU ARE BEING ASKED TO VOTE. If you are in any doubt about the contents of this Circular or the action you should take, you are recommended to seek immediately your own personal financial advice from an appropriately qualified independent adviser authorised pursuant to the UK Financial Services and Markets Act 2000 if in the United Kingdom or otherwise regulated under the laws of your own country. Prospective investors should not treat the contents of this document as advice relating to legal, taxation, investment or any other matters. This document has not been reviewed by the Central Bank of Ireland (the "Central Bank"). If you have sold or otherwise transferred all of your shares in the Company ("Shares") please send this Circular together with the accompanying Proxy Appointment Forms at once to the purchaser or transferee of such Shares, or to the stockbroker or other agent through whom the sale or transfer was effected, for onward transmission to the purchaser or transferee. The prospectus published by Blackstone/GSO Loan Financing Limited ("BGLF"), and the BGLF Rollover Election Documents in relation to the proposed BGLF Rollover Opportunity, that accompany this Circular should not be forwarded to or transmitted in or into any jurisdiction where action for that purpose may be required or doing so is restricted by law. Accordingly, none of the BGLF Prospectus, the BGLF Rollover Election Documents, any advertisement, or any other offering material, may be distributed or published in any jurisdiction except under circumstances that will result in compliance with any applicable laws and regulations. THIS CIRCULAR SHOULD BE READ AS A WHOLE. YOUR ATTENTION IS DRAWN IN PARTICULAR TO THE LETTER FROM THE CHAIRMAN OF THE COMPANY WHICH IS SET OUT ON PAGES 8 TO 19 OF THIS CIRCULAR AND WHICH RECOMMENDS THAT YOU VOTE IN FAVOUR OF THE RESOLUTIONS TO BE PROPOSED AT THE EXTRAORDINARY GENERAL MEETINGS OF THE COMPANY (THE "EGMS") REFERRED TO IN THIS CIRCULAR. YOUR ATTENTION IS ALSO DRAWN TO THE SECTION ENTITLED "11. ACTION TO BE TAKEN" IN THIS CIRCULAR. CARADOR INCOME FUND PLC (a closed ended investment company incorporated with limited liability under the laws of Ireland with registration number ) PROPOSALS FOR: A MANAGED WIND-DOWN WITH A ROLLOVER OPPORTUNITY AMENDMENT TO INVESTMENT OBJECTIVE AND POLICY OF THE COMPANY AMENDMENTS TO THE CONSTITUTION OF THE COMPANY and NOTICES OF SHAREHOLDER MEETINGS The proposals described in this Circular are conditional on Shareholder approval at the EGMs. The first EGM shall be open to participation by the U.S. Dollar Class Shareholders only, and will be held at the offices of State Street Fund Services (Ireland) Limited, 78 Sir John Rogerson's Quay, Dublin 2 at 3.00 p.m. (Irish time) on Monday 17 December 2018 (the "U.S. Dollar Class EGM"). All U.S. Dollar Class Shareholders holding U.S. Dollar Shares will be entitled to vote at the U.S. Dollar Class EGM. The second EGM shall be open to participation by both U.S. Dollar Class Shareholders and Repurchase Pool Shareholders, and will be held at the offices of State Street Fund Services (Ireland) Limited, 78 Sir John Rogerson's Quay, Dublin 2 at 3.30 p.m. (Irish time) on Monday 17 December 2018 (the "Multi-Class EGM"). All Shareholders holding U.S. Dollar Shares and/or Repurchase Pool Shares will be entitled to vote at the Multi-Class EGM. The Notices and Proxy Appointment Forms in respect of the EGMs are set out at the end of this Circular. The Proxy Appointment Forms must be lodged at the office of the Company Secretary, State Street Fund Services (Ireland) Limited, 78 Sir John Rogerson's Quay, Dublin 2, Ireland for the attention of Mr Sam Battye or returned by fax (fax no ) by 3.00 p.m. (Irish time) on Saturday 15 December 2018 in relation to the U.S. Dollar Class EGM, and 3.30 p.m. (Irish time) on Saturday 15 December 2018 in relation to the Multi-Class EGM or, if one or both EGMs is adjourned, at least 48 hours before the commencement of the relevant adjourned EGM. Completion of a Proxy Appointment Form will not preclude a Shareholder from attending, speaking and voting in person at an EGM. Shareholders who wish to consider participating in the BGLF Rollover Opportunity (as described in the section entitled "6. Rollover Opportunity to BGLF") should read the BGLF Prospectus and the BGLF Rollover Election Documents that accompany this Circular. Shareholders located in the United States or who are otherwise a U.S. Person (as defined in Rule 902 of Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act") ("U.S. Person") should also, in particular, read the section entitled "Notice for U.S. Shareholders" in the BGLF Prospectus and the form of U.S. Investor Letter that accompanies this Circular. Fidante Partners Europe Limited (trading as Fidante Capital) and N+1 Singer Advisory LLP, which are authorised and regulated in the United Kingdom by the FCA, are acting exclusively for Carador and no one else in connection with the Proposals, save in relation to their roles as joint sponsors, financial advisers and brokers to BGLF. They will not regard any other person (whether or not a recipient of this Prospectus) as their client in relation to the Proposals and, save as aforesaid, will not be responsible to anyone other than Carador for providing the protections afforded to their clients nor for providing advice in relation to the issue of Proposals, or any other transaction or arrangement referred to herein.

2 DECISION TREE FOR SHAREHOLDERS US Dollar Shareholders (CIFU) ACTION TO BE TAKEN STEP 1 Please complete and return the white and pink proxy forms so as to be received by 3.00 p.m. and 3.30 p.m. respectively (Irish time) on 15 December NOTE: A YES vote is a vote on whether shareholders should be offered the BGLF Rollover Opportunity. It does not represent an election to participate in the BGLF Rollover Opportunity. For this, see STEP 2 below. THE BOARD RECOMMENDS SHAREHOLDERS VOTE YES PLEASE COMPLETE AND RETURN THE WHITE AND PINK PROXY CARDS SO AS TO BE RECEIVED BY 3.00 P.M. AND 3.30 P.M. RESPECTIVELY (IRISH TIME) ON 15 DECEMBER 2018 Irrespective of how you voted in step 1 STEP 2 If you would like to elect for the BGLF Rollover Opportunity and therefore receive BGLF shares (subject to proposals being approved by BGLF) please complete and return the form of election so as to be received by 9.00 a.m. (Irish time) on 21 December

3 Repurchase Pool Shareholders (CIFR) ACTION TO BE TAKEN STEP 1 Please complete and return the pink proxy card so as to be received by 3.30 p.m. (Irish time) on 15 December NOTE: A YES vote is a vote on whether shareholders should be offered the BGLF Rollover Opportunity. It does not represent an election to participate in the BGLF Rollover Opportunity. For this, see STEP 2 below. THE BOARD RECOMMENDS SHAREHOLDERS VOTE YES SO THAT SHAREHOLDERS HAVE CHOICES PLEASE COMPLETE AND RETURN PINK PROXY CARD SO AS TO BE RECEIVED BY 3.30 p.m. (Irish time) ON 15 DECEMBER 2018 Irrespective of how you voted in step 1 STEP 2 If you would like to elect for the BGLF Rollover Opportunity and therefore receive BGLF shares (subject to proposals being approved) please complete and return the form of election so as to be received by 9.00 a.m. (Irish time) on 21 December

4 EXPECTED TIMETABLE OF PRINCIPAL EVENTS* Date of the Notices 23 November 2018 Earliest time and date for receipt of BGLF Rollover Election 23 November 2018 Forms or TTE Instructions from Shareholders** Latest time and date for receipt of Proxy Appointment Form 15 December 2018 at 3.00 p.m. in relation to the U.S. Dollar Class EGM 15 December 2018 at 3.30 p.m. in relation to the Multi-Class EGM The U.S. Dollar Class EGM The Multi-Class EGM Latest time and date for receipt of BGLF Rollover Election Forms or TTE Instructions from Shareholders 17 December 2018 at 3.00 p.m. 17 December 2018 at 3.30 p.m. 21 December 2018 at 9.00 a.m. Rollover Class Conversion Date** 4 January 2019 BGLF Rollover Date** 4 January 2019 * References to times in this Circular are to Irish times unless otherwise stated. Any changes to the expected timetable set out above will be notified by the Company through a Regulatory Information Service. ** Applicable only to Shareholders that elect for the BGLF Rollover Opportunity. The expected dates allow additional time for completing any necessary transfer arrangements (including any required anti-money laundering checks prior to the rollover). It is possible that these arrangements may be completed earlier, thus enabling the rollover to happen sooner. Shareholders holding Repurchase Pool Shares in uncertificated form should note that, due to the ISIN for the Repurchase Pool Shares changing following a repurchase for cash, the new ISIN required to elect for the BGLF Rollover Opportunity will not be enabled until 26 November

5 DEFINITIONS AND INTERPRETATION The following definitions apply throughout this Circular and in the accompanying Notices of the EGMs and Proxy Appointment Forms, unless the context otherwise requires: "2017 Prospectus" means the prospectus issued by the Company dated 9 October "Articles" "BGLF" "BGLF Registrar" "BGLF Rollover Date" "BGLF Rollover Election Documents" "BGLF Rollover Election Instructions" "BGLF Rollover Opportunity" "BGLF Prospectus" "Board" "Business Day" "CLO" "CLO Securities" "Company" or "Carador" "Constitution" "Constitution Resolution" "CREST" "Directors" means the articles of association of the Company as amended, modified or replaced from time to time. means Blackstone/GSO Loan Financing Limited. means Link Asset Services. means 4 January 2019, or such other date as the Directors may determine and notify to Shareholders. means, together, the Rollover Election Form and the BGLF Rollover Election Instructions. means the set of instructions that accompanies this Circular (and which are also available at to be used by Shareholders wishing to avail of the BGLF Rollover Opportunity who hold their Shares in uncertificated form. means the opportunity for Shareholders to roll their investment in the Company into BGLF as further described in this Circular. means the prospectus published by BGLF dated 23 November 2018 that accompanies this Circular. means the board of Directors of the Company. means a day on which commercial banks are open for business in Ireland and the UK. means a special purpose vehicle which issues CLO Securities that are backed by collateral. means income notes, mezzanine notes and/or senior notes. means Carador Income Fund plc. means the constitution of the Company, namely the Memorandum and Articles. means the resolution, conditional upon the passing of the Managed Wind-Down Resolution, to amend the Constitution to provide: (i) for the avoidance of doubt, that the Company may be terminated prior to 2022; (ii) to distribute the assets of the Company to Shareholders in kind when repurchasing Shares to facilitate the BGLF Rollover Opportunity; and (iii) such other changes as are set out in Appendix I to this Circular. means the computerised settlement system to facilitate the transfer of title to Shares in uncertificated form operated by Euroclear UK & Ireland Limited. means the directors of the Company. 5

6 "EGM" or "EGMs" "FCA" "General Pool" "Investment Manager" "ISIN" "Listing Rules" "London Stock Exchange" "Managed Wind-Down" "Managed Wind-Down Resolution" "Memorandum" "Multi-Class EGM" "NAV" "Notices" "Official List" "Proxy Appointment Form" "Regulatory Information Service" "Repurchase Date" "Repurchase Pool" "Repurchase Pool Shares" "Repurchase Pool Shareholder" means the extraordinary general meeting(s) of the Company and/or of a share class to be held on 17 December 2018 or any adjournment thereof. means the Financial Conduct Authority of the UK. means the pool of assets and liabilities attributable to the U.S. Dollar Shares. means GSO/Blackstone Debt Funds Management LLC. means the international securities identification number. means the listing rules made by the FCA under section 73A of the Financial Services and Markets Act means London Stock Exchange plc. means the managed wind-down of the portfolio attributable to the U.S. Dollar Shares as described in this Circular. means the resolution, conditional upon the passing of the Constitution Resolution, to modify the Company's investment objective and policy to reflect a realisation strategy and to authorise the Directors to instruct the Investment Manager to commence the Managed Wind-Down. means the memorandum of association of the Company as amended, modified or replaced from time to time. means the EGM that shall be open to participation by both U.S. Dollar Class Shareholders and Repurchase Pool Shareholders, and will be held at the offices of State Street Fund Services (Ireland) Limited, 78 Sir John Rogerson's Quay, Dublin 2 at 3.30 p.m. (Irish time) on Monday 17 December means the net asset value of the Company, class(es) or Share(s), as the case may be, as determined in accordance with the Articles. means the notices of the EGMs that accompany this Circular. means the official list of the UK Listing Authority. means the proxy appointment form that accompanies this Circular to be used by Shareholders wishing to appoint a proxy at the relevant EGM. means any of the services set out in Chapter 12 of the Listing Rules. means a date on which U.S. Dollar Shares are repurchased during the course of the Managed Wind-Down. means the separate pool of assets and liabilities within the Company attributable to the Repurchase Pool Shares. means shares in the Company designated as Repurchase Pool Shares which participate only in the Repurchase Pool. means a registered holder of Repurchase Pool Shares. 6

7 "Rollover Class Conversion Date" "Rollover Class Shares" "Rollover Election Form" "Share" "Shareholder" "TTE Instruction" "UK Listing Authority" "U.S. Dollar Class EGM" "U.S. Dollar Class Shareholder" "U.S. Dollar Shares" means 4 January 2019, or such other date as the Directors may determine and notify to Shareholders. means non-transferable shares in the Company designated as Rollover Class Shares which will participate in the BGLF Rollover Opportunity. means the election form that accompanies this Circular (and which is also available at to be used by Shareholders wishing to avail of the BGLF Rollover Opportunity who hold their Shares in certificated form. means a share in the capital of the Company of no par value, or any fraction thereof. means any person registered as a holder of any Shares in any class of the Company on the Company's register of shareholders from the time to time. means a transfer to escrow instruction applicable to Shareholders holding Shares in uncertificated form as described in the BGLF Rollover Election Instructions. means the FCA, acting in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act means the EGM that shall be open to participation by the U.S. Dollar Class Shareholders only, and will be held at the offices of State Street Fund Services (Ireland) Limited, 78 Sir John Rogerson's Quay, Dublin 2 at 3.00 p.m. (Irish time) on Monday 17 December 2018; means a registered holder of U.S. Dollar Shares. means the U.S. Dollar denominated Shares of no par value in the capital of the Company, other than the Repurchase Pool Shares. 7

8 CARADOR INCOME FUND PLC (a closed ended investment company incorporated with limited liability under the laws of Ireland with registration number ) (the "Company") LETTER FROM THE CHAIRMAN Registered Office: Directors: 78 Sir John Rogerson's Quay Werner Schwanberg (Chairman) Dublin 2 Fergus Sheridan Ireland Adrian Waters Edward D'Alelio Nicholas Moss EXTRAORDINARY GENERAL MEETING 23 November 2018 Dear Shareholder, 1. INTRODUCTION The purpose of this letter is to outline details of proposals regarding the future of the Company, which comprise amendments to the Company's investment objective and policy and amendments to its Constitution to permit a Managed Wind-Down and the BGLF Rollover Opportunity (each as defined below). On 15 June 2018, the Company announced that it had engaged its financial advisers to commence a strategic review of the Company in order to consider future prospects and opportunities. The strategic review of the Company involved an extensive shareholder consultation and considered, inter alia, a change of investment policy and the structure and domicile of the Company. On 28 August 2018, the Company provided an update regarding the Company's strategic review. The Board had evaluated the results of the Shareholder consultation, which included significant variation in feedback without a dominant view. Whilst there was a significant amount of support for the Company to continue offering shareholders exposure to CLOs, a number of Shareholders expressed concerns around liquidity, the level of the share price discount to NAV, and a desire for a return of their capital. The Board considered that a further partial repurchase opportunity of the kind carried out by the Company in 2017 may result in the Company becoming sub-scale with an increased total expense ratio and reduced liquidity that would make it unattractive to remaining Shareholders. Accordingly, the Board has determined to convene the EGMs to propose the Resolutions and to offer: U.S. Dollar Class Shareholders the opportunity to vote on the proposed amendments to the investment policy of the Company that would result in the Investment Manager being instructed to effect an orderly managed wind-down of the portfolio attributable to the U.S. Dollar Shares (the "Managed Wind-Down"); and U.S Dollar Shareholders and Repurchase Pool Shareholders the opportunity to vote on the proposed amendments to the Constitution that will facilitate: (i) the Managed Wind-Down; and (ii) an opportunity for Shareholders to roll their investment in the Company into an investment in BGLF that will allow those Shareholders who wish to retain an investment in the CLO asset class to continue to do so (the "BGLF Rollover Opportunity"). The U.S. Dollar Class EGM will be held at the offices of State Street Fund Services (Ireland) Limited, 78 Sir John Rogerson's Quay, Dublin 2 at 3.00 p.m. (Irish time) on Monday 17 December All U.S. Dollar Class Shareholders holding U.S. Dollar Shares will be entitled to vote at the U.S. Dollar Class EGM. The 8

9 proposed resolution to be considered by the U.S. Dollar Class Shareholders is, conditional upon the passing of the Constitution Resolution (as defined below), to modify the Company's investment objective and policy to reflect a realisation strategy and to authorise the Directors to instruct the Investment Manager to commence the Managed Wind-Down (the "Managed Wind-Down Resolution"). The U.S. Dollar Class EGM is not open to participation by Repurchase Pool Shareholders, on the basis that the Managed Wind- Down Resolution relates to the General Pool attributable to the U.S. Dollar Class Shares only and is therefore a matter that is reserved by the Listing Rules of the UK Listing Authority as a resolution that can only be voted on by holders of the U.S. Dollar Shares. The Multi-Class EGM will be held at the offices of State Street Fund Services (Ireland) Limited, 78 Sir John Rogerson's Quay, Dublin 2 at 3.30 p.m. (Irish time) on Monday 17 December All Shareholders holding U.S. Dollar Shares and/or Repurchase Pool Shares will be entitled to vote at the Multi-Class EGM. The proposed resolution to be considered by such Shareholders is, conditional upon the passing of the Managed Wind-Down Resolution, to amend the Constitution to provide: for the avoidance of doubt, that the Company may be terminated prior to 2022; to distribute the assets of the Company to Shareholders in kind when repurchasing Shares to facilitate the BGLF Rollover Opportunity; and such other changes as are set out in Appendix I to this Circular (the "Constitution Resolution", and together with the Managed Wind-Down Resolution, the "Resolutions"). If the Resolutions are passed and the Company is placed into Managed Wind-Down, Shareholders who wish to retain an exposure to CLOs will be offered the opportunity to rollover their investment in the Company into an investment in BGLF, as described in further detail in the section entitled "6. Rollover Opportunity to BGLF" in this Circular. Only those Shareholders who wish to rollover all or a proportion of their investment in the Company into an investment in BGLF should elect to participate in the BGLF Rollover Opportunity. Elections to participate in the BGLF Rollover Opportunity may be made in CREST by submitting an appropriate TTE Instruction, or (if you hold your shares in certificated form) by completing and returning a Rollover Election Form. U.S. Dollar Shareholders not returning a valid Rollover Election Form or making an appropriate TTE Instruction will have their U.S. Dollar Shares compulsorily repurchased over time for cash as part of the Managed Wind-Down. This cash exit is the default option for U.S. Dollar Shareholders. Repurchase Pool Shareholders who do not elect to participate in the BGLF Rollover Opportunity will continue to have their Repurchase Pool Shares compulsorily repurchased as assets attributable to the Repurchase Pool are realised over time as set out in the 2017 Prospectus. It is estimated that the transaction costs that will be borne by the Company in relation to the Proposals will be approximately $530,000. This would amount to approximately $ per U.S. Dollar Share, less any allocation of costs to Shareholders who elect to participate in the BGLF Rollover Opportunity (pro rata to NAV per share). Shareholders located in the United States or who are otherwise a U.S. Person should read the section entitled "Notice for U.S. Shareholders" in the BGLF Prospectus and, if they wish to participate in the BGLF Rollover Opportunity, execute and deliver a U.S. Investor Letter in the form that accompanies this Circular. The Directors are not making any recommendation to Shareholders in relation to the BGLF Rollover Opportunity. This is a matter entirely for each individual Shareholder to consider in light of their own circumstances, having taken the appropriate independent advice. Having considered the views of Shareholders holding in aggregate over 80 per cent. of the Shares of the Company, the Board believes that the proposals satisfy the wishes of most Shareholders. Shareholders are being offered the choice either to realise their investment for cash through an orderly managed wind-down of the Company or to continue their exposure to the asset class by rolling over their investment into an investment in BGLF, an internally-managed investment fund advised by an affiliate of the Investment Manager that invests in floating rate senior secured loans directly and indirectly through CLO Securities. The Board believes that the Resolutions are in the best interests of the Shareholders. Implementing a managed and orderly disposal of assets is expected to maximise the value to be realised on the sale of the Company's assets and, therefore, returns to Shareholders. Further, the Resolutions will allow cash to be returned to Shareholders in a cost-effective manner through the Company's compulsory repurchase of 9

10 Shares or, if a Shareholder so wishes, to rollover that Shareholder's investment in the Company into an investment in BGLF. Further details regarding the Resolutions are set out below. 2. PROPOSED MANAGED WIND-DOWN If the Resolutions are passed, the Directors will be authorised to instruct the Investment Manager to effect the Managed Wind-Down. The assets attributable to the U.S. Dollar Shares will be realised over time and, as and when the proceeds from the sales of the Company's assets attributable to the U.S. Dollar Shares accumulate, the Directors will have the discretion to return these proceeds, net of fees, expenses and other liabilities, to U.S. Dollar Class Shareholders on a pro rata basis by repurchasing such number of U.S. Dollar Shares, in tranches, as have an aggregate NAV equivalent to the amount proposed to be returned to U.S. Dollar Class Shareholders. In accordance with Article 13(a) of the Constitution, such compulsory repurchases will be made at the NAV per U.S. Dollar Share calculated as at the relevant Repurchase Date. Once repurchased, the U.S. Dollar Shares will be cancelled. It is anticipated that in normal circumstances it should be possible to realise the assets of the U.S. Dollar Shares and distribute the proceeds within six to twelve months of the date when the Investment Manager commences the Managed Wind-Down. However, this may take significantly longer in the case of certain assets or in less favourable market conditions. Accordingly, Shareholders should be prepared for a scenario in which a proportion of the assets attributable to the U.S. Dollar Shares may not be capable of realisation for an indefinite period that may be significantly longer than twelve months. Any material change to the anticipated timing for realisation will be notified by the Company through a Regulatory Information Service. The Directors do not intend to declare any dividends during the wind-down period. Accordingly, if the Resolutions are passed, the last dividend to be paid will be in respect of the final quarter of The process for paying out instalments as assets are sold under the Managed Wind-Down is expected to be materially the same as the process for realising assets and paying out cash to holders of Repurchase Pool Shares. The table below details the timing and amounts of capital which have been returned to date to holders of Repurchase Pool Shares. This table has been provided for illustrative purposes only, and the timing and relative amounts of capital to be returned to U.S. Dollar Class Shareholders through the Managed Wind-Down may differ materially. There can be no guarantee or assurance that the Company will be able to return capital in similar amounts or with the same frequency. USD % of Opening NAV Opening NAV (Oct 2017) 107,277,718 Repurchase Jan ,999, % Repurchase Feb ,999, % Repurchase Mar ,999, % Repurchase May ,500, % Repurchase August ,500, % Repurchase Oct ,500, % Repurchase Nov ,500, % 90,999, % Balance remaining 16,277, % Add net return to Oct ,288,103 Adjusted for NAV at 31 Oct ,565,876 November repurchase The Company's listing on the Official List and the capacity to trade in its U.S. Dollar Shares and Repurchase Pool Shares will be maintained for as long as the Directors believe it to be practicable during the Managed Wind-Down. The Repurchase Pool, which was created for the purposes of the repurchase opportunity offered to Shareholders in October 2017, is not expected to be affected by the proposed Managed Wind-Down. 10

11 Realisation of the assets in the Repurchase Pool will continue and is expected to be achieved as previously announced. However the Repurchase Pool Shareholders will also be given an opportunity to roll their investment in the Company into an investment in BGLF. In the event that the Resolutions are not passed, the Company will continue to operate under its current investment objective and policy. However, the Board may, in due course, consider alternative proposals for the future of the Company. Each Resolution is conditional upon the other Resolution being approved by Shareholders. Accordingly, if the Managed Wind-Down Resolution is not approved by the requisite majority of Shareholders, then the Constitution Resolution will not pass, and vice versa. Once the Managed Wind-Down is completed and the existing Repurchase Pool Shares are repurchased in their entirety, the Board will then consider, in the light of the then prevailing market conditions and Shareholders' views, proposing a resolution for a formal voluntary liquidation of the Company, which will require additional Shareholder approval at that time. 3. AMENDMENT TO INVESTMENT OBJECTIVE AND POLICY In order to implement the Managed Wind-Down, it is necessary to amend the Company's investment objective and policy to reflect the objective of realising the portfolio attributable to the U.S. Dollar Shares. The current investment objective and policy of the Company is as set out below: "Investment Objective of the Company The Company's investment objective is to produce attractive and stable returns with low volatility compared to equity markets by investing in a diversified portfolio of Senior Notes of CLOs collateralised by senior secured Bank Loans and equity and mezzanine tranches of CLOs. Investment Policy of the Company The Company seeks to achieve its investment objective through investment in cashflow CLO transactions, managed by portfolio managers with proven track records. It seeks to achieve diversification across asset class, geography, manager, and maturity profile. Each investment is collateralised by a diverse pool of fixed income assets, which will usually include senior secured Bank Loans but may also include: investment grade loans; project finance debt; asset-backed securities or other asset-backed obligations; mortgage-backed securities; and/or debt securities issued by other CLOs. The Company may also invest in other collective investment schemes for the purposes of gaining exposure to the types of CLO transactions described above or otherwise to pursue the investment objective and policy of the Company. The Company seeks to have minimal exposure to portfolios where the underlying assets comprise unsecured corporate bonds (investment grade or otherwise). The Company will limit investment in synthetic CLO transactions, at the time of investment, to 25 per cent. of the Net Asset Value. It is intended that the Company's investments comprise equity and mezzanine tranches in actively managed portfolios, with a variety of portfolio managers. The Company may also invest in senior tranches of leveraged loan CLOs where attractive opportunities can be identified. Such opportunities may include investments in senior tranches of CLOs in respect of which the Collateral consists of fee streams due to portfolio managers from underlying leveraged loan CLOs. The Company may invest in new issue CLO transactions in the Primary Market and transactions in the Secondary Market where attractive opportunities can be identified. 11

12 The Company's portfolio of CLO investments is actively managed to minimise default risk and potential loss through comprehensive credit analysis performed by the Investment Manager's experienced credit research team and use of the Investment Manager's proprietary risk management systems. Achieving efficient diversity is central to the Company's investment objective. Each investment is assessed with a view to providing diversification in terms of underlying assets, issuer, sector, geography and maturity profile. The Company invests in a minimum of 20 separate transactions with a maximum exposure per investment, at the time of investment, of 20 per cent. of the Net Asset Value. The Company also limits its exposure to transactions managed by the same portfolio manager to 15 per cent. of the Net Asset Value, at the time of investment. However, if the portfolio manager is the Investment Manager or an affiliate, this limit is increased to 60 per cent. of the Net Asset Value, at the time of investment. The Investment Manager analyses all transactions at the underlying portfolio level, identifying any concentration in terms of issuer, sector, geography and maturity profile. The Investment Manager's analysis also takes into consideration the correlation among different underlying securities to avoid concentrations of risk. There is no restriction as to the geographical composition of the underlying portfolio." It is proposed that, if the Resolutions are passed, the new investment objective and policy of the Company will be as follows: "Investment Objective of the Company The Company will be managed with the intention of realising all remaining assets of the Company with a view to returning capital to the Shareholders in an orderly manner (the "Managed Wind-Down"). The assets that are subject to the Managed Wind-Down will not include the assets of the Company that are transferred as part of the rollover elections as described in the shareholder circular that was issued in respect of the Company dated 23 November 2018 (the "2018 Circular"). Investment Policy of the Company The Managed Wind-Down will be effected with a view to the Company realising all of its investments in a manner that achieves a balance between maximising the value from the Company's investments and making timely returns of capital to Shareholders. Any assets to which rollover elections relate are to be transferred in accordance with the provisions set out in the 2018 Circular, following which the Company may sell its remaining investments either to co-investors in the relevant asset or to third parties, but in all cases with the objective of achieving the best available price in a reasonable time scale. The Company will cease to make any new investments except where necessary in the reasonable opinion of the Investment Manager in order to protect or enhance the value of any existing investments or to facilitate orderly disposals. Any cash received by the Company as part of the realisation process prior to its distribution to Shareholders will be held by the Company as cash on deposit and/or as cash equivalents. The Company will not undertake new borrowing other than for short-term purposes. The investment restrictions set out in the 2017 Prospectus will not apply during the Managed Wind-Down, subject to the requirements of the Central Bank, the Companies Act and the UK Listing Authority." The proposed modification to the Company's investment policy is considered a material change to the investment policy, which has been approved by the FCA and requires the consent of Shareholders in accordance with the Listing Rules and the requirements of the Central Bank. 4. COMPULSORY REPURCHASE OF U.S. DOLLAR SHARES DURING THE MANAGED WIND-DOWN Article 13 of the Articles provides that the Company may repurchase its own Shares in circumstances where the Directors determine to repurchase Shares at the NAV per Share or otherwise at the discretion of the Directors in accordance with the proper exercise of their fiduciary duties. Subject to the passing of the Resolutions, the Company intends to make compulsory repurchases of U.S. Dollar Shares in volumes and on dates to be determined at the Directors' discretion, with the amount 12

13 distributed in respect of the U.S. Dollar Shares on each occasion representing the cash available for distribution by the Company at the relevant time. U.S. Dollar Shares will be repurchased from all U.S. Dollar Class Shareholders pro rata to their existing holdings of the U.S. Dollar Shares on each Repurchase Date. Details of the tax consequences are set out below in the section entitled "8. Taxation" in this Circular. As and when the Directors exercise their discretion to repurchase compulsorily a given percentage of the U.S. Dollar Shares in issue, the Company will make an announcement in advance of the Repurchase Date (the "Repurchase Announcement") that will include the following details: a timetable for the repurchase and distribution of repurchase proceeds, including the Repurchase Date, and the record date for the relevant repurchase (the "Repurchase Record Date"); the aggregate amount to be distributed to U.S. Dollar Class Shareholders; the relevant percentage of U.S. Dollar Shares to be repurchased (pro rata as between the holders of U.S. Dollar Shares as at the Repurchase Record Date); the repurchase price per U.S. Dollar Share, which will be the equal to the NAV attributable to the U.S. Dollar Shares; a new ISIN in respect of U.S. Dollar Shares which will continue to be listed following the relevant repurchase date; and any additional information that the Board deems necessary in connection with the repurchase. Compulsory repurchases of U.S. Dollar Shares will become effective on each Repurchase Date, being a date chosen at the Directors' discretion, as determined by the Directors to be in the best interests of U.S. Dollar Class Shareholders as a whole. In determining the timing of any Repurchase Date, the Directors will take into account the amount of cash available for payment of repurchase proceeds and the costs associated with such repurchase. Accordingly, the proceeds of the disposals will not necessarily be distributed at or soon after the date of any such disposal but may be retained and aggregated with the proceeds of other disposals pending distribution. The U.S. Dollar Shares compulsorily repurchased will be the relevant percentage of the U.S. Dollar Shares registered in the names of U.S. Dollar Class Shareholders on the Repurchase Date. U.S. Dollar Class Shareholders will receive the repurchase price per U.S. Dollar Share in respect of each of their U.S. Dollar Shares repurchased compulsorily. Settlement In the case of U.S. Dollar Shares held in uncertificated form (that is, in CREST), repurchases will take effect automatically on each Repurchase Date and repurchased U.S. Dollar Shares will be cancelled. All U.S. Dollar Shares in issue will be disabled in CREST on the Repurchase Date and the existing ISIN applicable to such U.S. Dollar Shares (the "Old ISIN") (which, as at the date of this Circular, is IE00B3D60Z08), will expire. A new ISIN (the "New ISIN") in respect of the remaining U.S. Dollar Shares in issue and which have not been repurchased will be enabled and available for transactions from and including the first business day following the relevant Repurchase Date (or such other date notified to U.S. Dollar Class Shareholders). The New ISIN will be notified to U.S. Dollar Class Shareholders in the relevant repurchase announcement. Up to and including the Repurchase Date, U.S. Dollar Shares will be traded under the Old ISIN and, as such, a purchaser of such U.S. Dollar Shares would have a market claim for a proportion of the repurchase proceeds. CREST will automatically transform any open transactions as at the Repurchase Date (which may be the record date for the purposes of the repurchase) into the New ISIN. In the case of U.S. Dollar Shares held in certificated form (that is, not in CREST), repurchases will take effect automatically on each Repurchase Date. As the U.S. Dollar Shares will be compulsorily repurchased, certificated U.S. Dollar Class Shareholders do not need to return their share certificates to the Company in order to claim their repurchase monies. U.S. Dollar Class Shareholders' existing share certificates will be cancelled and new share certificates will be issued to each such Shareholder for the balance of their shareholding in the Company after each Repurchase Date. Cheques will automatically be issued to certificated Shareholders upon the cancellation of any of their U.S. Dollar Shares. All U.S. Dollar Shares that are repurchased will be cancelled with effect from the relevant Repurchase Date. Accordingly, once repurchased, U.S. Dollar Shares will be incapable of transfer. Payments of repurchase monies are expected to be effected either through CREST (in the case of U.S. Dollar Shares held in uncertificated form) or by cheque (in the case of U.S. Dollar Shares held in certificated form) within 14 Business Days of the relevant Repurchase Date, or as soon as practicable thereafter. U.S. Dollar Class Shareholders will be paid their repurchase proceeds in U.S. Dollars. 13

14 5. AMENDMENTS TO THE CONSTITUTION TO FACILITATE THE BGLF ROLLOVER OPPORTUNITY AND OTHER MATTERS The Constitution currently provides that the Company will continue until the annual general meeting to be held in the year 2022 when, and in every tenth year thereafter, the Directors will propose a special resolution to the effect that the Company continue for a further ten years. If the Resolutions are passed, the Constitution will be amended, subject to any requirements of the Central Bank, to provide that: for the avoidance of doubt, the Company may be terminated prior to 2022; with the consent of the relevant Shareholder, the Shares may be repurchased by the transfer of the assets of the Company in kind to that Shareholder; and such other changes to the Constitution as are set out in Appendix I to this Circular. A copy of the proposed revised Constitution will be available for inspection at the registered office of the Company at 78 Sir John Rogerson's Quay, Dublin 2, Ireland and at the offices of Herbert Smith Freehills LLP, Exchange House, Primrose Street, London EC2A 2EG, United Kingdom, during normal business hours on any Business Day from the date of this Circular until the conclusion of the Multi-Class EGM and at the place of the Multi-Class EGM for at least 15 minutes prior to, and during, the Multi-Class EGM. If any changes of a material nature are made to the draft Constitution (for example, to meet the Central Bank's requirements) before they are tabled for approval at the Multi-Class EGM, these changes will be brought to the attention of Shareholders as soon as is reasonably practicable and, in any event, at the Multi-Class EGM before consideration of the resolution to adopt the revised Constitution. 6. ROLLOVER OPPORTUNITY TO BGLF If the Resolutions are passed, given the interest expressed by a number of shareholders to retain an exposure to CLOs, Shareholders (including Repurchase Pool Shareholders) will have an opportunity to elect to rollover their investment in the Company into an investment in BGLF. BGLF is an internally-managed investment fund that invests in floating rate senior secured loans directly and indirectly through CLO Securities. An affiliate of the Investment Manager owns approximately 11 per cent. of BGLF's existing shares in issue and another affiliate of the Investment Manager provides advisory and other services to BGLF. A copy of the BGLF Prospectus that is being published in connection with the BGLF Rollover Opportunity accompanies this Circular. BGLF was founded in 2014 and is domiciled in Jersey, Channel Islands. For further information please see the website of BGLF at For Shareholders that validly elect for the BGLF Rollover Opportunity, their U.S. Dollar Shares or Repurchase Pool Shares, as the case may be, will be converted into a new class of Shares of the Company (the "Rollover Class Shares"). The Rollover Class Shares shall not be transferable. The Rollover Class Shares will be created by allocating to such class a pro rata amount of the assets and liabilities of the Company attributable to the Shares being converted using the latest published NAV available as at the Rollover Class Conversion Date. Such liabilities will include the portion of the transaction costs attributable to the Shares being converted to Rollover Class Shares, and may include an accrual for any performance fee payable to the Investment Manager attributable to the U.S. Dollar Shares or Repurchase Pool Shares, as the case may be, that has accrued as at the Rollover Class Conversion Date. It is envisaged that any accrued performance fees payable to the Investment Manager attributable to Rollover Class Shares will be waived by the Investment Manager. Each Share that a Shareholder elects to participate in the BGLF Rollover Opportunity will be converted into Rollover Class Shares on the following basis: each participating U.S. Dollar Share will be converted into one Rollover Class Share; and each participating Repurchase Pool Share will be converted into such proportion of Rollover Class Shares as is pro rata to the respective NAV per U.S Dollar Share compared with the NAV per Repurchase Pool Share. It is envisaged that, immediately following the Rollover Class Conversion Date, the Company will repurchase all of the Rollover Class Shares in kind and transfer the assets attributable to the Rollover Class Shares (the "Rollover Assets") to BGLF in exchange for shares in BGLF being issued to Rollover Class Shareholders as at the BGLF Rollover Date. Each Rollover Class Shareholder will receive one share in the C share class of BGLF in return for each Rollover Class Share it holds. Further details on BGLF and the C share class of 14

15 BGLF can be found in the BGLF Prospectus. BGLF will not hold any interest in the Company's Shares. Following the rollover to BGLF shares, the Rollover Class Shares will be cancelled. Rollover Assets (including cash) will be held by BGLF in a segregated C share asset pool. The BGLF Prospectus states that BGLF intends to sell the Rollover Assets and reinvest the proceeds in accordance with BGLF's investment policy. When substantially all the assets have been re-invested, the C shares in BGLF will convert into ordinary shares in BGLF. The Rollover Assets include cash income for the period since 1 October 2018 out of which a similar amount (in the relevant currency) to the dividend that is expected to be paid on Carador U.S. Dollar Shares for the fourth quarter of 2018 is expected to be paid in February 2019, providing continuity of dividend income. The BGLF Prospectus contains details of the C share dividend policy and illustrative financial projections for the period prior to the conversion of the C shares. It is important that, if you wish to make an election for the BGLF Rollover Opportunity, you review and understand the BGLF Prospectus and the BGLF Rollover Election Documents that accompany this Circular. If you are located in the United States or are otherwise a U.S. Person and wish to participate in the BGLF Rollover Opportunity, you should also in particular read the section entitled "Notice for U.S. Shareholders" in the BGLF Prospectus and execute and deliver a U.S. Investor Letter in the form that accompanies this Circular. Shareholders who wish to receive cash in respect of their entire holding of Shares do not need to return the Rollover Election Form or submit a TTE instruction, as they will be deemed to have elected to receive cash. In deciding whether to participate in the BGLF Rollover Opportunity, you should consider that the Investment Manager and its affiliates have interests that potentially conflict with those of Shareholders, including that an affiliate of the Investment Manager provides advisory and other services to BGLF and therefore has an interest in BGLF acquiring the Rollover Assets. BGLF will not pay advisory or similar fees to the Investment Manager's affiliate with respect to the Rollover Assets, and the Investment Manager is forgoing any performance fees it may be owed on the Rollover Assets. However, because BGLF depends on the continued acquisition of CLO Securities to support its business, the Investment Manager and its affiliates may have an economic incentive to effect the BGLF Rollover Opportunity. By electing to participate in the BGLF Rollover Opportunity, a Shareholder will be deemed to have acknowledged the existence of such potential conflicts of interest and to have waived any and all claims with respect to the existence of any such conflict of interest and any actions taken or proposed to be taken in respect thereof. The Board does not give any recommendation in relation to the proposed BGLF Rollover Opportunity. If you are in any doubt on the action you should take in relation to the BGLF Rollover Opportunity, you are recommended to seek immediately your own personal financial advice from an appropriately qualified independent adviser authorised pursuant to the UK Financial Services and Markets Act 2000 if in the United Kingdom or otherwise regulated under the laws of your own country. Any decision to participate in the BGLF Rollover Opportunity should only be taken on the basis of the information contained in the BGLF Prospectus that accompanies this Circular. Representations If you wish to make an election for the BGLF Rollover Opportunity and return the Rollover Election Form or submit a TTE instruction, you will be deemed to have given the representations set out in Appendix III. 7. RISKS ASSOCIATED WITH THE PROPOSED CHANGES If the Resolutions are passed, the risk factors specifically relating to the U.S. Dollar Shares include the following: Concentration risk and potential for increased total expense ratio The issued share capital of the Company will be reduced as a result of the repurchase of U.S. Dollar Shares. Consequently, the mix of asset exposure will be concentrated in fewer holdings, and the fixed costs of the Company attributable to the U.S. Dollar Shares will be spread over fewer Shares. Sales commissions, liquidations cost, taxes and other costs associated with the realisation of the Company's assets will reduce 15

16 the cash available for distribution to Shareholders. The early realisations may be in respect of the better performing and more liquid CLOs, the sale of which could result in the residual portfolio performing less well as it is wound down. The timing and ultimate amount of any returns may also be impacted by the tax regimes of the countries in which the Company invests. Share price volatility The Company might experience increased volatility in its NAV and/or its Share price as a result of possible changes to the portfolio structure of the U.S. Dollar Shares following the passing of the Resolutions. Uncertainty of timing of repurchases and completion of Managed Wind-Down Repurchases of U.S. Dollar Shares will be made at the Directors' discretion, as and when they deem that the Company has sufficient assets available to make a repurchase. Shareholders will therefore have little certainty as to when their U.S. Dollar Shares will be repurchased. U.S. Dollar Class Shareholders should expect that, under the terms of the Managed Wind-Down, the Board and the Investment Manager will be committed to distributing as much of the available cash as soon as reasonably practicable having regard to cost efficiency and working capital requirements. U.S. Dollar Class Shareholders are advised that future returns of cash may not necessarily be made as soon as cash becomes available. U.S. Dollar Class Shareholders should also note that, due to the illiquid nature of the Company's investments, there can be no certainty of the length of time it may take to complete the Managed Wind-Down. The liquidity profile of the assets is such that U.S. Dollar Class Shareholders may have to wait a considerable period of time before receiving all of their distributions pursuant to the Managed Wind-Down. During that time, the concentration of the value of the portfolio attributable to the U.S. Dollar Shares in fewer holdings will reduce diversification and the spread of risk. This may adversely affect the Company's performance. Change in status from Shareholder to general creditor Once all of a Shareholder's U.S. Dollar Shares have been repurchased, that Shareholder will cease to be a Shareholder in the Company with respect to such U.S. Dollar Shares and will instead become a general creditor of the Company with respect to any unpaid proceeds of the repurchase of such U.S. Dollar Shares. Asset valuations and liquidity The full amount of the proceeds to be paid to holders of U.S. Dollar Shares can only be determined following the complete realisation of the portfolio of assets attributable to the U.S. Dollar Shares. Shareholders should note that the repurchase proceeds received by a U.S. Dollar Class Shareholder may be materially different to that indicated by any estimated or official NAV per U.S. Dollar Share published by the Company. The Company's assets may not be realised at their fair market value, and it is possible that the Company may not be able to realise some assets at any value. Listing considerations The maintenance of the Company as an ongoing listed vehicle will entail administrative, legal, regulatory and listing costs, which will decrease the amount ultimately distributed to Shareholders. In addition, although the Board intends to maintain the Company's listing for as long as the Directors believe it to be practicable during the Managed Wind-Down, the Directors shall immediately notify the Financial Conduct Authority of the United Kingdom and may seek suspension of the listing of the U.S. Dollar Shares pursuant to the requirements of the Listing Rules (which may include Shareholder approval prior to any suspension or de-listing) if the Company can no longer satisfy the continuing obligations for listing set out therein including, but not limited to, the requirements in respect of U.S. Dollar Shares held in "public hands" (as such phrase is defined in the Listing Rules) and consequently the listing of the U.S. Dollar Shares may be suspended and/or cancelled. Once suspended and/or cancelled, the U.S. Dollar Shares would no longer be capable of being traded on the London Stock Exchange, which would materially reduce market liquidity in the U.S. Dollar Shares. 16