GSO Capital Partners International LLP
Carador plc (the “Fund” or “the Company”)
1
April 2009
Fund Performance 2 :
Monthly
Return
Carador € Price
Carador $ Price
+4.4%
+4.6%
Carador NAV per share
12m
Dividend
Yield 3
23.2%
5.12%
YTD
Return 4
LTM Total
Return
-26.0 %
-34.3 %
-50.7%
NA
€ Class
EUR 0.4196
Annualized
Total Return
Inception 5
-19.7%
-34.3%
Price/Net
Asset
Value
%
%
$ Class
USD 0.5375
General Commentary
Fund performance
The Euro Share class NAV decreased by 11.28% and the USD Share class decreased by
11.32% compared to the March NAV. The reduction in NAV in the period reflects the updated
estimates of cash flows for underlying investments which, for certain transactions, have been
reduced to reflect the potential for cash flow diversion due to breaches in the
overcollateralization (“OC”) tests. Between 1 January 2009 and 30 April 2009, 4 transactions
representing 3.03% of the April 2009 NAV have failed to pay a distribution due to breaches in
their OC tests and a total of 12 transactions representing 8.22% of the April NAV were in
breach of the OC tests. Although 2 transactions representing 1.44% of the April 2009 NAV
have cured the test and paid additional distributions in May, there is no assurance that the
distributions will not be affected in the future by recurring breaches of the OC tests. In addition,
9 transactions, representing 19% of the April NAV would face future interest diversions since
they were in breach of their Interest Reinvestment tests
The amount of income available for distribution to shareholders is likely to be reduced due to 1)
transactions diverting cash flow from the subordinated tranches due to OC test breaches and
2) the pricing policy taking into consideration reduced future cash flows and allocating a larger
percentage of received cash to principal rather than income. We are currently in conversations
with the managers of the underlying investments to obtain estimates of expected defaults and
downgrades in their portfolios in order to quantify the possible effect in future dividends.
The Fund received 14 distributions this month. Two transactions, Navigator 4 and Venture 7,
did not make any distribution due to a breach of its over-collateralization (“OC”) test during the
period. The cash flow returns received ranged from 3.16% to 45.31% (annualised cash on
1
Please see important disclaimer at the end of this document
Bloomberg analytics unless otherwise stated. Dividends reinvested at Libor.
3
th
Bloomberg 12mYld field (BQ screen). $ Class since Dec 11 2008.
4
2 January 2009 to end of month, non annualised.
5
Inception: 12 April 2006 for € class return annualised, 11 December 2008 for $ Class return not annualised. Dividends
reinvested at Libor.
2
THIS DOCUMENT IS BEING FURNISHED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE FORWARDED, REPRODUCED OR REDISTRIBUTED OR PASSED ON IN
WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, TO ANY OTHER PERSON. THE DISTRIBUTION OF THIS DOCUMENT IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY
LAW, AND PERSONS INTO WHOSE POSSESSION THIS DOCUMENT COMES SHOULD INFORM THEMSELVES ABOUT, AND OBSERVE, ANY SUCH RESTRICTIONS. BY
ACCEPTING THIS DOCUMENT, YOU AGREE TO BE BOUND BY THE FOREGOING LIMITATIONS. THIS DOCUMENT DOES NOT CONSTITUTE OR CONTAIN ANY OFFER OF, OR
THE SOLICITATION OF AN OFFER TO BUY OR SUBSCRIBE FOR SECURITIES OF CARADOR PLC ("CARADOR") IN THE UNITED STATES OR IN ANY OTHER JURISDICTION TO
WHOM OR IN WHICH SUCH SOLICITATION IS UNLAWFUL. THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO US PERSONS (AS DEFINED IN REGULATION S UNDER
THE SECURITIES ACT) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. CARADOR HAS NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "INVESTMENT
COMPANY ACT"). IF YOU ARE IN THE UNITED STATES AND ARE NOT EITHER A) A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) WHO IS ALSO A "QUALIFIED PURCHASER" (AS DEFINED IN SECTION 2(A)(51) OF THE INVESTMENT COMPANY ACT) FOR PURPOSES OF SECTION 3(C)(7) OF THE
INVESTMENT COMPANY ACT; OR (B) AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 OF THE SECURITIES ACT) WHO IS EITHER A QUALIFIED PURCHASER OR AN
ELIGIBLE INVESTMENT COMPANY ACT INVESTOR, YOU SHOULD NOT OPEN THIS DOCUMENT AND SHOULD DESTROY IT.
cash returns based on purchase price, excluding senior CLO investments). The average
distribution was 19.57%.
The Fund received cash flows of €3,050,663 in the month of which €1,866,084 (61.17%) were
allocated to principal.
There were 10 loan defaults in the US leveraged loan market in April and 1 default in the
European loan market 1 . Carador had exposure to 9 of these names through 28 portfolios with
an average exposure per name of 0.74% 2 .
Market performance
Leveraged Loans
The leveraged loan market posted another positive month with a return of 8.01% in the CS
Leveraged Loan Index for April, taking the year to date return to 15.75%.
The top performing US leveraged loan industry sectors in April were transportation, retail, and
information technology with returns of 19.22%, 14.86% and 13.02%, respectively. The worst
performing sectors, although still generating positive monthly returns, were manufacturing,
consumer non-durables and food/tobacco with returns of 3.16%, 3.91% and 4.19%,
respectively( 3 ).
The best performing rating groups were distressed (+15.06%) and CCC (+11.20%). B loans
generated a strong positive monthly return (+10.75%) but BB loans lagged (+5.73%). Despite
April’s performance, B and BB loans continue to outperform year to date with returns of
+20.31% and 17.14% versus -1.82% for distressed and +7.51% for CCC.
The following table summarizes returns for leveraged loans, high yield bonds and the S&P500
Index for April( 4 ). The discount margin, assuming a 3-year average life, tightened 265 bp during
the month to 1299 bp. The average price rose to 70.73c, up 4.92pt( 5).
CS Leveraged Loan Index
CS Euro Leveraged Loan Index
CS Distressed Loan Index
CS High Yield Index
Credit Suisse LUCI (Liquid US Corporate Index)
S&P 500
April-09
+8.01%
+5.70%
+8.26%
+10.08%
+2.60%
+9.57%
YTD
+15.75%
+9.06%
+16.31%
+16.48%
+2.74%
-2.49%
Firmer technical conditions, improved broader markets and better than expected earning
reports from large leveraged issuers have helped support loan prices in 2009. New issues and
1
Source: JP Morgan, “Default Monitor”, S&P LCD.
Exposure calculated as percentage of consolidated underlying CLO portfolios.
(3)
Source Credit Suisse Leveraged Finance Strategy Update 4 May 2009
(4)
The volatility of the indices reflected above and elsewhere in this report may be materially different from that of the
performance of Carador. In particular, Carador does not have direct exposure to leveraged loans, but rather its
exposure comes through its ownership of CLO securities. In addition, these indices employ different investment
guidelines and criteria than Carador; as a result, Carador’s exposure to leveraged loans may differ significantly from
the securities or other assets that comprise the indices. The performance of these indices has not been selected to
represent an appropriate benchmark to compare to the performance of Carador, but rather is disclosed to allow for
comparison of the performance of Carador to that of well known, relevant indices. A summary of the investment
guidelines of these indices is available upon request.
(5)
Source Credit Suisse Leveraged Finance Strategy Update 4 May 2009
2
THIS DOCUMENT IS BEING FURNISHED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE FORWARDED, REPRODUCED OR REDISTRIBUTED OR PASSED ON IN
WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, TO ANY OTHER PERSON. THE DISTRIBUTION OF THIS DOCUMENT IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY
LAW, AND PERSONS INTO WHOSE POSSESSION THIS DOCUMENT COMES SHOULD INFORM THEMSELVES ABOUT, AND OBSERVE, ANY SUCH RESTRICTIONS. BY
ACCEPTING THIS DOCUMENT, YOU AGREE TO BE BOUND BY THE FOREGOING LIMITATIONS. THIS DOCUMENT DOES NOT CONSTITUTE OR CONTAIN ANY OFFER OF, OR
THE SOLICITATION OF AN OFFER TO BUY OR SUBSCRIBE FOR SECURITIES OF CARADOR PLC ("CARADOR") IN THE UNITED STATES OR IN ANY OTHER JURISDICTION TO
WHOM OR IN WHICH SUCH SOLICITATION IS UNLAWFUL. THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO US PERSONS (AS DEFINED IN REGULATION S UNDER
THE SECURITIES ACT) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. CARADOR HAS NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "INVESTMENT
COMPANY ACT"). IF YOU ARE IN THE UNITED STATES AND ARE NOT EITHER A) A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) WHO IS ALSO A "QUALIFIED PURCHASER" (AS DEFINED IN SECTION 2(A)(51) OF THE INVESTMENT COMPANY ACT) FOR PURPOSES OF SECTION 3(C)(7) OF THE
INVESTMENT COMPANY ACT; OR (B) AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 OF THE SECURITIES ACT) WHO IS EITHER A QUALIFIED PURCHASER OR AN
ELIGIBLE INVESTMENT COMPANY ACT INVESTOR, YOU SHOULD NOT OPEN THIS DOCUMENT AND SHOULD DESTROY IT.
liquidation activity is a fraction of last year’s ($6.4 billion compared to $14.7 billion)(1).
Repayments have also increased to $24.6 billion YTD. This reduction in supply has taken place
as demand has increased, with part of this additional demand coming from non traditional
buyers such as high yield bond and equity funds.
Loan defaults were $2 billion (5 month low according to S&P LCD) vs $16.7 billion in March.
Although there were no “jumbo” loan issuers defaulting in April, the default picture continues to
be a key concern with the loan default rate reaching an all time high of 8.03%.
There were 10 loan defaults in the US leveraged loan market in April and 1 defaults in the
European loan market( 2 ). Carador had exposure to 9 of these names through 28 portfolios with
an average exposure per name of 0.74%( 3 )
Date
Company
Debt (mm)
Sector
Present in
Fund's
Portfolios
Average
CLO
Exposure
01-Apr-09 Rhodes Homes
$370 Housing
2
0.53%
01-Apr-09 United Subcontractors
$335 Housing
2
0.60%
15-Apr-09 Georgia Gulf
15-Apr-09 RH Donnelley
$350 Chemicals
$3,503 Diversified Media
2
0.26%
8
1.05%
0.67%
15-Apr-09 Six Flags
$837 Gaming/Leisure
1
16-Apr-09 Abitibi-Bowater
$347 Gaming/Leisure
0
20-Apr-09 Asyst Technologies
30-Apr-09 Airborne Health
30-Apr-09 Chrysler LLC
30-Apr-09 Mark IV Industries
03-Apr-09 Dometic
$80 Information Technology
$137 Healthcare
0
1
1.04%
$6,895 Transportation
10
0.78%
$897 Manufacturing
2
0.37%
12
1.31%
SEK10,625 Leisure
Carador’s 12 month lagging default rate to 30 April 2009 (latest available trustee information)
was estimated at 4.00%. Since inception, Carador’s default rate has been 4.40% (1.41%
annualized).
CLOs
The CLO market, particularly the senior part of the capital structure, was very strong over the
last two weeks of April. Several “Offer Wanted in Competition” (“OWIC”) lists were circulated, a
welcomed change from “Bid Wanted in Competition” (“BWIC”) liquidation lists we had grown
familiar with in the recent past.
The liquidation of the Whistlejacket SIV was a key event, with investors purchasing about half
of the $5 billion portfolio. The broadly syndicated CLO component of the liquidation (AAA)
reportedly traded in the 70s( 4 ).
The potential selling pressure from banks concerned about rating downgrades and capital
charges has yet to materialize and the market is gaining comfort about the banks’ ability to
keep the assets within their balance sheets.
The rally in the underlying loans is generating higher valuation floors for senior notes and we
are starting to see price differentiation based on the degree of control that a senior holder has
over the underlying portfolio. Similarly, CLO senior paper has lagged the performance of other
(1)
Source: S&P LCD
Source: JP Morgan, “Default Monitor”, S&P LCD
Exposure calculated as percentage of consolidated underlying CLO portfolios.
(4)
Source: IFR
(2)
(3)
THIS DOCUMENT IS BEING FURNISHED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE FORWARDED, REPRODUCED OR REDISTRIBUTED OR PASSED ON IN
WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, TO ANY OTHER PERSON. THE DISTRIBUTION OF THIS DOCUMENT IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY
LAW, AND PERSONS INTO WHOSE POSSESSION THIS DOCUMENT COMES SHOULD INFORM THEMSELVES ABOUT, AND OBSERVE, ANY SUCH RESTRICTIONS. BY
ACCEPTING THIS DOCUMENT, YOU AGREE TO BE BOUND BY THE FOREGOING LIMITATIONS. THIS DOCUMENT DOES NOT CONSTITUTE OR CONTAIN ANY OFFER OF, OR
THE SOLICITATION OF AN OFFER TO BUY OR SUBSCRIBE FOR SECURITIES OF CARADOR PLC ("CARADOR") IN THE UNITED STATES OR IN ANY OTHER JURISDICTION TO
WHOM OR IN WHICH SUCH SOLICITATION IS UNLAWFUL. THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO US PERSONS (AS DEFINED IN REGULATION S UNDER
THE SECURITIES ACT) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. CARADOR HAS NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "INVESTMENT
COMPANY ACT"). IF YOU ARE IN THE UNITED STATES AND ARE NOT EITHER A) A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) WHO IS ALSO A "QUALIFIED PURCHASER" (AS DEFINED IN SECTION 2(A)(51) OF THE INVESTMENT COMPANY ACT) FOR PURPOSES OF SECTION 3(C)(7) OF THE
INVESTMENT COMPANY ACT; OR (B) AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 OF THE SECURITIES ACT) WHO IS EITHER A QUALIFIED PURCHASER OR AN
ELIGIBLE INVESTMENT COMPANY ACT INVESTOR, YOU SHOULD NOT OPEN THIS DOCUMENT AND SHOULD DESTROY IT.
asset classes such as CMBS and credit card ABS, creating significant relative value at current
spreads.
Outlook
We remain vigilant of potential supply of senior CLO paper due to rating changes but are
actively exploring AAA and AA investment opportunities.
THIS DOCUMENT IS BEING FURNISHED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE FORWARDED, REPRODUCED OR REDISTRIBUTED OR PASSED ON IN
WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, TO ANY OTHER PERSON. THE DISTRIBUTION OF THIS DOCUMENT IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY
LAW, AND PERSONS INTO WHOSE POSSESSION THIS DOCUMENT COMES SHOULD INFORM THEMSELVES ABOUT, AND OBSERVE, ANY SUCH RESTRICTIONS. BY
ACCEPTING THIS DOCUMENT, YOU AGREE TO BE BOUND BY THE FOREGOING LIMITATIONS. THIS DOCUMENT DOES NOT CONSTITUTE OR CONTAIN ANY OFFER OF, OR
THE SOLICITATION OF AN OFFER TO BUY OR SUBSCRIBE FOR SECURITIES OF CARADOR PLC ("CARADOR") IN THE UNITED STATES OR IN ANY OTHER JURISDICTION TO
WHOM OR IN WHICH SUCH SOLICITATION IS UNLAWFUL. THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO US PERSONS (AS DEFINED IN REGULATION S UNDER
THE SECURITIES ACT) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. CARADOR HAS NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "INVESTMENT
COMPANY ACT"). IF YOU ARE IN THE UNITED STATES AND ARE NOT EITHER A) A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) WHO IS ALSO A "QUALIFIED PURCHASER" (AS DEFINED IN SECTION 2(A)(51) OF THE INVESTMENT COMPANY ACT) FOR PURPOSES OF SECTION 3(C)(7) OF THE
INVESTMENT COMPANY ACT; OR (B) AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 OF THE SECURITIES ACT) WHO IS EITHER A QUALIFIED PURCHASER OR AN
ELIGIBLE INVESTMENT COMPANY ACT INVESTOR, YOU SHOULD NOT OPEN THIS DOCUMENT AND SHOULD DESTROY IT.
Fund Performance :
Daily Closing € Price/NAV
Daily Closing $ Price/NAV
(¢)
(¢)
100.00
100.00
80.00
80.00
60.00
60.00
40.00
40.00
20.00
(€) Price + Dividend
(€) NAV + Dividend
Price (€)
($) Price + Dividend
($) NAV + Dividend
Price ($)
20.00
0.00
0.00
3/4
20/10
8/5
24/11
11/6
28/12
3/4
20/10
8/5
24/11
11/6
28/12
For the Price + Dividend and NAV + Dividend calculations, the dividend has been linearly distributed over the relevant period.
This adjustment is only applied to previous periods, ie, no future dividend is estimated to adjust the chart.
Portfolio Description:
(1)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
By Asset Class :
Broadly Syndicated Sub-Investment Grade Secured Loans-Europe
Broadly Syndicated Sub-Investment Grade Secured Loans-US
Middle Markets Secured Loans-US
Cash
Total
% NAV
13.00%
52.02%
3.05%
31.93%
100.00%
By Currency:
EUR
USD
Total
% NAV
19.10%
80.90%
100.00%
Investment/Manager:
% NAV
ACA CLO 2006-2 (Apidos)
1.02%
Alpstar I Euro CLO (Alpstar Management)
0.36%
CIFC Funding 2006-II (CIFC)
1.71%
CS Advisors CLO I (Capital Source)
0.77%
Denali Capital CLO VI (DC Funding Partners LLC)
0.55%
Duchess VII (Babson Capital)
0.65%
Eaton Vance CDO VIII (Eaton Vance)
0.70%
Egret Funding CLO I (Egret/SocGen)
1.44%
Eurocredit CDO II (ICG)
0.01%
Eurocredit VI (ICG)
0.62%
Euro-Galaxy CLO (AIG)
0.73%
Foxe Basin CLO (GSO/Blackstone Debt Funds Managem
0.69%
FM Leveraged Capital Fund II (GSO/Blackstone Debt Fun
1.26%
0.80%
Gale Force 1 CLO (GSO/Blackstone Debt Funds Manage
Gale Force 2 CLO (GSO/Blackstone Debt Funds Manage 10.89%
Gale Force 3 CLO (GSO/Blackstone Debt Funds Manage
4.07%
Gale Force 4 CLO (GSO/Blackstone Debt Funds Manage 18.70%
GECLT 2006-2 (GE Capital)
3.78%
GLC CLO I (Global Leveraged Capital, LLC)
0.28%
Gresham II (Investec)
0.29%
Cash
(1)
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
Investment/Manager:
% NAV
Harbourmaster 7 (Harbourmaster)
0.10%
Harvest III Euro CLO (Mizuho Leveraged Finance)
0.77%
Harvest IV Euro CLO (Mizuho Leveraged Finance)
0.28%
Hudson Straits CLO 2004 Ltd. (GSO/Blackstone Debt Fun 2.86%
Inwood Park CDO (Blackstone Debt Advisors LP)
0.61%
Inwood Park CDO (Blackstone Debt Advisors LP)
2.04%
Leopard IV CLO (Prudential M&G)
0.88%
Leveraged Finance Europe Capital IV (BNP)
1.45%
Mountain View II (Seix Advisors)
0.39%
Navigator CDO 2004 (GE Asset Management)
0.24%
NYLIM Flatiron CLO 2006-1X (New York Life)
0.73%
OWS CLO I (Alcentra)
0.00%
Panther CDO III (Prudential M&G)
1.24%
Prospect Park CLO (Blackstone Debt Advisors LP)
1.56%
RMF Euro CLO III (RMF Investment Management)
0.96%
RMF Euro CLO IV (RMF Investment Management)
1.39%
Skell 2006-1 X 30/11/2022 (AIB)
0.91%
Venture VII (MJX Asset Management)
1.43%
Versailles (BNP)
0.93%
31.93%
As of 31st April 2009
THIS DOCUMENT IS BEING FURNISHED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE FORWARDED, REPRODUCED OR REDISTRIBUTED OR PASSED ON IN
WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, TO ANY OTHER PERSON. THE DISTRIBUTION OF THIS DOCUMENT IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY
LAW, AND PERSONS INTO WHOSE POSSESSION THIS DOCUMENT COMES SHOULD INFORM THEMSELVES ABOUT, AND OBSERVE, ANY SUCH RESTRICTIONS. BY
ACCEPTING THIS DOCUMENT, YOU AGREE TO BE BOUND BY THE FOREGOING LIMITATIONS. THIS DOCUMENT DOES NOT CONSTITUTE OR CONTAIN ANY OFFER OF, OR
THE SOLICITATION OF AN OFFER TO BUY OR SUBSCRIBE FOR SECURITIES OF CARADOR PLC ("CARADOR") IN THE UNITED STATES OR IN ANY OTHER JURISDICTION TO
WHOM OR IN WHICH SUCH SOLICITATION IS UNLAWFUL. THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO US PERSONS (AS DEFINED IN REGULATION S UNDER
THE SECURITIES ACT) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. CARADOR HAS NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "INVESTMENT
COMPANY ACT"). IF YOU ARE IN THE UNITED STATES AND ARE NOT EITHER A) A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) WHO IS ALSO A "QUALIFIED PURCHASER" (AS DEFINED IN SECTION 2(A)(51) OF THE INVESTMENT COMPANY ACT) FOR PURPOSES OF SECTION 3(C)(7) OF THE
INVESTMENT COMPANY ACT; OR (B) AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 OF THE SECURITIES ACT) WHO IS EITHER A QUALIFIED PURCHASER OR AN
ELIGIBLE INVESTMENT COMPANY ACT INVESTOR, YOU SHOULD NOT OPEN THIS DOCUMENT AND SHOULD DESTROY IT.
DISCLAIMER
This document is for informational purposes only and does not constitute an offer of, or the solicitation of an offer to buy
or subscribe for, securities of Carador PLC (“Carador”) in the United States or to any person in any other jurisdiction to
whom or in which such offer or solicitation is unlawful. The distribution of this document in certain jurisdictions may be
restricted by law and persons into whose possession this document comes should inform themselves about, and
observe any such restrictions. Further, it does not constitute an offer to sell, or a solicitation of an offer to buy, any
investment in, or to participate in any trading strategy with GSO Capital Partners International LLP (the “Manager”) or
its affiliates, including without limitation, The Blackstone Group L.P., GSO Capital Partners LP and GSO Debt Funds
Management LLC (collectively, the “Manager’s Affiliates”) or any investment fund managed or sponsored by the
Manager or the Manager’s Affiliates (a “Blackstone Fund”). Such an offer only will be made by means of the Private
Placement Memorandum (or other offering document) for the Blackstone Fund as it may be amended or supplemented
from time to time (the "PPM”). Each PPM contains material information (including a discussion of risk factors and
potential conflicts of interest) not contained in this document, and supersedes and qualifies in its entirety the
information set forth herein. Any decision to invest in, or withdraw from, a Blackstone Fund should be made after
reviewing the appropriate PPM, conducting such investigations as the investor deems necessary and consulting the
investor's own legal, accounting and tax advisors in order to make an independent determination of the suitability and
consequences of the investment. A copy of the PPM for each Blackstone Fund is available upon request. Risks
associated with investment in a Blackstone Fund include, without limitation, illiquidity of an investment, risk of default of
the underlying debt instrument and risk of loss of principal.
Carador has not, and will not be, registered under the Investment Company Act of 1940, as amended (the "Investment
Company Act"). In addition, no offer, issue or sale of securities of Carador has been, or will be, registered under the
Securities Act of 1933, as amended (the "Securities Act") or with any securities regulatory authority of any State, the
United States or other jurisdiction of the United States. Accordingly, securities of Carador may not be offered, sold,
pledged or otherwise transferred or delivered, directly or indirectly, in or into the United States, or to or for the account
or benefit of any US person (within the meaning of Regulation S under the Securities Act), except in transactions that
are exempt from registration under the Securities Act and under circumstances which will not require Carador to
register under the Investment Company Act.
This document is issued and has been approved for the purposes of Section 21 Financial Services and Market Act
2000 ("FSMA") by the Manager, which is authorised and regulated by the Financial Services Authority in the United
Kingdom. It does not constitute an invitation and should not be taken as an inducement to engage in any investment
activity and is for the purpose of providing information about Carador only. It may not be relied upon and should not be
used for the purpose of making any investment decision.
This document is based on information which is otherwise publicly available and, whilst the Manager uses all
reasonable efforts to ensure the information is accurate and up to date, no representations or warranties are given as
to the reliability, accuracy or completeness of the information. Neither the Manager nor the Manager’s Affiliates
accepts any liability for any loss or damage which may arise directly or indirectly from any use of or reliance on such
information. In particular, you should note that, since many or all of the Manager investments are unquoted, net asset
value figures in relation to Carador are based wholly or partly on estimates of the values of Carador's investments
provided by the originating banks of those underlying investments or other market counterparties, which estimates may
themselves have been subject to no verification or auditing process or may relate to a valuation at a date before the
relevant net asset valuation for Carador, or which have otherwise been estimated by Carador's Investment Advisor.
Information contained herein which relates to the net asset value performance of Carador may not be indicative of how
Carador's investments may perform in the future. Moreover the values of such investments may fluctuate considerably
and the historic net asset values shown for Carador take no account of the costs or practical difficulties of realising
some or all of such investments. The value of investments offered through or mentioned in this letter may go down as
well as up and investors may not get back the amount invested. No assurance can be given that the investment
objective will be achieved. Information on past performance, where given, is not necessarily a guide to future
performance. Changes in rates of exchange between currencies may cause the value of investments to decrease or
increase. The information on this letter is provided solely for information and does not constitute investment advice or
personal investment recommendations. Investments offered through or mentioned in this letter may not be suitable for
all recipients and in each case potential investors are advised not to take any investment decision unless they have
taken independent advice from an advisor authorised under FSMA.
For other risk factors which may be applicable to Carador and certain of the information contained herein, you are
referred to the Company's listing particulars dated 12 April 2006 and the prospectus dated 30 September 2008.
The volatility of the indices reflected above and elsewhere in this report may be materially different from that of the
performance of Carador. In particular, Carador does not have direct exposure to leveraged loans, but rather its
exposure comes through its ownership of CLO securities. In addition, these indices employ different investment
guidelines and criteria than Carador; as a result, Carador’s exposure to leveraged loans may differ significantly from
the securities or other assets that comprise the indices. The performance of these indices has not been selected to
represent an appropriate benchmark to compare to the performance of Carador, but rather is disclosed to allow for
comparison of the performance of Carador to that of well known, relevant indices. A summary of the investment
guidelines of these indices is available upon request.
THIS DOCUMENT IS BEING FURNISHED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE FORWARDED, REPRODUCED OR REDISTRIBUTED OR PASSED ON IN
WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, TO ANY OTHER PERSON. THE DISTRIBUTION OF THIS DOCUMENT IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY
LAW, AND PERSONS INTO WHOSE POSSESSION THIS DOCUMENT COMES SHOULD INFORM THEMSELVES ABOUT, AND OBSERVE, ANY SUCH RESTRICTIONS. BY
ACCEPTING THIS DOCUMENT, YOU AGREE TO BE BOUND BY THE FOREGOING LIMITATIONS. THIS DOCUMENT DOES NOT CONSTITUTE OR CONTAIN ANY OFFER OF, OR
THE SOLICITATION OF AN OFFER TO BUY OR SUBSCRIBE FOR SECURITIES OF CARADOR PLC ("CARADOR") IN THE UNITED STATES OR IN ANY OTHER JURISDICTION TO
WHOM OR IN WHICH SUCH SOLICITATION IS UNLAWFUL. THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO US PERSONS (AS DEFINED IN REGULATION S UNDER
THE SECURITIES ACT) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. CARADOR HAS NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "INVESTMENT
COMPANY ACT"). IF YOU ARE IN THE UNITED STATES AND ARE NOT EITHER A) A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) WHO IS ALSO A "QUALIFIED PURCHASER" (AS DEFINED IN SECTION 2(A)(51) OF THE INVESTMENT COMPANY ACT) FOR PURPOSES OF SECTION 3(C)(7) OF THE
INVESTMENT COMPANY ACT; OR (B) AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 OF THE SECURITIES ACT) WHO IS EITHER A QUALIFIED PURCHASER OR AN
ELIGIBLE INVESTMENT COMPANY ACT INVESTOR, YOU SHOULD NOT OPEN THIS DOCUMENT AND SHOULD DESTROY IT.