Publication of Circular

RNS Number : 8867T

Real Estate Credit Investments Ltd

06 October 2010

 



6 October 2010

REAL ESTATE CREDIT INVESTMENTS LIMITED (the "COMPANY")

Publication of Circular

Real Estate Credit Investments Limited has today published a circular to shareholders (the "Circular").

The Circular contains a notice of the Company's Annual General Meeting to be held at 12.00 p.m. on 5 November 2010 at the offices of Kleinwort Benson (Channel Islands) Fund Services Limited, Dorey Court, Admiral Park, St Peter Port, Guernsey GY1 3BG.

Copies of the following documents are available for inspection at the registered office of the Company during normal business hours on any Business Day (Saturdays and public holidays excepted) until the conclusion of the annual general meeting:

·      the Memorandum and the Articles of Association of the Company;

·      the Circular;

·      the consent letter from Liberum Capital Limited;

·      the letters of appointment of the Company directors;

·      the audited consolidated accounts of Cheyne ABS Opportunities Fund LP for the years ending 2008, 2009 and 2010; and

·      the audited consolidated accounts for the Company for the years ending March 31, 2009 and 2010.

Copies of the Circular, the proxy form and the Company's annual report and accounts for the year ended 31 March 2010 have been forwarded to the Financial Services Authority and submitted to the National Storage Mechanism and will shortly be available for inspection at: www.Hemscott.com/nsm.do

Copies of these documents are also published on www.recreditinvest.com

Defined terms in this announcement shall have the meaning assigned to them in the Circular.

The full text of the Circular is also copied below:

Page 1

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document or the action you should take, you are recommended to seek immediately your own personal financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser who, if you are taking advice in the United Kingdom, is authorised under the Financial Services and Markets Act 2000 or, if you are taking advice in a territory outside the United Kingdom, from an appropriately authorised independent financial adviser.

If you have sold or otherwise transferred all your Shares in Real Estate Credit Investments Limited (the "Company"), please send this Circular, together with the accompanying Form of Proxy at once to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for delivery to the purchaser or transferee. However, such documents should not be distributed, forwarded or transmitted in or into the United States, Canada, Australia, South Africa or Japan or into any other jurisdiction if to do so would constitute a violation of the relevant laws and regulations in such other jurisdiction.

REAL ESTATE CREDIT INVESTMENTS LIMITED

(an authorised closed-ended investment scheme limited by shares and incorporated under the laws of Guernsey with registered number 43634)

NOTICE OF ANNUAL GENERAL MEETING

This Circular should be read as a whole. Your attention is drawn to the letter from the Chairman which is set out on pages 3 to 8 of this Circular.

The Proposals described in this Circular are conditional on approval from Shareholders, which is being sought at the Annual General Meeting of the Company (the "AGM") to be held at 12.00 p.m on 5 November 2010 at the offices of Kleinwort Benson (Channel Islands) Fund Services Limited, Dorey Court, Admiral Park, St Peter Port, Guernsey GY1 3BG. Notice of the AGM is set out at the end of this Circular.

All Shareholders are requested to return the Form of Proxy for the AGM enclosed with this Circular. To be valid, the Form of Proxy should be completed, signed and returned in accordance with the instructions printed thereon to Capita Registrars, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible but in any event to arrive not later than 48 hours before the time appointed for holding the AGM. The lodging of the Form of Proxy will not prevent a Shareholder from attending the AGM and voting in person if they so wish.

Page 2

Contents

Part I Letter from the Chairman	3
Part II Additional Information	9
Part III Information about the Deemed Concert Party and Investors in Cheyne ABS Opportunities Fund LP	15
Notice of Annual General Meeting	19

Expected Timetable

Latest time and date for receipt of Forms of Proxy	12.00 p.m. on 3 November 2010
Annual General Meeting	12.00 p.m. on 5 November 2010

Page 3

Part I

Letter from the Chairman

Real Estate Credit Investments Limited

(an authorised closed-ended investment scheme limited by shares and incorporated under the laws of Guernsey with registered number 43634)

Directors:	Registered office:
Tom Chandos (Chairman)	Dorey Court Admiral Park St. Peter Port Guernsey GY1 3BG
Talmai Morgan
Christopher Spencer
Graham Harrison
John Hawkins

6 October 2010

Notice of Annual General Meeting

Dear Shareholder,

1. Introduction

I am pleased to be writing to you with details of our Annual General Meeting ("AGM") which we are holding at Kleinwort Benson (Channel Islands) Fund Services Limited, Dorey Court, Admiral Park, St Peter Port, Guernsey GY1 3BG on 5 November 2010 at 12.00 p.m.

The purpose of this letter is to explain the business to be considered at the AGM (the "Proposals").

The Proposals are:

(a) to receive and adopt the Directors' report and financial statements for the period ended 31 March 2010;

(b) to re-appoint Deloitte LLP as Auditors;

(c) to authorise the Directors to fix the remuneration of the Auditors;

(d) to re-elect Tom Chandos as Director;

(e) to re-elect Christopher Spencer as Director;

(f) to authorise the company unconditionally and generally in accordance with the Companies (Guernsey) Law 2008 (as amended) to make market acquisitions (within the meaning of section 316 of the Companies Law) of up to 14.99 per cent of the Ordinary Shares of no par value in the capital of the Company on such terms and in such manner as the directors may from time to time determine; and

(g) to approve the waiver granted by the Panel of the obligation that would otherwise arise on any member of the Concert Party to make a general offer to Shareholders pursuant to Rule 9 of the Code as a result of the exercise by the Company of its Buy Back Authority (the "Waiver Proposal").

Ordinarily, when any person, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent but does not hold shares carrying more than 50 per cent of the voting rights of such a company, a mandatory bid for the Company will be required if any further interests in shares are acquired by any such person pursuant to Rule 9 of the Code.

Assuming that no member of the Concert Party participated in such buy-back, if the Company were to exercise its Buy-Back Authority in full, the shareholding of the Concert Party, which is currently 41.4 per cent of the total Voting Rights in the Company in aggregate, would increase to 48.7 per cent.

As a result, your Board has consulted with the Panel which has agreed, subject to  Shareholder approval, the requirement to make such a bid will be waived in respect of this exercise of the Buy Back Authority.

Page 4

Were the Investment Manager Options to be exercised in full prior to the exercise of the Buy Back Authority by the Company the Concert Party would in aggregate be interested in 47.1 per cent of the total Voting Rights of the Company. Assuming that the Company were to exercise its Buy Back Authority in full and the Investment Manager, who is a member of the Concert Party, were to exercise the entirety of its option rights, the shareholding of the Concert Party would increase to 55.0 per cent (assuming that no member of the Concert Party participated in such buy back).

If the above were to occur, the Concert Party would be able to further increase their aggregate interest in Ordinary Shares without incurring any obligation under Rule 9 to make a mandatory bid for the Company, although individual members of the Concert Party will not be able to increase their percentage interests in Ordinary Shares through or between a Rule 9 threshold without first obtaining the consent of the Panel.

Further details regarding each of the Proposals is set out below.

2. Adoption of the Directors' report and financial statements for the period ended 31 March 2010

Resolution 1, which is an ordinary resolution, proposes the adoption of the Directors' report and the financial statements of the Company for the period ended 31 March 2010. The financial statements have been audited by Deloitte LLP.

3. Auditors

Resolutions 2 and 3, which are ordinary resolutions, seek to reappoint Deloitte LLP as the Company's auditor and to authorise the Directors to determine the auditor's remuneration. Deloitte LLP has been the only auditor of the Company since its incorporation. Deloitte LLP is a member of the Institute of Chartered Accountants in England and Wales.

4. Reappointment of the Directors

Resolutions 4 and 5, which are ordinary resolutions, propose the reappointment of Tom Chandos and Christopher Spencer, respectively, as Company Directors. Each of these Directors will hold office until the forthcoming AGM and each will offer himself for re-election by Shareholders at that meeting. The Board endorses each Director's candidature and commends their appointment to Shareholders.

The Board currently consists of five non-executive Directors each of whom is considered to be independent of the Company's Investment Manager and free from any business or other relationship which could interfere materially with the exercise of their independent judgement. This is in accordance with the Listing Rules and the Association of Investment Companies' principles of corporate governance which require that a majority of the Board is independent.

The biographies of the Directors whose reelection is being proposed, as set out below, demonstrate a breadth of investment knowledge, business and financial experience relevant to the Company's business, which enables the Board to provide effective strategic leadership and proper governance of the Company.

Tom Chandos (Chairman) (appointed on 6 September 2005)

Viscount Chandos, aged 56, is chairman of the real estate investment company Invista European Real Estate Trust SICAV and sits on the board of a number of other publicly traded and private companies. He has a background in investment banking and venture capital. He is a Trustee of the Esmee Fairbairn Foundation and a member of its investment committee. He is a Labour member of the House of Lords.

Christopher Spencer (appointed on 6 September 2005)

Mr Spencer qualified as a chartered accountant in London in 1975. Following two years in Bermuda he moved to Guernsey. Mr Spencer, who specialised in audit and fiduciary work, was Managing Partner/Director of Pannell Kerr Forster (Guernsey) Limited from 1990 until his retirement in May 2000. Mr Spencer sits on the AIC Offshore Committee and is a past President of the Guernsey Society of Chartered and Certified Accountants, and a past Chairman of the Guernsey Branch of the Institute of Directors. Mr Spencer sits on the Board of Directors of J.P.Morgan Private Equity Limited, IRP Property Investments Limited, Tamar European Industrial Fund Limited, Dexion Trading Limited, Henderson Far East Income Limited, Ruffer Investment Company Limited and Low Carbon Accelerator Limited, each of which is listed on the London Stock Exchange. Mr Spencer also sits on the Board of Directors of Thames River Hillside Apex Fund SPC, Thames River Longstore Limited, and Nevsky Fund limited, each of which is listed on the Irish Stock Exchange.

5. Repurchase of own shares

Resolution 7, which is an extraordinary resolution, seeks to renew the authority granted to Directors enabling the Company to make market purchases of Ordinary Shares. This reflects the Directors' continuing focus on ensuring that the share capital of the Company can be managed for the benefit of all Shareholders including through an ongoing managed programme of share buy backs. In the event the Waiver Resolution is not approved by the Independent Shareholders, the Directors do not intend to buy-back Shares where such a buy-back may result in any member of the Concert Party being required to make an offer for Shares pursuant to Rule 9 of the Code.

Page 5

Under the Listing Rules of the Financial Services Authority, the maximum price which can be paid is the higher of 105 per cent of the average of the market values of the Ordinary Shares for the five business days before the purchase is made, the price of the last independent trade, and the highest current independent bid. In addition, Ordinary Shares will only be purchased at prices below the NAV per Share, which should have the effect of increasing the NAV per Share for the remaining Shareholders. The Directors will only consider repurchasing Ordinary Shares in the market if they believe it to be in Shareholders' interests and as a means of correcting any imbalance between supply of and demand for Ordinary Shares. In making purchases, the Company will deal only with member firms of the London Stock Exchange. The Directors are seeking authority to purchase up to 14.99 per cent of the amount of issued share capital (excluding treasury shares) of the Ordinary Shares class of the Company as at 4 November 2010. This authority will expire on the conclusion of the AGM of the Company in 2011.

6. Code Waiver

Background

As a Guernsey company which has its Shares admitted to trading on the Main Market of the London Stock Exchange, the Company is subject to the Code.

Under Rule 9 of the Code, any person who acquires an interest (as defined in the Code) in shares which, taken together with shares in which he is already interested in and which persons acting in concert with him are interested, carry 30 per cent or more of the voting rights of a company which is subject to the Code, is normally required to make a general offer to all the remaining shareholders to acquire their shares.

Similarly, when any person, together with persons acting in concert with him, is interested in shares which in the aggregate carry not less than 30 per cent of the voting rights of such a company, but does not hold shares carrying more than 50 per cent of such voting rights, a general offer will normally be required if any further interests in shares are acquired by any such person.

An offer under Rule 9 must be made in cash and at the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the company during the 12 months prior to the announcement of the offer.

The Concert Party

For the purposes of Rule 9 it is considered that a concert party exists. The Concert Party consists of the Investment Manager, the members of the Investment Manager and the Cheyne Capital Directors, together with their close relatives and any trusts through whom they act, the Cheyne ABS Opportunities Fund LP, certain directors of the Cheyne ABS Opportunities Fund LP, any other funds that are under the discretionary management of the Investment Manager to the extent of that discretionary management other than the Company, certain portfolio managers of such funds, and the members of the Investment Management Team.

As at the date of this announcement, the Concert Party is interested in 16,561,304 Ordinary Shares and 20,701,630 Preference Shares1. Such Shares represent, in aggregate, approximately 41.4 per cent of the Company's current Voting Rights.2

Each of the Directors is independent of the Investment Manager and Cheyne ABS Opportunities Fund LP.

Further information on the members of the Concert Party is set out in Part II and Part III of this Circular.

Effect of Share buy-backs

The Company is seeking authority, pursuant to Section 315 of the Companies (Guernsey) Law 2008 (as amended) to make market acquisitions (within the meaning of Section 316 Companies Law) of the Ordinary Shares, provided that the maximum number of Ordinary Shares that the Company is authorised to acquire is 14.99 per cent of that class of Shares in issue (excluding Shares held in treasury) as at the time the authority is granted, being at the Annual General Meeting.

Subject to the terms of the Buy Back Authority and the Companies Law, the making and timing of any buy back of Ordinary Shares will be at the absolute discretion of the Board. No firm decision to buy back Ordinary Shares has been made at the time of the publication of this Circular.

1 Preference Shares shall not entitle the holders thereof to vote upon any resolution at any general meeting of the Company. If at any time: (a) the payment of the preference dividend on any of the Preference Shares thereof is more than 12 months in arrear; or (b) the redemption of any Preference Shares is more than 1 month overdue, then in relation to any general meeting held at any time whilst either of the events specified in paragraphs (a) or (b) above remain applicable (or any adjournment thereof) holders of Preference Shares shall be entitle to attend and vote at general meetings of the Company in the same way as holders of Ordinary Shares.

2 Including the Investment Manager's interest in Ordinary Shares through the Investment Manager Options the Concert Party would in aggregate be interested in 47.1 per cent of the total Voting Rights of the Company.

Page 6

If the Company were to exercise its Buy Back Authority in full (with no member of the Concert Party participating), the Concert Party's maximum aggregate shareholding in the Company would be 16,561,304 Ordinary Shares and 20,710,630 Preference Shares, representing approximately 48.7 per cent of the Company's reduced Voting Rights. These figures are based on the assumption that:

• the Investment Manager has not exercised its Investment Manager Options;

• no member of the Concert Party sells any of its Shares between the date of this Circular and the AGM and the NAV of these two classes remains unchanged;

• the Company exercises the Buy Back Authority in full and no member of the Concert Party participates therein;

• each Ordinary Share entitles the holder to one vote at a meeting of Shareholders; and

• Preference Shares shall not entitle any holder thereof to vote upon any resolution at any general meeting of the Company.

Were the Investment Manager Options to be exercised in full prior to the exercise of the Buy Back Authority by the Company, the Concert Party would in aggregate be interested in 47.1 per cent of the total Voting Rights of the Company. Assuming that the Company were to exercise its Buy-back Authority in full and the Investment Manager, who is a member of the Concert Party, were to exercise the entirety of its option rights, the shareholding of the Concerted Party would increase to 55.0 per cent (assuming that no member of the Concert Party participatedin such buy back). As a result, the Concert Party may further increase their aggregate interest in Ordinary Shares without incurring any obligation under Rule 9 to make a mandatory bid for the Company, although individual members of the Concert Party will not be able to increase their percentage interests in Ordinary Shares through or between a Rule 9 threshold without first obtaining the consent of the Panel.

The Code

Under Rule 37 of the Code, any increase in the percentage of shares carrying voting rights in which a person is interested that results from a company buying back its own shares is also treated as an acquisition for the purposes of Rule 9 of the Code. Rule 37 does not normally apply to a company unless the person who would otherwise be required to make a mandatory offer under Rule 9 of the Code is a director of the company or is acting in concert with the directors of the company. Investment managers of a company will, for these purposes, be treated as a director. As the assets of Cheyne ABS Opportunities Fund LP are managed by the Investment Manager (who has an interest in Ordinary Shares through the Investment Manager Options), it is treated as acting in concert with the Directors. The Cheyne Principals are also treated as acting in concert with the Investment Manager which is a member of the Cheyne Capital group. The exception to Rule 37 would therefore not apply in either the case of the Cheyne ABS Opportunities Fund or the Cheyne Principals.

Accordingly, if the Concert Party's aggregate interest in shares carrying voting rights increased as a result of the exercise of the Buy Back Authority such that it represented 30 per cent or more of the Company's Voting Rights in aggregate, one or more of the members of the Concert Party would be required to make a mandatory offer for the remainder of the Issued Share Capital of the Company. Similarly if the Concert Party's aggregate interest in shares carrying Voting Rights in the Company was between 30 to 50 per cent of the Company's Voting Rights and it increased as a result of the exercise by the Company of the Buy Back Authority one or more members of the Concert Party would be required to make a mandatory offer for the remainder of the Issued Share Capital of the Company.

Panel Waiver - Buy Back Authority

The Panel has agreed that, subject to the approval of the Independent Shareholders on a poll, it will waive the obligation on any member of the Concert Party to make a general offer that would otherwise arise as a result of the exercise by the Company of the Buy Back Authority.

Accordingly, the Waiver Resolution (for the approval of the Waiver Proposal) is being proposed at the AGM, and will be taken on a poll, to be called by the Chairman of the AGM. The members of the Concert Party will not be entitled and have undertaken not to vote on the Waiver Resolution.

This Circular provides Independent Shareholders with further details of the Waiver Proposal and explains why the Directors consider that the Waiver Proposal is in the best interests of both the Company and the Independent Shareholders as a whole. Shareholders should note that if the Waiver Resolution is approved at the AGM, any further increase in the Concert Party's interest in Shares or that of any member thereof, other than by way of the Buy Back Authority, or an acquisition of further Shares by any member of the Concert Party will be subject to the provisions of Rule 9. The Panel Waiver will only remain in effect for 12 months following the AGM.

Intentions of the Directors

The Directors anticipate that they will continue to seek authority from the Shareholders on an annual basis to renew the Buy Back Authority and will continue to seek Shareholder approval of the waiver of any Rule 9 obligation which may otherwise arise.

Page 7

7. Risks associated with the Waiver Proposal

In considering your decision in relation to the Waiver Proposal, you are referred to the risks set out below.

Only those risks relating to the Waiver Proposal which are material and currently known to the Company are set out below.

Additional risks and uncertainties not currently known to the Company, or that the Company currently deems to be immaterial, may also have an adverse effect on the Company.

The Independent Shareholders should note that, if the Waiver Resolution is approved and, as a result of the exercise by the Company of the Buy Back Authority, the Concert Party's aggregate shareholding in the Company increased to greater than 30 per cent, the Concert Party would be able to exercise more significant control over the conduct of the Company than prior to the exercise of the Buy Back Authority.

The Independent Shareholders should note that even if the Waiver is approved there is no guarantee that, in any future situation where Rule 9 of the Code became relevant to the Company (whether in relation to the Concert Party or otherwise), the Panel would be similarly willing to grant a waiver.

8. Entitlement to vote and voting intention

Under Rule 5 of the Code, the members of the Concert Party are not permitted to vote on the Waiver Resolution. Only the Independent Shareholders (being all of the Shareholders except for the members of the Concert Party) will be entitled to vote on the Waiver Resolution at the AGM.

The Concert Party will not be voting its aggregate shareholding of 16,561,304 Ordinary Shares, representing approximately 41.4 per cent of the current Voting Rights, in respect of Resolution 6.

9. Annual General Meeting

In general

The Waiver Proposal is subject to the approval of the Independent Shareholders holding Ordinary Shares. The remaining Proposals are subject to the approval of the Company's Shareholders holding Ordinary Shares.

Notice convening an Annual General Meeting of the Company, to be held at 12.00 p.m. on 5 November 2010 at Kleinwort Benson (Channel Islands) Fund Services Limited, Dorey Court, Admiral Park, St Peter Port, Guernsey GY1 3BG, is set out at the end of this Circular. This Notice includes the full text of the Resolutions to

be proposed at the AGM.

Quorum and majorities required

The quorum for the Annual General Meeting will be two Shareholders present in person or by proxy and entitled to vote.

In order for the Waiver Resolution to be passed, it must be approved on a poll by more than 50 per cent of votes cast by the Independent Shareholders holding Ordinary present at the AGM in person or by proxy.

In order for the Ordinary Resolutions (excluding the Waiver Resolution) to be passed, they must be approved by more than 50 per cent of votes cast by the Ordinary Shareholders present at the AGM in person or by proxy.

In order for Resolution 7, which is an extraordinary resolution, to be passed, it must be approved by not less than 75 per cent of votes cast by the Ordinary Shareholders present at the AGM in person or by proxy.

10. Action to be taken by Shareholders

If you are a Shareholder, you will find enclosed with this Circular a Form of Proxy for use at the Annual General Meeting.

Whether or not you intend to be present at the Annual General Meeting, you are asked to complete the Form of Proxy in accordance with the instructions printed thereon and to return it to Capita Registrars, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU, at the address indicated on the front page of this Circular, as soon as possible, but in any event so as to arrive not later than forty-eight hours before the time appointed for holding the Annual General Meeting.

The completion and return of the Form of Proxy will not preclude you from attending the Annual General Meeting and voting in person if you wish to do so.

Page 8

11. Recommendation

The Waiver Proposal

The Directors, who have been so advised by Liberum, consider the Waiver Proposal to be fair and reasonable and in the best interests of the Company and of the Independent Shareholders as a whole. In providing advice to the Directors, Liberum has taken account of the commercial assessments of the Directors. Accordingly, the Directors unanimously recommend that the Independent Shareholders vote in favour of the Waiver Resolution, approving the Waiver Proposal, at the AGM, as they intend to do in respect of their own beneficial shareholdings of 30,000 Ordinary Shares, representing 0.075 per cent of the current Voting Rights.

The remainder of the Proposals

The Board considers that the Proposals are in the best interests of the Company and of Shareholders as a whole. Accordingly, the Board unanimously recommend that the Shareholders vote in favour of Resolutions 1, 2, 3, 4, 5 and 7 at the AGM. Each of the Directors, where applicable has indicated its intention to vote their aggregate beneficial holdings of 30,000 Ordinary Shares representing 0.075 per cent of the current Voting Rights, in favour of Resolutions 1, 2, 3, 4, 5 and 7.

Yours faithfully

Tom Chandos

Page 9

Part II

Additional Information

1. Responsibility

The Directors of the Company, whose names are set out below, accept responsibility for the information set out in this document, other than information relating to the Cheyne ABS Opportunities Fund LP, the Investment Manager and other members of the Concert Party, members of their immediate families and related trusts. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case), the information in this document for which they take responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

The directors of Cheyne ABS Opportunities General Partner Inc., the general partner to the Cheyne ABS Opportunities Fund LP, accept responsibility for the information set out in this document relating to themselves, members of their respective immediate families and related trusts, the Cheyne ABS Opportunities Fund LP and to the Cheyne ABS Opportunities Fund LP's general partner. To the best of the knowledge and belief of the directors of the general partner (who have taken all reasonable care to ensure that such is the case), the information in this document for which they take responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

Michael Lewis accepts responsibility for the information set out in this document relating to him, members of his immediate family and related trusts. To the best knowledge and belief of Mr. Lewis (who has taken all reasonable care to ensure that such is the case), the information in this document for which he takes responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

The directors of CCM, which is a designated member of the Investment Manager, accept responsibility for the information set out in this document relating to themselves, members of their respective immediate families and related trusts, the Investment Manager and to Stuart Fiertz and Jonathan Lourie and members of their respective immediate families and related trusts. To the best of the knowledge and belief of the directors of CCM (who have taken all reasonable care to ensure that such is the case), the information in this document for which they take responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

2. Directors, Partners and the Cheyne Principals

2.1 The Directors of the Company are:

Tom Chandos (Chairman)

Graham Harrison

John Hawkins

Talmai Morgan

Christopher Spencer

The Directors' business address is at Dorey Court, Admiral Park, St. Peter Port, Guernsey GY1 3BG.

2.2 The directors of Cheyne ABS Opportunities General Partners Inc. are:

Daniele Hendry

Philippe Lette

The directors' business address is at Walker House, Mary Street, PO Box 908 GT, Grand Cayman, Cayman Islands.

2.3 The directors of CCM are:

Stuart Fiertz

Gary Ibbott

Michael Lewis

Jonathan Lourie

The directors' business address is at Stornoway House, 13 Cleveland Row, London SW1A 1DH.

Page 10

3. Interests and Dealings

The Company Directors

3.1 As at the close of business on the Latest Practicable Date, the interests, rights to subscribe and short positions of the Directors, their immediate families and persons connected with them in the share capital of the Company, together with any options in respect of such share capital (all of which holdings are beneficially held unless otherwise stated) required to be notified to the Company or which are required to be entered into the Company's Shareholder register, are as set out below.

Director	Ordinary Shares	Preference Shares*	Percentage of Voting Rights
Tom Chandos	28,500(3)	35,625	0.0713
Talmai Morgan	1,500(4)	1,875	0.0038
Christopher Spencer	1,500(5)	1,875	0.0038
Graham Harrison	1,500(6)	1,875	0.0038
John Hawkins	1,500(7)	1,875	0.0038

* Preference Shares shall not entitle the holders thereof to vote upon any resolution at any general meeting of the Company. If at any time: (a) the payment of the preference dividend on any of the Preference Shares thereof is more than 12 months in arrear; or (b) the redemption of any Preference Shares is more than 1 month overdue, then in relation to any general meeting held at any time whilst either of the events specified in paragraphs (a) or (b) above remain applicable (or any adjournment thereof) holders of Preference Shares shall be entitle to attend and vote at general meetings of the Company in the same way as holders of Ordinary Shares.

(3) These Ordinary Shares are held by Smith & Williamson Nominees Limited: 24,000 are held for the Botts & Company Retirement Benefit Scheme on behalf of Mr. Chandos, 3,000 are held for Mr. Chandos' two sons and 1,500 are held for Mr. Chandos as bare trustee for his daughter.

(4) These Ordinary Shares are held by Forest Nominees Limited for Mr. Morgan.

(5) These Ordinary Shares are held by HSBC Global Custody Nominee (UK) Limited for Mr. Spencer.

(6) These Ordinary Shares are held by Forest Nominees Limited for Asset Risk Consultants Limited Retirement Annuity Trust Scheme on behalf of Mr. Harrison.

(7) These Ordinary Shares are held by James Capel Nominees (Channel Islands) Limited for Mr. Hawkins.

3.2 Save as disclosed in paragraph 3.1 and the table below, neither any of the Directors nor any member of their immediate families or related trusts (so far as the Directors are aware having made due enquiry) is interested, directly or indirectly, has rights to subscribe to, or has any short position in relevant securities, nor has any such person dealt therein for value during the 12 months prior to the latest practicable date prior to the publication of this document.

Beneficial Shareholder	Date of Transaction	Transaction	Number of Ordinary Shares	Price Per Share
Tom Chandos (8)	16 September	Purchase of Ordinary Shares	9,500	€2
Talmai Morgan	16 September	Purchase of Ordinary Shares	500	€2
Christopher Spencer	16 September	Purchase of Ordinary Shares	500	€2
Graham Harrison	16 September	Purchase of Ordinary Shares	500	€2
John Hawkins	16 September	Purchase of Ordinary Shares	500	€2

(8) These Ordinary Shares are held by Smith & Williamson Nominees Limited: 8,000 are held for the Botts & Company Retirement Benefit Scheme on behalf of Mr. Chandos, 1,000 are held for Mr. Chandos' two sons and 500 are held for Mr. Chandos as bare trustee for his daughter.

3.3 Neither the Company nor any of the Directors nor any member of their immediate families or related trusts, owns or controls or is interested, directly or indirectly in, or has any short position in, any of the members of the Concert Party or any securities convertible into, or exchangeable for, rights to subscribe for and options (including traded options) in respect of, and derivatives referenced to, any of the foregoing, or has dealt for value in any such securities in the 12 months prior to the latest practicable date prior to the publication of this document.

3.4 Neither the Company, the Directors, nor any person acting in concert with the Company has borrowed or lent any relevant securities (save for any borrowed securities which have either been on-lent or sold).

3.5 Neither the Company nor any person acting in concert with the Company has any arrangement, agreement or understanding, formal or informal, of whatever nature relating to relevant securities which may be an inducement to deal or refrain from dealing.

Page 11

The Concert Party

3.6 Save as disclosed in the table below, neither the Cheyne ABS Opportunities Fund LP, CCM, its subsidiaries, any directors of the Cheyne ABS Opportunities Fund LP nor any of the Cheyne Capital Directors, nor any member of their immediate families or connected persons, nor any person acting in concert with the Cheyne ABS Opportunities Fund LP, CCM or any directors of the Cheyne ABS Opportunities Fund LP or any of the Cheyne Capital Directors (in the case of the Cheyne Capital Directors and their immediate families or connected persons) owns or controls or is interested, directly or indirectly in, or has borrowed or lent (save for any borrowed securities which have either been on-lent or sold), has rights to subscribe to, or has any short position in, any relevant securities as defined in paragraph 3.10 below, nor has any such person dealt therein during the 12 months prior to the latest practicable date prior to the publication of this document.

Beneficial Shareholder (9)	Number of Ordinary Shares held at the Latest Practical Date	Percentage of Voting Rights	Maximum potential percentage of Voting Rights
Cheyne ABS Opportunities Fund LP	15,773,804	39.47	46.43
Stuart Fiertz (10)	300,000	0.75	0.88
Michael Lewis (11)	337,500	0.84	0.99
Jonathan Lourie (12)	150,000	0.38	0.44

(9) Assuming the full exercise of the Investment Manager Options as at the Latest Practical Date the Investment Manager would hold 2,250,000 Shares and be interested in 5.6 per cent of the total Voting Rights of the Company, which would increase to 6.3 per cent of the total Voting Rights if the Company were to exercise its Buy Back Authority in full and the Investment Manager were to exercise the entirety of its option rights. This would result in a maximum potential of 55.0 per cent of the total Voting Rights of the Company.

(10) These Ordinary Shares are held by Raner Investments Limited on behalf of Oceana Retail Holdings Limited, a company of which Mr Fiertz is the sole beneficiary.

(11) These Ordinary Shares are held by Goldman Sachs Securities Nominees Limited on behalf of Oceana Retail Holdings Limited, a company indirectly owned by family trusts connected with Mr Lewis.

(12) These Ordinary Shares are held by Morstan Nominees Limited on behalf of Mr Lourie.

3.7 Save as disclosed in the table below no dealings (including borrowing or lending) for value in relevant Company securities by any member of the Concert Party, their respective directors or persons acting in concert with them took place during the period beginning 12 months preceding the date of this Circular and ending on the Latest Practicable Date.

Beneficial Shareholder	Date of transaction	Transaction	Number of Ordinary Shares	Price per Share
Stuart Fiertz	16 September	Purchase of Ordinary Shares	100,000	€2
Jonathan Lourie	16 September	Purchase of Ordinary Shares	50,000	€2

Parties acting in concert with the Company

3.8 At the Latest Practicable Date prior to the publication of this document, the interests (all of which are beneficial) of Liberum in Ordinary Shares are as set out below. Liberum is the Company's corporate broker and acted as Sponsor, Financial Adviser and Bookrunner on the Company's Placing and Open Offer and Bonus Issue of Preference Shares.

Share Class	Number of Ordinary Shares	Percentage of Voting Rights
Ordinary	451,270	1.13

3.9 Save as disclosed in paragraph 3.8, no concert party of the Company, no connected adviser to the Company or to any associate (as defined in paragraph 3.10 below) of the Company or to any company which is an associate of the Company or to any concert party of the Company nor any person controlling, controlled by or under the same control as any such connected adviser (other than an exempt principal trader or an exempt fund manager), nor any associates of the Company, nor any pension fund of the Company or any of its associates, nor any employee benefit trust of the Company or any of its associates, owns, controls, or is interested, directly or indirectly in, or has borrowed or lent, or has rights to subscribe to, or has any short position in, any relevant securities.

Page 12

3.10 For the purposes of this paragraph:

3.10.1 references to an "associate" of a company include the company's parent, its subsidiaries and fellow subsidiaries and their associated companies and companies of which such companies are associated companies (for this purpose ownership or control of 20 per cent or more of the equity share capital of company is regarded as a test of associated company status);

3.10.2 references to a person having an "interest" in relevant securities includes where a person:

(A) owns securities;

(B) has the right (whether conditional or absolute) to exercise or direct the exercise of the voting rights attaching to securities or has general control of them;

(C) by virtue of any agreement to purchase, option or derivative, has the right or option to acquire securities or call for their delivery or is under an obligation to take delivery of them, whether the right, option or obligation is conditional or absolute and whether it is in the money or otherwise; or

(D) is party to any derivative whose value is determined by reference to the prices of securities and which results, or may result, in his having a long position in them;

3.10.3 references to "relevant securities" means Ordinary Shares and any securities convertible into, or exchangeable for, rights to subscribe for and options (including traded options) in respect of, and derivatives referenced to, any of the foregoing; and

3.10.4 derivatives include any financial product whose value in whole or in part is determined directly or indirectly by reference to the price of an underlying security but which does not include the possibility of delivery of such underlying securities derivatives.

4. Arrangements in connection with the Proposals

4.1 No member of the Concert Party has entered into any agreement, arrangement or understanding with any of the Directors which has any connection with or dependence upon any of the Proposals. In addition, the Directors are not aware of any agreement, arrangement or understanding having any connection with or dependence upon the Proposals between any member of the Concert Party and any person interested or recently interested in Shares, or any other recent director of the Company.

4.2 The Directors' current intention is for Shares purchased by the Company pursuant to the Buy Back Authority to be cancelled, although they reserve the right to hold repurchased Shares in treasury subject to legal and regulatory requirements. No agreement, arrangement or understanding exists whereby any of the securities acquired in pursuance of the Waiver Proposal will be transferred to other persons.

5. Directors' letters of appointment

5.1 All of the Directors are non-executive and do not have service contracts with the Company. Instead, the

Directors are appointed pursuant to letters of appointment. All of the Directors were appointed pursuant to letters of appointment dated 6 September 2005.

5.2 On termination of a Directors' appointment, at any time, he or she is entitled to any accrued but unpaid fees but not to any other compensation. Save in regards to Tom Chandos, the current fees (per annum) of the Directors are €30,000 each, payable quarterly in arrear. Tom Chandos is the Chairman and receives a fee of €120,000 (per annum) for fulfilling such a role. Save for Tom Chandos, all of the Directors were paid an additional payment of €5,000 in relation to the Placing and Open Offer and Bonus Issue (in respect of which dealings commenced on 17 September 2010). The Directors receive no other material pay or benefits from the Company (with the exception of reimbursement of expenses incurred in respect of their duties as Directors).

5.3 Save as described in this paragraph 5, there have been no new Directors' service contracts or letters or terms of appointment or amendments to existing Directors' service contracts or letters or terms of appointment within the period of six months prior to the date of this Circular.

6. The Company

6.1 The Company is an authorised closed ended investment scheme registered in Guernsey. Its Shares are listed on the Official List of the United Kingdom Listing Authority and admitted to trading on the Main Market of the London Stock Exchange.

6.2 The Company's current investment policy is to invest primarily in debt secured by commercial or residential properties in Western Europe and the United Kingdom.

Page 13

6.3 The Directors and the members of the Concert Party have confirmed that their intentions regarding the future of the business and the location of the Company's place of business will not be altered as a result of these Proposals.

There are no plans to introduce any significant change in the business as a result of the Proposals. The

Company does not have any employees.

6.4 As at the Latest Practicable Date, the Company had a market capitalisation of approximately €36.6 million.

6.5 The financial information relating to the Company that would otherwise be required under the Takeover Code is contained in the Company's Annual Report and Accounts for the financial year ended 31 March 2010 that has been sent to you together with this Circular. If you have not received your copy of the Company's Annual Report and Accounts for the financial year ended 31 March 2010 and would like a further copy, please contact the Company Secretary on telephone number 01481 727111.

7. Material contracts

7.1 The following contracts (not being contracts entered into in the ordinary course of business) are contracts which have been entered into by the Company and its subsidiary Trebuchet Finance Limited during the period beginning 2 years preceding the date of this Circular, and which are or may be material or are contracts entered into by the Company or its subsidiary Trebuchet Finance Limited which contain any provisions under which the Company or its subsidiary Trebuchet Finance Limited has any obligation or entitlement which is or may be material to the Company at the date of this Circular:

7.2 Placing and Open Offer Agreement

7.2.1 The placing and open offer agreement (the "Placing and Open Offer Agreement") dated 17 August 2010 between Liberum, the Company and the Investment Manager whereby the Company agreed, subject to certain conditions that are typical for an agreement of this nature, the last condition being open offer admission ("Open Offer Admission"), to issue the new Ordinary Shares ("New Ordinary Shares") to be issued pursuant to the Placing and Open Offer. Liberum agreed, subject to certain conditions that are typical for an agreement of this nature, the last condition being Open Offer Admission, to use reasonable endeavours to procure subscribers for the New Ordinary Shares to be issued under the Placing.

7.2.2 In consideration for the provision of their services under the Placing and Open Offer Agreement, the Company would pay to Liberum a commission based on the number of qualifying new investors that subscribed for New Ordinary Shares pursuant to the issue. It was agreed that Liberum would be paid a minimum, 2.5 per cent of the aggregate value of the New Ordinary Shares issued pursuant to the Placing and Open Offer.

7.2.3 In addition, conditional on the New Ordinary Shares allotted pursuant to the Placing and Open Offer being admitted to the Official List and to trading on the main market of the London Stock Exchange, the Company paid to Liberum a corporate finance advisory fee of £100,000.

7.2.4 It was agreed that the aggregate value of placing commissions paid to placees would not equate to more than 1.25 per cent of the aggregate value of the New Ordinary Shares to be issued pursuant to the Placing and Open Offer.

7.2.5 The Company and the Investment Manager gave certain representations, warranties, undertakings and indemnities to Liberum. The Company undertook to Liberum in the Placing and Open Offer Agreement that it would not, during the period beginning at the date of the Placing and Open Offer Agreement and ending six months after the date of Open Offer Admission, without the prior written consent of Liberum, offer, issue, lend, sell or contract to sell, grant options in respect of or otherwise dispose of, directly or indirectly any New Ordinary Shares, Preference Shares or any securities convertible into, or exchangeable for, or enter into any transaction with the same economic effect as, or agree to do any of the foregoing (other than the New Ordinary and Preference Shares issued pursuant to the Placing and Open Offer and the Bonus Issue).

7.2.6 The Placing and Open Offer Agreement is governed by English law.

8. Material changes

8.1 Save as set out in Note 23 in the Company's Annual Report and Accounts for the financial year ended 31 March 2010, there have been no material changes in the financial or trading position of the Company since 31 March 2010.

Page 14

9. Market quotations

9.1 The following are middle market quotations for the Company's Shares, as derived from the Daily Official List of the London Stock Exchange, for the first business day of each of the six months set out below and for the Latest Practicable Date:

Date (2010)	Price per Ordinary Share (€)	Price per Preference Share (£)
4 May	2.34	n/a
1 June	1.93	n/a
1 July	2.15	n/a
2 August	2.48	n/a
1 September	2.03	n/a
1 October	0.915	0.965

(the Latest Practicable Date)

10. Financing Arrangements

10.1 None of the Cheyne ABS Opportunities Fund LP, Stuart Fiertz, Michael Lewis and Jonathan Lourie and other members of the Concert Party has any financing arrangements which are dependent on the business of the Company.

11. Consents

11.1 Liberum has given and not withdrawn its written consent to the issue of this Circular with the references to it in the form and context in which they appear.

12. Documents available for inspection

Copies of the following documents are available for inspection at the registered office of the Company during normal business hours on any Business Day (Saturdays and public holidays excepted) until the conclusion of the AGM:

the Memorandum and the Articles of Association of the Company;

this Circular;

the consent letter from Liberum;

the letters of appointment of the Company directors;

the audited consolidated accounts of Cheyne ABS Opportunities Fund LP for the years ending 2008, 2009 and 2010; and

the audited consolidated accounts for the Company for the years ending March 31, 2009 and 2010.

Copies of these documents are also published on www.recreditinvest.com

Page 15

Part III

Information About The Concert Party And Investors In Cheyne Abs Opportunities Fund LP

Cheyne ABS Opportunities Fund L.P. (the Cheyne ABS Opportunities Fund LP)

(a) The Cheyne ABS Opportunities Fund LP is an unregulated collective investment scheme which was established in December 2005 as an open-ended exempted limited partnership formed under the laws of the Cayman Islands. The Cheyne ABS Opportunities Fund LP was originally established under the name of Cheyne ABS Opportunities Fund I L.P. and subsequently changed its name to Cheyne ABS Opportunities Fund L.P. The Cheyne ABS Opportunities Fund LP's general partner is Cheyne ABS Opportunities General Partner Inc., an exempted company formed under the laws of the Cayman Islands ("Cheyne ABS Opportunities General Partner"). The assets of Cheyne ABS Opportunities Fund LP are managed by the Investment Manager which is regulated and authorised in the conduct of its investment business in the United Kingdom by the FSA. Cheyne ABS Opportunities General Partner has appointed Cheyne Capital International Limited, a Bermudian-registered limited company ("CCIL"), to provide it with advisory and marketing services. The Cheyne ABS Opportunities Fund LP is administered in Ireland.

The Cheyne ABS Opportunities Fund LP is not actively managed by the Investment Manager as the Cheyne ABS Opportunities Fund LP is currently restricted in its ability to make investments only in the shares of the Company. A board of directors has ultimate responsibility for the Cheyne ABS Opportunities Fund LP. Dividend payments received in respect of this holding are paid out to the Cheyne ABS Opportunities Fund LP's investors, subject to the retention of a cash reserve sufficient to cover the Cheyne ABS Opportunities Fund LP's operating costs and hedging expenses. The Cheyne ABS Opportunities Fund LP has no other investment activity.

The investors in the Cheyne ABS Opportunities Fund LP are Cheyne Structured Solutions Fund L.P., Cheyne Special Situations Fund L.P., Cheyne Multi-Strategy Fund L.P., Cheyne Fund L.P. and Cheyne Leverage Fund L.P. details of which are set out below. The registered office address of the Cheyne ABS Opportunities Fund LP is Walker House, Mary Street, PO Box 908GT, Grand Cayman, Cayman Islands.

(b) Cheyne Structured Solutions Fund L.P.

Cheyne Structured Solutions Fund L.P. is an unregulated collective investment scheme which was established in September 2003 as an open-ended exempted limited partnership formed under the laws of the Cayman Islands.  The general partner of Cheyne Structured Solutions Fund L.P. is Cheyne Structured Solutions General Partner Limited, an exempted company formed under the laws of the Cayman Islands ("Cheyne Structured Solutions General Partner"). The assets of the Cheyne Structured Solutions Fund are managed by the Investment Manager. Cheyne Structured Solutions General Partner has appointed CCIL to provide it with advisory and marketing services. Cheyne Structured Solutions Fund is

administered in Ireland.

Cheyne Structured Solutions Fund L.P.'s investment objective in respect of the Cheyne Structured Solutions Fund is to directly or indirectly enter into or gain exposure to one or more investment transactions involving asset backed commercial paper conduits, other variable interest entities and/or other structured finance opportunities. Investment transactions may be effected in such form as Cheyne Structured Solutions General Partner may from time to time approve and may include, without limitation, the acquisition of notes, equity and/or forms of debt or derivative-based instruments or investments, including credit default, total return and other forms of swaps.

(c) Cheyne Special Situations Fund L.P.

Cheyne Special Situations Fund L.P. ("Cheyne Special Situations Fund") is an unregulated collective investment scheme which was established in April 2003 as an open-ended exempted limited partnership formed under the laws of the Cayman Islands. Cheyne Special Situations Fund was originally established under the name of Cheyne Event Driven Fund L.P. and subsequently changed its name to Cheyne Special Situations Fund L.P. Cheyne Special Situations Fund's general partner is Cheyne General Partner Inc., an exempted company formed under the laws of the Cayman Islands ("Cheyne General Partner"). The assets of the   Cheyne Special Situations Fund are managed by the Investment Manager. Cheyne General Partner has appointed CCIL to provide it with advisory and marketing services. Cheyne Special Situations Fund is administered in Ireland.

Cheyne Special Situations Fund's investment objective is to realise value from its investments in an orderly fashion.

(d) Cheyne Multi-Strategy Fund L.P.

Cheyne Multi-Strategy Fund L.P. ("Cheyne Multi-Strategy Fund") is an unregulated collective investment scheme which was established in March 2005 as an open-ended exempted limited partnership formed under the laws of the Cayman Islands. Cheyne Multi-Strategy Fund's general partner is Cheyne General Partner. The assets of the Cheyne Multi-Strategy Fund are managed by the Investment Manager. Cheyne General Partner has appointed CCIL to provide it with advisory and marketing services. Cheyne Multi-Strategy Fund is administered in Ireland.

Page 16

Cheyne Multi-Strategy Fund's investment objective in respect of its initial portfolio is to seek to achieve attractive risk adjusted total rates of return independent of market movements. It is the current policy of the initial portfolio to achieve its investment objective primarily through (i) investment in investment funds and/or (ii) the establishment within the Cheyne Multi-Strategy Fund of managed accounts, the portfolios of which are managed in accordance with policies and/or strategies approved by the directors of Cheyne General Partner or the Investment Manager. There are no restrictions on the asset class or asset classes or strategy or strategies which may be employed by any such investment funds and/or managed accounts. Cheyne Multi-Strategy Fund may also seek exposure to such policies and/or strategies through derivatives and other instruments and investments.

(e) Cheyne Fund L.P.

Cheyne Fund L.P. ("Cheyne Fund") is an unregulated collective investment scheme which was established in May 2000 as an open-ended exempted limited partnership formed under the laws of the Cayman Islands. Cheyne Fund's general partner is Cheyne General Partner. The Cheyne Fund structure also offers investors the opportunity to seek exposure to the Cheyne Fund's investment strategy via an investment in a Cayman exempt feeder company.

The assets of the Cheyne Fund are managed by the Investment Manager. Cheyne General Partner has appointed CCIL to provide it with advisory and marketing services. Cheyne Fund is administered in Ireland. Cheyne Fund's investment objective is to realise value from its investments in an orderly fashion.

(f) Cheyne Leverage Fund L.P.

Cheyne Leverage Fund L.P. ("Cheyne Leverage Fund") is an unregulated collective investment scheme which was established in July 2002 as an open-ended exempted limited partnership formed under the laws of the Cayman Islands. Cheyne Leverage Fund's general partner is Cheyne General Partner. The Cheyne Leverage Fund structure also offers investors the opportunity to seek exposure to the Cheyne Leverage Fund's investment strategy via an investment in a Cayman exempt feeder company. The assets of the Cheyne Leverage Fund are managed by the Investment Manager. Cheyne General Partner has appointed CCIL to provide it with advisory and marketing services. Cheyne Leverage Fund is administered out of Ireland. Cheyne Leverage Fund's investment objective is to realise value from its investments in an orderly fashion.

2 Jonathan Lourie

Mr Lourie is the founder and Chief Executive Officer of the Investment Manager. Under his leadership, Cheyne has grown to become one of the largest alternative asset managers in Europe. The firm's main areas of expertise include corporate credit, real estate and asset-backed strategies, event driven, convertible bonds, equity strategies, and fund of funds. Prior to the inception of Cheyne Capital in June 2000, Mr. Lourie worked from 1985 at Morgan Stanley where he was responsible for the creation and development of the convertible bond management practice. Mr. Lourie was educated from 1967 to 1979 at the International School of Geneva and from 1979 to 1983 at Dartmouth College in Hanover, New Hampshire, from which he graduated Phi Beta Kappa and Summa Cum Laude in 1983.

3 Stuart Fiertz

Mr Fiertz is the co-founder, President and Director of Research of the Investment Manager. From 1991 to June 2000, and prior to establishing Cheyne, Mr Fiertz worked for Morgan Stanley where he was responsible for the development and implementation of customised portfolio strategies and for credit research in the convertible bond management practice, latterly as an Executive Director. Prior to joining Morgan Stanley, Mr. Fiertz was an equity research analyst for the Value Line Investment Survey from 1984 - 1986, and a high yield credit analyst in Boston at Merrill Lynch from 1986 - 1988 and in New York at Lehman Brothers from 1988 - 1990. During this time, Mr. Fiertz was responsible for the analysis of companies in a wide range of industries. Mr Fiertz is a Chartered Financial Analyst and a Chartered Alternative Investment Analyst who was educated at the International School of Geneva from 1976 - 1980 and from 1980 - 1984 at Dartmouth College where he was awarded a BA degree in Political Science and Economics.

4 Michael Lewis

Mr. Lewis is the Managing Director of Oceana Retail Holdings Limited, a UK investment company. The wider Lewis group has retail interests in South Africa. It also holds a controlling interest in a retail business in Australia and New Zealand comprising some 240 outlets. Mr. Lewis is a director of Foschini Limited, one of South Africa's foremost retail companies with 1,200 stores. He is actively involved in the biotechnology industry, having co-founded a biotechnology company focusing on bone and cartilage development and tissue engineering. Mr. Lewis' other interests include general investment, real estate and media. Mr. Lewis is a member of the Concert Party by virtue of being a non-executive director of CCM, the corporate member of the Investment Manager. Mr. Lewis has an Honours Degree in Economics and previously worked for Ivory & Sime, Lombard Odier and money management companies in Scotland and England.

Page 17

Definitions

"Annual General Meeting" the annual general meeting of the Company held on 5 November 2010

"Articles" or "Articles of Incorporation" the memorandum and articles of association of the Company in force from time to time

"Board" the board of directors of the Company from time to time

"Business Day" any day on which banks are generally open for business in London and Guernsey other than a Saturday or a Sunday

"Buy Back Authority" the Company's authority, pursuant to Section 315 of the Companies Law, to make one or more market acquisitions (within the meaning of section 316) of Shares, provided that the maximum number of Shares that the Company is authorised to acquire is 14.99 per cent of each class of Shares in issue (excluding Shares held in treasury) at the time the authority is granted, being the Annual General Meeting

"Cheyne ABS Opportunities Fund LP" Cheyne ABS Opportunities Fund LP, acting by its general partner, Cheyne ABS Opportunities General Partner Inc. and (as the context requires) such general partner itself, which is an open-ended investment fund managed by the Investment Manager

"CCM" Cheyne Capital Management Limited, which is the corporate member of the Investment Manager

"Cheyne Capital Directors" the directors of CCM

"Cheyne Principals" Jonathan Lourie (Chief Executive Officer of the Cheyne Capital group) together with Stuart Fiertz (President and director of research of the Cheyne Capital group)

"Circular" this document

"Code" The City Code on Takeovers and Mergers

"Companies Law" The Companies (Guernsey) Law, 2008

"Company" Real Estate Credit Investments Limited

"Concert Party" the Investment Manager, the members of the Investment Manager and the Cheyne Capital Directors, together with their close relatives and any trusts through whom they act, the Investing Fund, certain directors of the Investing Fund, any other funds that are under the discretionary management of the Investment Manager to the extent of that discretionary management other than the Company, certain portfolio managers of such funds, and the members of the Investment Management Team

"CREST" the computerised settlement system operated by Euroclear which facilitates the transfer of title to shares in uncertificated form

"CREST Manual" the document entitled "CREST Reference Manual" issued by Euroclear

"Daily Official List" the daily record setting out the prices of all trades in securities conducted on the London Stock Exchange

"Directors" the directors of the Company from time to time

"Euroclear" Euroclear UK & Ireland Limited

"Form of Proxy" the form of proxy for use at the AGM

"FSA" the United Kingdom Financial Services Authority

"Independent Shareholders" all of the Shareholders with the exception of the members of the Concert Party

"Interest" has the meaning given to that term in the Code

"Investment Management Team" the investment management team at the Investment Manager with responsibility for the investment management of the Company

"Investment Manager" Cheyne Capital Management (UK) LLP, a limited liability partnership incorporated in England (registered number OC321484

"Investment Manager Options" the Options for Ordinary Shares held by Cheyne Global Services Limited that are fullyvested and immediately exercisable (and will remain exercisable until 13 December 2015)at an exercise price per share of €10 per Ordinary Share

"Issued Share Capital" the Shares of the Company in issue from time to time

"Latest Practicable Date" 1 October 2010, being the latest practicable date prior to the publication of this Circular;

"Liberum" Liberum Capital Limited

"Listing Rules" The Listing Rules made by the United Kingdom Listing Authority under Section 73A of the Financial Services and Markets Act 2000, as amended

"London Stock Exchange" London Stock Exchange plc

"Main Market" the main market for listed securities of the London Stock Exchange

"NAV" or "Net Asset Value" the value of the assets of the Company less its liabilities determined in accordancewith the principles adopted by the Directors

Page 18

"Notice of AGM" or "Notice" the notice convening the AGM attached to this Circular

"Official List" the list maintained by the United Kingdom Listing Authority pursuant to Part VI of the Financial Services and Markets Act 2000

"Ordinary Resolutions" all of the ordinary resolutions to be proposed at the AGM and contained in the Notice of AGM

"Ordinary Shares" the shares of no per value in the capital of the Company

"Panel" The Panel on Takeovers and Mergers

"Preference Shares" the redeemable shares of no par value each in the capital of the Company and designated as Preference Shares

"Proposals" the proposals listed in paragraph 1 of Part I of this document

"Resolutions" or "Resolution" one or more of the resolutions to be proposed at the AGM and contained in the Notice of AGM (as the context requires)

"Rule 9" Rule 9 of the Code

"Shareholders" holders of Shares

"Shares" the unlimited number of redeemable participating shares of no par value in the capital of the Company denominated in Sterling or such other currencies as the Directors may determine and with such rights and privileges as the being subject to the relevant restrictions contained in the Articles (which currently includes the Ordinary Shares and the Preference Shares, which constitute the authorised capital of the Company

"uncertificated" or "in uncertificated form" recorded on the Register as being in uncertificated form in CREST and title may be transferred by means of CREST

"United Kingdom Listing Authority" the FSA as the competent authority for listing in the United Kingdom

"Voting Rights" all the voting rights attributable to the capital of the Company which are currentlyexercisable at a general meeting of the Company

"Waiver" the waiver by the Panel of the obligation which would otherwise arise under Rule 9 of the Code requiring one or more of the members of the Concert Party to make an offer for the Issued Share Capital of the Company once its shareholding reaches 30 per cent of the Shares

"Waiver Proposal" the proposal, referred to in paragraph 6 of Part 1 of this Circular, that Independent Shareholders approve, on a poll, the Panel's agreement to waive the obligation on any member of the Concert Party to make a general offer to the Shareholders of the Company pursuant to Rule 9 of the Code that would otherwise arise as a result of the exercise by the Company of Buy-Back Authority

"Waiver Resolution" Resolution 6 as set out in the Notice

Page 19

Real Estate Credit Investments Limited

Notice of Meeting

Notice is hereby given that the fifth Annual General Meeting (the "2010 AGM") of Real Estate Credit Investments Limited will be held at Dorey Court, Admiral Park, St Peter Port, Guernsey GY1 3BG on 5 November 2010 at 12.00 p.m. for the purpose of considering and, if thought fit, passing the following Resolutions:

Ordinary Resolutions

To consider and, if thought fit, pass the following resolutions as ordinary resolutions:

1. To receive and adopt the Directors' report and financial statements for the period ended 31 March 2010.

2. To re-appoint Deloitte LLP as Auditors.

3. To authorise the Directors to fix the remuneration of the Auditors.

4. To re-elect Tom Chandos as Director.

5. To re-elect Christopher Spencer as Director.

6. THAT the waiver granted by the Panel of the obligation that would otherwise arise on any member of the Concert Party to make a general offer to the Shareholders of the Company pursuant to Rule 9 of the Code as a result of the exercise by the Company of the Buy Back Authority (and any renewal thereof, subject to the 12 month duration of the waiver granted by the Takeover Panel and without prejudice to the maximum in the original Buy Back Authority which shall continue to apply by reference to the Company's Issued Share Capital as at the Annual General Meeting), each as described in the Circular of which this Notice forms part, be approved.

In order to comply with the Code, Resolution 6 will be taken on a poll and the Concert Party has undertaken not to vote on the Resolution.

Extraordinary Resolution

7. To renew the Company's authority under and in accordance with the Articles of Incorporation of the Company and section 315 of The Companies (Guernsey) Law, 2008 (the "Law") to make market acquisitions (within the meaning of section 316 of the Law) of ordinary shares of no par value in the capital of the Company ("Ordinary Shares"), on such terms and in such manner as the Directors may from time to time determine, provided that in respect of the purchases to be made on the market:

i) the maximum number of Ordinary Shares authorised to be purchased is the number that is equal to 14.99 per cent of the issued share capital of the Company (excluding shares held in treasury) as at the close of trading on the London Stock Exchange on 4 November 2010, rounded down to the nearest whole share;

ii) the minimum price which may be paid for a Ordinary Share is €0.01;

iii) the maximum price which may be paid for an Ordinary Share is an amount equal to the higher of:

a) 105 per cent of the average market value of the Company's Ordinary Shares as derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which such share is contracted to be purchased; or

b) the higher of the price of the last independent trade and the highest current bid as stipulated by Article 5(1) of Commission Regulation (Directive 2003/6/EC) 22 December 2003 implementing the Market Abuse Directive with regard to exemptions for buy back programmes and stabilisation of Financial Instruments (No. 2273/2003);

iv) the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2011 unless such authority is renewed prior to such time provided that the Company may prior to the expiry of such authority, enter into a contract to purchase Ordinary Shares under such authority and make a purchase of Ordinary Shares pursuant to any such contract.

By order of the Board

Kleinwort Benson (Channel Islands) Fund Services Limited

Secretary

6 October 2010

Registered Office:

Dorey Court

Admiral Park

St Peter Port

Guernsey

GY1 3BG

Page 20

Notes:

1. A member entitled to attend and vote is entitled to appoint a proxy (or proxies) to attend and, on a poll, vote instead of him/her. A proxy need not be a member of the Company.

2. A form of proxy is enclosed. The appointment of a proxy will not prevent a Shareholder from subsequently attending and voting at the meeting in person.

3. To be effective the instrument appointing a proxy, and any power of attorney or other authority under which it is executed (or a duly certified copy of any such power or authority), must be deposited at the offices of Capita Registrars not less than 48 hours before the time for holding the meeting or adjourned meeting or (in the case of a poll taken otherwise than at or on the same day as the meeting or adjourned meeting) for the taking of the poll at which it is to be used.

4. The effect of resolution 7 is to authorise the Company, pursuant to any share buy back programme conducted from time to time, to purchase its own Ordinary Shares representing 14.99 per cent of the issued ordinary share capital of the Company at the close of trading on the last business day prior to the 2010 AGM until the conclusion of the Annual General Meeting of the Company for the year ending 31 March 2011. As at 1 October 2010 (being the latest practicable date prior to the publication of this document), 14.99 per cent of the issued ordinary share capital of the Company amounted to 5,991,051 Ordinary Shares, rounded down to the nearest whole share.

5. To appoint a proxy or to give or amend an instruction to a previously appointed proxy via the CREST system, the CREST message must be received by the issuer's agent RA10 by 12.00 p.m. on the 3 November 2010. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer's agent is able to retrieve the message. After this time any change of instructions to a proxy appointed through CREST should be communicated to the proxy by other means. CREST Personal Members or other CREST sponsored members, and those CREST Members who have appointed voting service provider(s) should contact their CREST sponsor or voting service provider(s) for assistance with appointing proxies via CREST. For further information on CREST procedures, limitations and system timings please refer to the CREST Manual. We may treat as invalid a proxy appointment sent by CREST in the circumstances set out in Regulation 35(5) (a) of the Uncertificated Securities Regulations 2001. In any case your proxy form must be received by the company's registrars no later than 12.00 p.m. on the 3 November 2010.

6. A copy of the register of interests of the Directors of the Company will be available for inspection at the place of the meeting from 15 minutes before it is held until its conclusion.

7. The Company, pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, specifies that only those Shareholders entered on the Company's register of members at 6 p.m. two days prior to date of the 2010 AGM or, if the meeting is adjourned, on the Company's register of members 48 hours before the time fixed for the adjourned meeting, shall be entitled to attend or vote at the meeting in respect of the number of shares registered in their name at that time. Changes to entries on the Company's register of members after 6 p.m. on the 3 November 2010 or, if the meeting is adjourned, 48 hours before the time fixed for the adjourned meeting, shall be disregarded in determining the rights of any person to attend or vote at the meeting.

8. Voting on the resolutions will be by means of a poll of the Shareholders.

-ENDS-

For further information:

Investor Relations Natalie Withers Tel: [phone]
M: Communications Caroline Villiers Tel: [phone] Mob: [phone] James Wallis Tel: [phone] Mob: [phone]
Liberum Capital (Broker) Chris Bowman / Tom Fyson / Richard Bootle Tel:  [phone]
Company Secretary Kleinwort Benson (Channel Islands) Fund Services Limited Tel:  [phone]

The securities described in this document have not been and will not be registered under the US Securities Act of 1933, as amended (the "US Securities Act"), or under any securities laws of any state or other jurisdiction of the United States or under the securities laws of Australia, Canada, Japan or South Africa. Consequently, such securities may not be offered, sold, resold, taken up, exercised, renounced, transferred delivered or distributed, directly or indirectly, into or within the United States or to, or for the account or benefit of, US Persons. No public offering of the securities is being made in the United States. The Company has not been and will not be registered under the US Investment Company Act of 1940, as amended (the "US Investment Company Act") and, as such, investors will not be entitled to the benefits of the US Investment Company Act. No offer, purchase, sale, exercise or transfer of the securities may be made except under circumstances which will not result in the Company being required to register as an investment company under the US Investment Company Act.

The release, publication or distribution of this document into jurisdictions other than the United Kingdom may be restricted by law.  Persons to whom this document is made available should, therefore, inform themselves about and observe any such restrictions.  No action has been taken by the Company that would permit the offer or sale of any securities or possession or distribution of this document in any jurisdiction where action for that purpose is required.  Any failure to comply with such restrictions may constitute a violation of the laws of such jurisdictions.

 

END

 

 

MSCFSFFEIFSSEES