Bank Debt and Hedging Update

RNS Number : 1264H

Utilico Emerging Markets Limited

31 October 2008

Utilico Emerging Markets Limited

Bank debt and hedging update

Utilico Emerging Markets ('UEM') has this month released significant capital from both its market hedge position and the portfolio and facilitated a reduction in its bank debt.

The sharp falls in the market resulted in the matched option spreads being deep in the money and reflected for the most part intrinsic value. As such they were no longer acting as a hedge, but rather a residue of value. These positions have now been realised. The proceeds together with realisations from the portfolio have been used to reduce the bank debt from £82.8m at the end of September to £42.9m.

Following the realisation of the matched option positions the option hedge for UEM now comprises only a naked position of 1,175 S&P 500 Index put option contracts expiring in January 2009 with strike prices from 850 to 870. Should markets weaken further, these contracts would be expected to result in gains for UEM. The managers will continue to keep this position under review.

At the same time the debt position has been restructured. Some £16.6m is drawn in UK Sterling and $41.1m is drawn in USD Dollars. UEM has bought GBP Put/USD Calls covering $30.0m at a spot price of 1.50 and $11.0m at a spot price of 1.60, both maturing in January 2009. As a result of these changes the bank utilisation and debt maturities are: