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Mainsail II Ltd (73WC)

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Thursday 06 September, 2007

Mainsail II Ltd

Update to Creditors

Mainsail II Ltd
06 September 2007


                    MAINSAIL II LIMITED (the 'Company')
          US$4,000,000,000 EURO/US COMMERCIAL PAPER PROGRAMME
                US$407,000,000 MEZZANINE NOTE PROGRAMME
                 US$112,000,000 CAPITAL NOTE PROGRAMME

                                                              6 September 2007 




                                Update to Creditors

Following the announcement dated 20 August 2007 concerning the occurrence of a
market value coverage test wind down event, the following update is being
provided to investors. 

The Company is an exempted company with limited liability organised under the
laws of the Cayman Islands and established for the purpose of carrying out the
business of an investment company in relation to the Company's programme for the
issuance of capital notes (the 'Capital Notes') and mezzanine notes (the
'Mezzanine Notes' (together, with the Capital Notes, the 'Programme Notes') as
more particularly set out in the information memorandum (the 'Information
Memorandum') dated 12 July 2007 in relation to the Programme Notes. 

The net proceeds of the issuance of the Programme Notes were used by the
Issuer to acquire a portfolio of investments including cmbs, rmbs and cdo asset
backed securities. 

Barclays Capital has proposed an outline restructuring solution to the Security
Trustee of the Mainsail II transaction. 

The restructuring proposes that all commercial paper investors will be fully
paid out at par at the same time when the restructuring is implemented through
the provision of an additional Liquidity Facility underwritten by Barclays
Capital. This Liquidity Facility will be split into three tranches and capital
and mezzanine note holders will be invited to participate in the junior tranche
of this facility. 

Barclays Capital will underwrite the Liquidity Facility by sourcing suitable
credit protection in the form of the note holder participation described above
plus the purchase of additional credit protection. Barclays Capital has
confirmed to the Security Trustee that discussions are well advanced in sourcing
this additional credit protection.
 
Barclays Capital has informed the Security Trustee that it has had detailed
discussions with mezzanine and capital note holders. Through these discussions
Barclays Capital has confirmed to the Security Trustee that the restructuring is
realisable subject to the consent and additional participation of the note
holders as described above. 

Barclays Capital have said that they will be providing detailed proposals to all
mezzanine and capital note holders shortly.
                                                            
The Security Trustee has briefly discussed these proposals with Barclays Capital
and is expecting to receive further information in the next few days. The
Security Trustee is evaluating the proposal and will continue to do so as
further details are provided, however, based on the information the Security
Trustee has at present, the Security Trustee regards this as a credible
proposal.
                      This information is provided by RNS
            The company news service from the London Stock Exchange
                                                                                                           

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