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Mainsail II Ltd (73WC)

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Thursday 18 October, 2007

Mainsail II Ltd

Update to Creditors

Mainsail II Ltd
18 October 2007





                                MAINSAIL II LIMITED

                                                                 18 October 2007

                                Update to Creditors

The Company is an exempted company with limited liability organised under the
law 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 6 July 2006 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.     ;

Following the announcement dated 24 September 2007 concerning various
developments, a further update containing the following information has been
provided to investors. 

The Security Trustee engaged Houlihan Lokey Howard & Zukin (Europe) Limited (the
'Financial Adviser') on 27 September 2007. The Financial Adviser is actively
assisting the Security Trustee in evaluating the asset portfolio and assessing
strategic options. As part of the process, the Financial Adviser is in dialogue
with members of an ad hoc investors' committee which together represents more
than 50% of the outstanding CP Obligations (the 'Committee').

Holders of Programme Notes are aware from previous announcements that a
restructuring proposal provided by Barclays Capital on 6 September 2007 is no
longer regarded as a credible proposal. The Financial Adviser is in dialogue
with a number of select parties concerning potential restructuring proposals.

The Security Trustee has been directed by creditors comprising the Majority
Secured parties not to make payments from amounts standing to the credit of the
US Operating Account in accordance with the Priority of Payments. A further
direction has been received from Majority Secured parties that no payments
should be made before 22 October 2007. Thereafter, the Security Trustee intends
to seek further directions from the Majority Secured Parties in relation to the
making of payments.

On 9 October 2007, the Financial Adviser provided a summary of its initial
findings regarding the Issuer's assets and liabilities to members of the
Committee who have subjected themselves to confidentiality undertakings. A
summary of some of the information provided to the Committee is set forth below.
The information provided is based solely on data provided to the Financial
Adviser by the Collateral Manager and the Administrator. Neither the Security
Trustee nor the Financial Adviser have verified the accuracy or completeness of
this data and nor do they take any responsibility with respect to it.

Assets: Based on information provided by the Collateral Manager, the table below
summarises the Issuer's asset portfolio. In addition to the below, the Issuer
held US$97.3m of cash.

                                    Current 
                                    Notional
                      No.of         Balance(1)
Asset Type            Assets         (US$m)

RMBS - Midprime        69             705.5 
RMBS - Subprime        33             380.4
CDO                    14             210.5
RMBS-Prime/Alt A       15             107.7 
CRE CDO                 3              75.0

TOTAL                 134           1.479.0

(1)Notional balance refers to the face or nominal amount of principal on the 
relevant asset.
 

 
                                    Current
                                    Notional
                      No.of         Balance
Vintage               Assets         (US$m)

2007 H1                11             147.0
2006 H2                31             334.8                                                                             
2006 H1                69             779.2 
2005 H2                22             213.0
2005 H1                 1               5.0

TOTAL                 134           1,479.0

Liabilities: As at 5 October 2007 based on information provided by the 
Administrator, the principal amount outstanding of the Issuer's liabilities is 
as follows.  

                                Principal Amount 
                                Outstanding (US$ millions)

Euro Commercial Paper                623.0
US Commercial Paper                  695.2
TOTAL CP LIABILITIES               1,318.2
Mezzanine Notes                      261.0
Capital Notes                         72.5

TOTAL CP AND NOTES                 1,651.7



                      This information is provided by RNS
            The company news service from the London Stock Exchange
                                                                                                                                                                                                                     

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