1 Small-Cap Secured Lending & Advisory Specialists Presentation to Hall Chadwick, Sydney.April 17th, 2014April, 2014
2 Confidential. Do not copy or distribute. OverviewTCA Global Credit Master FundTCA is a short-duration, absolute return fund specializing in senior secured lending and advisory services to small-caps located predominantly in the US, Canada, Western Europe & Australia.Fund commenced April 2010, 3 Years of Unqualified Audited financial statementsTCA has Funds under Management of circa USD 180 million, target circa USD 400 million.Regulated and registered by the SEC (US), FCA/FSA (UK), and ASIC (Australia). AFSL NoFocused StrategyOrigination of $10-25MM quarterly; multiple financings consummated monthlySmall position sizes, 1-2% of portfolio; Average loan size $1-2MMLoans are ALWAYS senior secured, short duration (6 to 12 months) & income generatingTargeted annual net returns to Investors of 12-14%No style drift, no leverage, no shorting, no market risk, no currency riskLong-term Track RecordReturns have eclipsed the 12-14% target since inception, while exhibiting low volatility when compared with equities (S&P 500 Index) or high-yield debt (ML High Yield Master II Index).Specialty Global TeamExtensive expertise in credit analysis and monitoring, stable & seasoned executive teamIn-depth restructuring, liquidation and bankruptcy experience; leads to proactive adaptationQuarterly independent collateral validationIndependent board of directors, administrators, legal counsel & auditorsCIMA & SEC* regulated and AIMA best practices membership*Pre-approved to be finalized in June 2014Confidential. Do not copy or distribute.
3 Market Inefficiency in Small-Cap Lending Secular Decline of ‘Traditional’ Financing Sources15+ years of banks drastically reducing exposure to small-cap lending%100755025-25-50-75TighteningStronger DemandStandardsNote: Change in percentage from the previous period.Source: Federal Reserve Board, Senior Loan Officer Survey, 2013Confidential. Do not copy or distribute.
4 Confidential. Do not copy or distribute. Return AttributionIRR* ExpensesROI**12-14%Fund expenses:2/20, High WatermarkLoan LossExperienceCash reserve dragCapitalFeeLoanInterestandCollectionEquityKickerMerchant Banking& Advisory Fee*targeted, typical fund investment**per annum, targeted, net to InvestorsConfidential. Do not copy or distribute.
5 Thorough Investment Process Fundamental, Credit, Liquidity, Fund & Market DynamicsExcellent relationships with investee companies; 50% repeat businessIn-house expertise for work-outs when needed1Deal OriginationInvestment professionals and Analyst TeamGlobal network of professional advisorsSponsor and attend conferences50% repeat business2Deal AnalysisFundamental, credit and liquidity analysisManagement team +20yr track recordCorporate structureEvaluate investment risks/reward3Investment ReviewEstablish most efficient investment structure and terms/pipelineOn Site Visits to Portfolio CompaniesUnanimous Investment Committee Approval only4Legal Due DiligenceLocal legal experts evaluate and structure dealStandardized legal documents / jurisdiction expedite process57Investment CommitteeCIO ledDeal size and duration vis-à-vis portfolio capacityMonitor cash flow to deal flowAccept/modify/reject termsTransaction CloseDocuments executedInvestment executedLock-box account openedAnalyst Team assigned to monitor6Monitoring to RepaymentBi-weekly call with management to monitor evolution of investmentsIdentify and act on any stressed positionMonthly report to Investment Committee on stressed positions, actions taken and resolutions (External Director led)Completion of paymentConfidential. Do not copy or distribute.
6 Confidential. Do not copy or distribute. TCA CredentialsSpecialty Global TeamTCA Fund strategy: investing in short term, senior secured debt in listed and non listed small cap companiesStable Executive Team; Dozens of Corporate ReferencesSuccessful track record with a high repeat business rateDebt ProfileTransaction size: $0.5MM to $5MMSecured lending structuresEfficient ExecutionTerm sheets issued within 24hrs of management call and collation of preliminary due diligence materialClosing typically within 2 weeks after term sheet signing and due diligence is completeConfidential. Do not copy or distribute.
7 Industry and Geographical Breakdown Confidential. Do not copy or distribute.
8 Confidential. Do not copy or distribute. Investment CriteriaProven Management TeamsRevenueCollateralStrong CorporateGovernanceRobust management teams that have a track record of successIdentifiable revenues streams (not start up companies)Strong Cash Flows, receivables and contracted revenuesListed companies, private companies seeking an IPO, Private Companies whose internal reporting procedures match those of a listed companyConfidential. Do not copy or distribute.
9 Investment Structures TCA has three main financing instruments*:Amortizing NotesRevolving Credit FacilitiesConvertible and Invoice-backed NotesIn addition, Equity Lines and Swaps are available in conjunction with a debt piece*Transactions are always senior secured and collateral basedConfidential. Do not copy or distribute.
10 Confidential. Do not copy or distribute. Amortizing Notes12 month termMonthly equal amortisation payments plus interestFirst charge over assets and in particular over liquid collateral:Cash flowsReceivables (subject to counter-party credit worthiness and concentration risk)Contracted revenues (subject to counter-party credit worthiness)Possibly in conjunction with an equity line (issuer must still have some proven cash flow to service the note in the absence of equity draw downs)Coupon 8% - 12% depending on credit profileRedemption PremiumInvestment Banking Fee payable in shares in certain instancesLegal and due diligence costs paid by issuerOn going reporting obligationsConfidential. Do not copy or distribute.
11 Balance of 80% remitted to company’s operational account Revolving FacilityOverviewRenewable term of 6 months (Renewed with mutual consent)Lend up to 80% of value of liquid collateralFirst charge over collateral and “lock box” bank arrangementLock BoxLock Box swept weekly or bi-weeklySimilar costs to Amortizing Loan Note but additional for operation of Lock BoxReserveReserve account deduction of 20% of cash flow up to 20% of the facilityReserve account used for repaymentCustomer cash receiptsLock Box Bank Account20% Reserve Account deductionFor Customer paymentsCustomized Periods for ReconciliationsTCA signatoriesConfidential to customersInterest and feesBalance of 80% remitted to company’s operational accountConfidential. Do not copy or distribute.
12 Confidential. Do not copy or distribute. Investment ProcessWeek OnePre-Screening and initial due diligence of the companyReview 12 month historic numbers and 12 month forecastAnalysis of the companies Account Receivables and Account payablesIn depth analysis of company’s use of proceedsConference call with the management teamTerm Sheet issuedTerm sheet is discussed and an agreement is formedLegal and due diligence costs are paidUnanimous investment committee approval must be madeWeek TwoLegal documents preparedLegal documents are agreed upon by both the partiesDetailed Due diligenceClosing the deal; funds are remitted to the companyTermPost ClosingRepayment of principal and interestMonthly reportingRepayment at end of term or rolloverConfidential. Do not copy or distribute.
13 US Medical and Medical Supplies Company Case StudiesCase OneU.S Energy ProviderCase TwoUS Medical and Medical Supplies CompanyCompany Overview: The Company is publically listed on the Canadian TSX Venture Exchange and a US based Company that focuses on the acquisition, development and exploration of oil and natural gas. The Company has operated for nearly ten years and has a great relationship with a large oil and gas company. The Company is focused on the execution and expansion of its drilling program in its existing holdings.$3MM Senior secured short term lending facilityTo assist with the drilling of proved reserves and working capital needs, the Company sought out TCA for a financing solution. TCA’s solution was to support the Company’s expansion with a short duration senior secured debenture secured by all assets and receivables of the Company.Company Overview: The Company is publicly listed and a US based Company that provides laboratory services specializing in providing blood and urine drug toxicology to physicians, clinics and rehabilitation facilities in the United States. The Company intends to grow from the acquisition and formation of businesses that can grow be expanded to provide an extensive range of services to Medical Providers for the improved care of a patient.$4MM Revolving line of credit facility:To assist with the active expansion and working capital needs, the Company contacted TCA for a financing solution. TCA’s offered a financial solution to the Company with a senior secured revolving line of credit secured by all assets and eligible medical receivables of the Company.Confidential. Do not copy or distribute.
14 Case Studies Case Three U.S Multimedia Networking Company Case Four US Medical and Medical Supplies CompanyCompany Overview: The Company is a US based private full service multimedia marketing and professional networking company that assists individuals and small companies to promote their professional identity. The company utilizes a membership platform, radio and video interviews, web site development, press releases, an online edition of a Who’s Who, and other multimedia methods to promote the businesses and professional identities of its members and customers. The Company’s mission is to assist the world’s professional and notable people to make them more productive and successful in a cost effective way.$2MM Asset Based Line of Credit:To support the marketing strategies and working capital needs of the company, TCA was sought out for a financing solution. TCA devised a solution that would best support the Company through an asset based line of credit secured by the credit card receivables of the Company.Company Overview: The Company is publicly listed and a US based Company that provides laboratory services specializing in providing blood and urine drug toxicology to physicians, clinics and rehabilitation facilities in the United States. The Company intends to grow from the acquisition and formation of businesses that can grow be expanded to provide an extensive range of services to Medical Providers for the improved care of a patient.$4MM Revolving line of credit facility:To assist with the active expansion and working capital needs, the Company contacted TCA for a financing solution. TCA’s offered a financial solution to the Company with a senior secured revolving line of credit secured by all assets and eligible medical receivables of the Company.Confidential. Do not copy or distribute.
15 US Aviation Services Company US Food Products Company Case StudiesCase FiveUS Aviation Services CompanyCase SixUS Food Products CompanyCompany Overview: The Company is a private full service mid-sized air charter based in the US. The Company operates as a provider of private aviation services through two primary flight services: (1) on demand/pay as you go; and (2) bulk purchasing/advanced block hour purchasing with funds on account. These services are provided on the Company’s managed aircraft fleet by professionally piloted aircraft for business and personal use. The Company intends to grow its business segments and bring in-house those services that the Company believes to be synergistic to the air charter business.$5MM Secured Line of Credit Facility:To assist with the business growth plan and working capital needs, the Company contacted TCA for a financing solution. TCA’s resolution was to support the Company with a senior secured line of credit facility secured by all assets and credit card receivables of the Company.Company Overview: The Company is a public US based Company that provides sustainably, grown, ethically farmed and artisan roasted gourmet coffee through multiple US and international distribution channels. The Company is looking to expand its US sales territories and to develop a significant global recognition through co-branding relationships.$2MM Secured revolving credit facility:To assist with the expansion and working capital needs, the Company contacted TCA for a financing solution. TCA offered a solution to the Company with a senior secured line of credit with a convertible debenture secured by all assets and receivables of the Company.Confidential. Do not copy or distribute.
16 US Gourmet Bakery & Café Products Company Case StudiesCase SevenUS Gourmet Bakery & Café Products CompanyCompany Overview: The US based and publicly listed Company engages in the development, production, and marketing of desserts to retail, corporate, and wholesale markets in the United States. The Company provides various pies, including apple, peach, cherry, blackberry, blueberry, pecan, buttermilk, chocolate pecan, lemon velvet, coconut supreme, heavenly chocolate, and key lime margarita, as well as offers seasonal pies, such as pumpkin pie. The Company markets its products directly to consumers through its Web site, phone orders, in-store sales, and festivals/events, as well as through foodservice distributors and a foodservice broker. As of June 27, 2012, the Company owned and operated seven cafes in Texas. The Company’s focus is on opening additional Company-owned Cafes.$1MM Secured convertible debenture:To assist with the storefront expansion and working capital needs, the Company contacted TCA for a financing solution. TCA’s resolution was to support the Company with a senior secured convertible debenture secured by all assets and receivables of the Company.Confidential. Do not copy or distribute.
17 Some alternatives to TCA funding Equity… still very scarce, and invariably owners believe it is too dilutive, expensive and permanent.Bank Debt… scarce, avoided by prudential and balance sheet constraints.Alternative/Mezzanine, tends to be scarce, onerous, and carry equity (dilutive) trails.So, typically TCA appeals as:It favours growing, higher margin businesses.It is capable of being re-paid/re-financed once growth has delivered returnsIt can be flexible/adaptiveIt is a short and reasonably predictable process and outcomeTCA tends to understand these SMEs – we currently have over circa 60% repeat businessIf the business foregoes the opportunity, there tends to be an “opportunity cost/gross profit” foregone.Confidential. Do not copy or distribute.
18 Confidential. Do not copy or distribute. Snapshot TCAAlpha Driven-Absolute Return FundNo lockup, monthly liquidityNon-correlated to all other asset classesLow volatility return profileTargeted net returns of 12-14% per annumQuarterly Income distribution availableNo leverage, no shorting, minimal currency risk3 Years of Unqualified Audited financial statementsRegulated and registered by CIMA, SEC* ; AIMA best practices membershipIndependent board of DirectorsQuarterly reviews by Independent forensic accounting firmHedged share classes for global investors (GBP, USD, EUR)Expert Management Team*Pre-approved to be finalized in June 2014Confidential. Do not copy or distribute.
19 Confidential. Do not copy or distribute. Expert Management TeamFounder: Bob PressBob Press’s career spans over two decades in finance. He began his career in the Capital Markets Group of Chemical Bank and rose to become the head of global derivative products trading. He has been a principal in asset management, brokerage and investment banking companies and has served on industry panels and as an officer and director of public and private companies. His diverse background includes years of experience in structured finance, asset backed lending, securitizations and mergers and acquisitions both within the US and Europe. Prior to the formation of TCA Fund Management Group, Bob was co-founder and portfolio manager of Montgomery Equity Partners L.P., a sponsored fund. Bob has a BA in Economics with extensive coursework in computer science from Brandeis University, Massachusetts. Prior to the formation of TCA Fund Management Group, Bob was the co-founder of a sponsored fund and then an independent fund.Director: Bruce WookeyMr. Wookey has over 25 years experience in corporate finance with a focus on strategic advisory, mergers, and acquisitions, equity portfolios structuring and all facets of capital raisings. Mr. Bruce Wookey began his career as a Chartered Accountant with PWC, and has continued to be involved professionally at the top level, as a founding member of the Urgent Issues Group, and continuing as a Fellow of the Institute of Chartered Accountants in Australia. Bruce was a member of The Australian Stock Exchange, is a Fellow of the Australian Institute of Company Directors and The Financial Services Institute of Australia (FINSIA).He has also been involved in global Corporate Finance, Advisory and Syndications and as Head of Corporate Finance of The Hong Kong and Shanghai Bank in Australia. In addition to serving as a director TCA Global Master Credit fund and its feeder funds, he also serves as the current managing director and major shareholder of Cartesian Capital Group which he founded in Bruce has a Degree in Business Studies (Accounting) (FIT), a post graduate diploma in Banking & Finance (FINSIA), and an MBA from The University of Melbourne.Confidential. Do not copy or distribute.
20 Confidential. Do not copy or distribute. Expert Management TeamManaging Director & Portfolio Manager: Donna SilvermanPrior to joining TCA, Donna Silverman’s investment banking career began by founding her own firm and then merging her efforts into another successful boutique investment banking firm as a partner. She is a specialist in raising capital and working with small to mid-size private and public companies with a global perspective. She currently provides valuable entrée and understanding of markets both within and outside the United States and that global perspective is in keeping with the ever increasing multi-country needs of corporate issuers. She has been a director of both private and public companies in the United States. Ms. Silverman also focuses on the continuing development of resources for TCA fund, specializing in the introduction of the Fund to US Broker Dealers and liaising with both management and registered representatives. Ms. Silverman holds a BS in Psychology from Rowan University.Confidential. Do not copy or distribute.
21 Confidential. Do not copy or distribute. Platforms & SIPP ProvidersCurrently listed on:PlatformsWork-in Progress:EuropeCanada LifeAEGONInnocapEuroclear GroupCorporation for AIPJP Morgan Asset ManagementFinancial ExpressCofundsNoviaLegal&General International IrelandCapital PlatformNucleus Financial GroupMoventumAVIVAOpen ProtocolPlatform One (Offshore)AscentricRaymond James Investment ServicesPrivate InsurerAmber Financial InvestmentsTrue PotentialTransactAlbourne PartnersZurich Assurance LtdUSNational Asset ManagementSchwabTD AmeritradeThe Depository Trust and ClearingPrudentialInternationalCambridge AssociatesFidelityAIP/DTCCFriends ProvidentGeneraliMercer Investment Consulting, Inc.DatabasesBarclayHedgeB FinanceInfoVest 21SIPP ProvidersAJ Bell SippAvalon Investment Services LtdPershingHangreaves LansdownPointon YorkLondon&ColonialProsper SIPPSippcentreRoyal London 360Wealthtime LimitedRoyal SkandiaXafinityCustodiansAdvanta IRA TrustTheodore GillissenEquity InstitutionalGuernroy (Part of RBC Wealth Manager)Millennium Trust CompanyNational AdvisorsSelf Directed IRA ServicesConfidential. Do not copy or distribute.As of March 2014
22 Confidential. Do not copy or distribute. ContactsUK OfficeUSA OfficeCustodian71 Wimpole StreetLondonW1G 8AYT + 44 (0)F + 44 (0)19950 West Country Club Drive, 1st FloorAventura, FL 33180T FDeutsche Bank (Cayman) LimitedBoundary Hall, Cricket Square171 Elgin AvePO Box 1984Grand Cayman, KY1-1104Cayman CounselUS CounselAdministrator / Valuation AgentPO Box 309, Ugland HouseSouth Church StreetGeorge Town, Grand CaymanKY1-1104Cayman IslandsTSadis &Goldberg LLP Ron Geffner551 Fifth Avenue, 21st FloorNY T FCaledonian Fund Services (Cayman) Ltd. P.O. Box Dr. Roy’s Drive George TownGrand Cayman KY1-1102TFAuditorUK CounselIndependent DirectorsBDO Cayman LtdGlen Trenouth23 Lime Tree Bay AvenueGrand Cayman KY1 1205T +1 (345)F +1 (345)Reed SmithDouglas Rofe20 Primrose StLondon EC2A 2RST +44 (0)Bruce Wookey Matt LucianoT +61 (0) TConfidential. Do not copy or distribute.
23 Confidential. Do not copy or distribute. DisclaimerGeneralThis document is being furnished by TCA Fund Management Group (“TCA”) the investment manager of TCA Global Credit Master Fund LP (the "Fund") solely for use in connection with consideration of an investment in the Fund by prospective investors.The information contained herein regarding TCA is confidential and proprietary and intended only for use by the recipient. This document may not be reproduced or copied without the prior written consent of TCA. This document is subject to revision at any time and the Manager is not obligated to inform you of any changes made. The information contained herein is not complete, and does not contain certain material information about alternative investments, including important disclosures and risk factors associated with an investment these types of vehicles, and is subject to change without notice. This document is not intended to be, nor should it be construed or used as an offer to sell, or a solicitation of any offer to buy shares or limited partnership interests any funds managed by TCA If any offer is made, it shall be pursuant to a definitive Private Placement Memorandum prepared by or on behalf of a specific fund which contains detailed information concerning the investment terms and the risks, fees and expenses associated with an investment in that fund. Neither the Securities and Exchange Commission (“SEC”) nor any state securities administrator has approved or disapproved, passed on, or endorsed, the merits of these securities.The Manager does not accept any responsibility or liability whatsoever caused by any action taken in reliance upon information herein. TCA is regulated by such regulatory agencies as the SEC and the Financial Conduct Authority (“FCA”) and abides by all standards and legal requirements required for an investment adviser in all jurisdictions. TCA’s interests will be offered and sold only to "Accredited Investors" as such terms are defined under federal securities laws.Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship, residence or domicile which might be relevant to the subscription, purchase, holding, exchange, redemption or disposal of any investments.No statement herein supersedes any statement to the contrary in the Fund's confidential offering memorandum. With respect to the present document and/or its accessories, the Manager makes no warranty or representation, whether express or implied, and assumes no legal liability for the accuracy, completeness or usefulness of any information disclosed. In addition to exposure to adverse market conditions, investments may also be exposed to changes in regulations, change in providers of capital and other service providers.Confidential. Do not copy or distribute.
24 Confidential. Do not copy or distribute. DisclaimerPerformanceThe performance information herein has been prepared by or on behalf of TCA and has not been independently audited or verified except for certain year-end data. Investment returns may vary from the stated objectives so that investors may have a gain or a loss when they redeem their investment. As with any investment vehicle, past performance cannot assure any level of future results.Returns (which may include the reinvestment of dividends, capital gains and other earnings) are shown net of all fees and expenses. The results reflected in any performance information are not necessarily indicative of future results. Investments in a Fund entail numerous risks including the loss of capital. Current year returns may be subject to adjustment during the year-end audit. This information may include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). TCA claims the protection of the safe-harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are often characterized by the terms "may," "believes," "projects," "expects," or "anticipates," and do not reflect historical facts. Specific forward-looking statements could be in reference/ implication, but not limited to/of: impact of the company's expansion plan, and new business development success, future financial results, development and acquisition of new product lines, the impact of competitive products or pricing from technological changes, the effect of economic conditions and other uncertainties. The information contained herein does not constitute an offer to sell or the solicitation of an offer to purchase any security or investment product. Any such offer may only be made by means of delivery of an approved confidential offering memorandum and only in those jurisdictions where permitted by law. There is no guarantee that the investment objectives of the Fund will be achieved. The performance representations contained herein are not representations that such performance will continue in the future. There may be sharp differences between prior performance results; such performance should not be construed as an indicator of future performance. Performance information and/or results, unless otherwise indicated, are un-audited and their appearance reflects the estimated returns net of all expenses, including the management and performance fees similar to those of the Fund.The information contained herein does not take into account the particular investment objectives or financial circumstances of any specific person who may receive it. Before making an investment, prospective investors are advised to carefully review the offering memorandum with their advisers to determine whether investing in the Fund is suitable.An investment in the Fund is speculative and involves a high degree of risk. Opportunities for withdrawal and transferability of interests can be restrictive. As a result, investors may not have access to capital except according to the terms of withdrawal specified within the confidential offering memorandum and other related documents.Confidential. Do not copy or distribute.
25 Confidential. Do not copy or distribute. DisclaimerAlternative Investment RisksInvestments in alternative investments entail substantial risk and are not intended as a complete investment program. The profitability and return of alternative investments are dependent upon numerous factors, including the active management of TCA’s portfolio, as well as general macroeconomic variables such as interest rates and the foreign exchange markets. There is no secondary market for interests in many alternative investments and none is expected to develop.Alternative investments are designed only for sophisticated investors who are able to bear the economic risk of losing all of their investment. Alternative investments: (1) often engage in leveraging and other speculative investment practices that may increase the risk of investment loss; (2) can be highly illiquid; (3) are not required to provide periodic pricing or valuation information to investors; (4) may involve complex tax structures and delays in distributing important tax information; (5) are not subject to the same regulatory requirements as mutual funds; and (6) often charge high fees.Current InformationOpinions expressed are current opinions as of the date appearing in this material only. While the data contained herein has been prepared from information that TCA believes to be reliable, TCA does not warrant the accuracy or completeness of such information.Use of IndexesMarket index information shown herein is included to show relative market performance for the periods indicated and not as standards of comparison, since these are unmanaged, broadly based indices which differ in numerous respects from the portfolio composition of the Fund. Market index information was compiled from sources that TCA believes to be reliable. No representation or guarantee is made hereby with respect to the accuracy or completeness of such data.Index DefinitionsThe S&P 500 Stock Index is an unmanaged market capitalization index of 500 US equities generally considered to be representative of US stock market activity.The Merrill Lynch High Yield Master II is an unmanaged benchmark index generally considered as a measure of the broad high yield market.Confidential. Do not copy or distribute.