Mid-Market Quarterly Snapshot Q © 2013 Marl Partners LLP. All rights reserved.

Q Review UK Senior Loan Volumes and Pricing (1) iTraxx Europe Cross-Over Sources: LCD Comps, Bloomberg (1) Volumes are for UK, Pricing is Rolling 3-Month Avg. Institutional Spread for UK Key Themes  UK loan volumes remained strong in Q at c.€2.7bn consistent with the c.€2.6bn seen in Q and the c.€2.5bn in the same quarter last year  Large Q1 volumes was a consistent theme throughout Europe which saw €15.5bn of leveraged loans, the strongest opening quarter in 6 years driven by refinancings which reached a peak following Continental (€4.5bn), Rexel (€1.1bn) and UPC (€1.4bn). However of this volume only 36.8% came from M&A activity (a record low)  Despite this, primary volumes remain well below pre credit crunch levels with demand for loans continuing to outstrip supply with CLOs under increasing pressure to deploy capital before their reinvestment periods end and the mid-market receiving continued new liquidity from credit funds. This technical imbalance is allowing sponsors to launch opportunistic refinancings and fund dividend re-caps. Q saw more dividends returned to sponsors than all of 2012 (see focus on slide)  Weighted Average institutional spread on TLB/C tightened slightly to E+469bps  Re-pricings are becoming an emerging theme with eight European issuers launching mark-to-market amendments in Q1 2013, the same as seen in the five years to 2012, making it the busiest quarter since the summer of 2007  iTraxx has continued to remain around the 450bps mark as the window for high yield bond issuance has remained open. Q saw €21.4bn of high yield bond volumes, the busiest since 2006, 30% of which was used to refinance bank debt (all refinancings made up 54%)  Continued strong demand from bond investors has seen yields continue to fall and terms improve for issuers. Features such as portability are now commonplace and non-call periods have shortened 1

Focus On: Dividend Re-caps 2 The Dividend Recap is Back  Q dividend recaps returned almost the same volume of proceeds to Financial Sponsors as seen over 2011 and 2012 combined  M&A led primary buyout volumes insufficient to meet loan and bond investor demand for European sub-investment grade credits  Loan demand strongly buoyed by the impact of the impending lock-down of the majority of European CLOs by the end of 2013  Bond led refinancings are returning large capital flows to CLOs  CLO Managers are desperate to maintain assets under management prior to the expiry of their reinvestment period (c.80% will suffer this during the course of 2013)  As a result, dividend recaps and A&E transactions now facing less resistance European Loan and Bond Funded Dividends Sources: LCD Comps, Bloomberg Sponsor owned firms dividend volumes funded through bond and loan markets Selected Recent Sponsor Owned Recapitalizations  Financial Sponsors will continue to take advantage of their ability to return capital to LPs  Those Financial Sponsors looking to raise new funds have an alternative to selling into a stagnant M&A market  Alternatively, dividend recaps provide downside protection to Financial Sponsors where sale processes fail to secure minimum return expectations  Marlborough believe that the time for opportunistic recapitalisations will continue through Q2, pausing for the summer shut-down, and into Q3  Any return to more normal level of primary deal flow will impact upon investor demand for dividend recaps  The same goes for any major Eurozone bailout coming over the horizon during this period  Mar-13: Pets at Home – £135m add-on term loan D  Mar-13: Mivisa – €145m add-on term loan C  Mar-13: Constellium France – €350m senior secured term loan  Mar-13: World Pay – £700m add-on term loan C Loan Funded Recaps High Yield Funded Recaps  Apr-13: Orange Switzerland – €250m senior PIK toggle notes  Mar-13: Sunrise Communications – €275m senior PIK toggle notes  Mar-13: Sunrise Communications – CHF300m senior PIK toggle notes  Feb-13: DFS Furniture – £200m senior secured notes  Feb-13: DFS Furniture – £110m FRN  Jan-13: Infinis – £350m senior notes