NB Distressed Debt Investment Fund Limited Announces ... ?· NB Distressed Debt Investment Fund ...…

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    19 April 2010

    NB Distressed Debt Investment Fund Limited Announces Intention to Float

    Neuberger Berman today announces its intention to establish NB Distressed Debt Investment Fund Limited (the Company). It is intended that the Company, once established, will seek admission to trading of its ordinary shares (Ordinary Shares) on the Specialist Fund Market (SFM) of the London Stock Exchange plc (LSE) and a dual-listing on the Official List of the Channel Island Stock Exchange (CISX) (Admission), through a proposed placing and offer for subscription with a target size in excess of US$150 million and the potential to increase the offer size, subject to global investor demand. Highlights Objective To provide investors with attractive risk-adjusted returns through long biased,

    opportunistic stressed, distressed and special situation investments in credit-related products.

    Market opportunity Neuberger Berman believes that the increased supply of distressed

    debt and rising default rates have created a compelling investment opportunity.

    Attractive potential returns Target returns of 20%1,2 per annum without the use of leverage.

    Risk management The Company intends to invest in approximately 40 to 50 holdings

    diversified across stressed, distressed and special situations investments, with a focus on senior debt backed by hard assets.

    Fixed life Investment / reinvestment period of three years with any profits expected to be

    returned to investors from year four onwards.

    Capital deployed quickly At least one third is expected to be invested in the first one to three months following Admission and the aim is to be fully invested in three to nine months.

    Highly experienced portfolio management team The portfolio will be managed by the

    distressed debt team within what Neuberger Berman believes to be one of the largest and most experienced credit teams in the industry.

    1 Gross of fees and expenses. 2 This is the Companys targeted return only and there is no guarantee that the target return can be achieved. The actual returns of the Company will be dependent on a number of factors, including, but not limited to, market conditions, the success of the Company's investment strategy and individual investments held in the Company's portfolio. Accordingly, actual returns may be materially lower than the target returns.


    Proprietary database Neuberger Bermans comprehensive proprietary information and commentary on over 2,000 companies, providing extensive private and public financial and capital structure information on issuers.

    Discount control Continuation vote and discretionary 20% tender offer approximately 18 months after Admission; separate authority to buy back up to 14.99% of issued shares.

    Targeted proceeds US$150 million, with the ability to upsize. Issue price US$1.00; Opening NAV per share US$0.98.

    Bonus subscription share issue 1 for 5 bonus subscription share issue to all initial

    public offering investors with an exercise price equal to issue price and bullet conversion date 18 months after Admission.

    Joint Global Co-ordinators and Joint Bookrunners Oriel Securities Limited and RBS Hoare Govett Limited.

    Michael J. Holmberg, Managing Director, Neuberger Berman, commented: We are delighted to be creating a listed fund which will aim to capture what we perceive to be the attractive current opportunity in distressed debt. We believe that we are still in the early days of this opportunity, and we believe our experienced team and proprietary research platform are well placed to capture these potentially attractive, risk-adjusted returns. Patrick H. Flynn, Managing Director, Neuberger Berman, added: We have structured the offering with investors in mind, creating a fixed life fund with several discount control mechanisms in place and a commitment to investor communications, including daily NAV plus quarterly disclosure of holdings by industry. NB Distressed Debt Investment Fund The Company will take the form of a closed-ended limited liability investment company incorporated in Guernsey. The Companys primary objective will be to provide investors with attractive risk-adjusted returns through long-biased, opportunistic stressed, distressed and special situation investments in credit-related products. The Company's portfolio is intended to focus on 40 to 50 holdings of senior and senior secured debt backed by hard assets which can limit risk. Historically strong distressed debt investment performance has followed periods when a large number of companies have failed to meet their debt obligations. Neuberger Berman believes there are compelling reasons why the investment opportunity in distressed debt will continue for the next three to four years.


    First, U.S. bond default rates reached a 25-year3 high in 2009. Default rates and distressed debt returns have historically been correlated, with strong investment returns typically following two years after rising defaults. Neuberger Berman believes that the sharp rise in defaults from 2009 onward implies strong distressed debt performance for at least the next two years. Second, Neuberger Berman expects default rates for leveraged loans to accelerate again from 2011 as a large quantity of these loans will start to mature and many companies may find it difficult to refinance in a capital-constrained market. This is expected to present a second wave of investment opportunities from 2011 to 2014. Investment Managers The Company will be managed by Neuberger Berman Europe Limited, a company incorporated in England and Wales, and certain responsibilities and functions will be delegated to Neuberger Berman Fixed Income LLC, a limited liability company incorporated in Delaware, USA (together, the Investment Managers). The Investment Managers distressed debt team is backed by the strong breadth and depth of their research platform. The Investment Managers are wholly-owned indirect subsidiaries of Neuberger Berman Group LLC (Neuberger Berman). Established in 1939, Neuberger Berman is one of the worlds largest private, independent employee-controlled asset management companies, managing approximately $173 billion in assets as of December 31, 2009, including approximately US$70 billion in fixed income investments and which includes more than US$11 billion in high yield bonds and loans. Neuberger Berman is a leader in providing a broad range of global investment solutions to institutions and individuals through customized separately managed accounts, mutual funds and alternative investment products. For more information please visit our website at www.nb.com. Admission Dealings are expected to commence in early June 2010. Oriel Securities Limited and RBS Hoare Govett Limited have been appointed as joint global co-ordinators and joint bookrunners to the proposed initial public offering. Oriel Securities Limited has also been appointed as financial adviser to the Company.

    3 Moodys Investor Service reportJanuary 29, 2010.



    For further information, please contact: Neuberger Berman Europe +44 (0)20 3214 9000 Nick Hoar Oriel Securities +44 (0)20 7710 7600 Joe Winkley Neil Langford RBS Hoare Govett +44 (0)20 7678 8000 Gary Gould Stuart Klein Financial Dynamics +44 (0)20 7269 7114 Rob Bailhache Nick Henderson www.nbddif.com Portfolio Managers Michael J. Holmberg, Managing Director, joined Neuberger Berman in 2009 and is the co-head of Distressed Portfolio Management. Prior to joining Neuberger Berman, Michael was the managing principal of Newberry Capital Management LLC and prior to that Michael founded and managed Ritchie Capital Managements Special Credit Opportunities Group. He was also a managing director of Strategic Value Partners and Moore Strategic Value Partners. He began investing in distressed and credit-orientated strategies at Continental Bank/Bank of America, where he was a founder and portfolio manager for the banks global proprietary capital account. Michael received an AB in Economics from Kenyon College and an MBA from the University of Chicago. Patrick H. Flynn, Managing Director, joined Neuberger Berman in 2006 and is the co-head of Distressed Portfolio Management and Director of Leveraged Asset Management Research. He came to Neuberger Berman with more than 15 years of experience, including positions with Putnam Investments, JP Morgan Chase and UBS. Most recently, Patrick served as Director of Research at DDJ Capital Management LLP. He holds an AB from Columbia University and an MBA in Finance and Economics from the University of Chicago. Patrick has been awarded the Chartered Financial Analyst designation.



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