Chicago, Illinois [August 28, 2011] UFTCF has recently unveiled the Enhancement CPC to be used in conjunction with the CVRDN (Note) as a source of capital to qualifying hedge fund and other investment managers.  This approach creates an alternative point of entry for investors in the credit market to gain exposure to select hedge and investment funds through the acquisition of a related Enhancement CPC.  This is accomplished by the fund's issuance of the Notes when coupled with the subsequent delivery of specially formatted letters of credit in coordination with UFTCF. These letters of credit are not intended to be drawn, except under very rare circumstances or in the event of the fund's default under its Notes. The letters of credit are both the non-cash "currency" for the purchase of an Enhancement CPC in the transaction that is secured by the operation of the investment fund and the key that enables the release of the fund's Note proceeds to the fund's investor-approved investment strategy.

This mechanism produces a stellar line-up of potential benefits to both the fund and the investor that can constitute key differentiators when fighting for investment dollars in this highly competitive marketplace. Particularly, an average hedge fund with a typical "2 and 20" approach can actually develop investment terms that decrease the management fee charged to its investors by as much as 75%, increase management's percentage participation in performance of the fund to as much as 60%, and simultaneously increase the investor's potential overall return on cash, as compared to the same investment and performance levels using a conventionally cash-funded investment allocation.

In looking at the downside of this trade, should the fund fail to meet its obligations by defaulting on its Notes due to underperformance of the fund's strategy, the letter of credit will be drawn, the investment therefore becomes a "funded" investment by the investor, and the return model defaults to a more conventional calculation such as a 2/20 approach. In short, the credit risks are exactly the same whether invested using a conventional investment structure or participating in this model through an Enhancement CPC, however, since the actual cash investment is deferred while the letter of credit remains undrawn and the Enhancement CPC outstanding, the investor's percentage-based return on cash invested is correspondingly potentially much higher.

UFTCF is currently introducing this solution in cooperation with select credit-linked investment funds and will be introducing the concept formally at invitation-only private symposiums as well as select hedge fund conferences.

To learn more, visit www.unitedft.com and click on the "CVRDN - Fund" tab.  To qualify for a complimentary invitation to one of our educational symposiums or to be notified of any upcoming conferences we will be attending, please contact credit@uftcf.com.

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UFT Commercial Finance is an alternative credit solutions company and the Network Manager of the Master Participating Lender Network.  It is a privately held company with its headquarters in Chicago, Illinois.  Learn more about UFT Commercial Finance at www.uftcf.com.

United FT, Inc., a designer and developer of financial instruments and solutions, is a privately held company headquartered in Chicago, Illinois. Learn more about UFT at www.unitedft.com.


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