New AIFM and Delegated Portfolio Manager

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

1 October 2020

Pollen Street Secured Lending plc ("PSSL" or the "Company")

New AIFM and Delegated Portfolio Manager

Background

The Board announced on 25 February 2020 that it had served 12 months' notice in writing on PSC Credit Holdings LLP ("PSC") to terminate the Investment Management Agreement ("IMA").

As announced on 14 August 2020, the Board entered into an interim advisory agreement with Waterfall Asset Management, LLC ("Waterfall") for the provision of advisory services which included providing the Board with proposals for the transfer of the management of the Company's portfolio of investments to a replacement investment manager, with a view to appointing Waterfall as the replacement investment manager as soon as practicable.

New AIFM and Delegated Portfolio Manager

The Board is pleased to announce, following its earlier announcement on 14 August 2020, that it has now formalised the appointment of Waterfall as the replacement investment manager. An Investment Management Agreement has now been signed with the new Alternative Investment Fund Manager ("AIFM"), Mirabella Financial Services LLP ("Mirabella") and new Delegated Portfolio Manager, Waterfall, effective from 1 October 2020.

The Board is also pleased to announce that Mirabella and Waterfall have confirmed that they are ready to assume the roles of AIFM and Delegated Portfolio Manager respectively and effect the transition of portfolio management responsibilities from PSC to Waterfall. This follows a period of extensive preparatory work undertaken by Waterfall and its legal advisers, including detailed discussions with the Company's lending banks and counterparties.

Under the terms of the newly agreed Delegated Portfolio Management Agreement, Waterfall will receive a monthly fee in arrears equal to 1/12th of 0.75 per cent of Net Asset Value, less an amount equal to the AIFM fee payable to Mirabella for the same period, which taken together with the performance fee change, represents a significant reduction compared to the previous management fee arrangements for the Company. Waterfall will also be entitled to a performance fee of 10 per cent of distributions (including by way of dividends and buyback of shares) made by the Company in excess of 105 per cent of the most recently published Net Asset Value prior to the date of the agreement. The AIFM Agreement and the Delegated Portfolio Management Agreement are each terminable on 9 months' notice save that they are terminable on 30 days' notice with no additional compensation in the event of a completed offer for the duration of the current Offer Period. In addition, in respect of the period commencing on 14 August 2020 up to and including 31 March 2021, total fees payable to Waterfall and Mirabella are capped at £2.0 million.

Transition from PSC

As part of the transition, the Board has entered into a termination agreement with PSC by which the existing IMA with PSC will terminate on 1 October 2020. PSSL has agreed to pay to PSC a sum representing the approximate balance of the unpaid base management fee, including the unexpired notice period, payable to PSC.

As announced on 14 August 2020, the Board believes that Waterfall's appointment materially increases the likelihood that a firm all cash offer will be brought to the table for shareholders to consider. As previously stated, if a recommendable offer is not forthcoming the Board is likely to recommend to shareholders that the Company pursues an orderly run-off with capital to be returned to shareholders in as timely a manner as possible during the process. Any change to the Company's investment policy will be conditional upon the approval of shareholders. Further announcements will be made in due course.

Simon King, Chairman, commented:

"The Board is pleased to effect the change of Investment Manager, something which the Board unanimously and firmly believes is in the best interests of shareholders. This follows a period of intensive and rigorous preparatory work undertaken by Waterfall and its legal advisers."

About Waterfall

Waterfall is a specialty credit investment adviser registered with the US Securities and Exchange Commission ("SEC") with approximately $8.3 billion in assets under management as of 1 August 2020. Founded in 2005, Waterfall has offices in New York, London and Dublin. The core strategies of Waterfall are direct lending, structured credit (new issue and secondary securities) and whole loans. Waterfall also manages a NYSE-listed public REIT, Ready Capital Corporation (ticker: RC) which is a non-bank direct lender to small-medium enterprises ("SMEs") and small balance commercial property owners in the US. Through the experience of its management team and its specialisation in structured credit, principal finance and loans, Waterfall can bring credibility and confidence to shareholders with regards to the investment management of the Company.

Waterfall's founders and co-managing partners, Tom Capasse and Jack Ross, each have over 30 years of experience in securitisation and credit investing, having established Merrill Lynch's industry leading ABS Group in the 1980s. Their experience in credit investing across multiple strategies and focus in the specialty finance sector brings insight and perspective over four credit cycles. As it relates to the Company's core strategy, Waterfall's direct lending team brings highly relevant experience and expertise having invested across multiple asset classes and capital structures (e.g. senior, mezzanine and equity) in this specific strategy. The direct lending team includes investment professionals responsible for originating and underwriting opportunities and operations staff responsible for reporting, cash management and surveillance. Waterfall has also recently hired a team of seasoned professionals for a private equity strategy. Additionally, through its loans strategy, Waterfall has experience in asset management of underperforming or non-performing debt and has successfully worked with borrowers, deploying solutions to distressed situations in order to recover value.

Further information on Waterfall will be made available on the Company website shortly following this announcement.

About Mirabella

Mirabella is a full-scope AIFM, currently managing $17.7bn (end of July 2020) of assets under management across 69 mandates including alternative investment funds and segregated mandates as well as providing services to other alternative investment managers and UCITS management companies.

Further information on Mirabella is set out in an appendix to this announcement.

In accordance with Rule 26.1 of the Code, a copy of this announcement will be available on PSSL's website (www.pollenstreetsecuredlending.com/investor-announcements).

The Company remains in an "Offer Period" as defined in the Code. Accordingly, the dealing disclosure requirements listed below will continue to apply.

This announcement has been made with the consent of Waterfall. Further announcements will be made as and when appropriate.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No.596/2014. Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

Disclaimer

Smith Square Partners LLP, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for PSSL and for no one else in connection with the possible offer and will not be responsible to anyone other than PSSL for providing the protections afforded to its clients or for providing advice in connection with the possible offer referred to in this announcement.

Liberum Capital Limited ("Liberum"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for PSSL and for no one else in connection with the possible offer and will not be responsible to anyone other than PSSL for providing the protections afforded to its clients or for providing advice in connection with the possible offer referred to in this announcement.

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Rule 2.9 disclosure

In accordance with Rule 2.9 of the Code, PSSL confirms that as at the close of business on 30 September 2020 its issued share capital consisted of 73,580,811 ordinary shares of £0.01 each (excluding shares held in treasury). The International Securities Identification Number for PSSL's ordinary shares is GB00BLP57Y95.

LEI number

PSSL's LEI number is 213800P4S1KTTPIB9T76.

Publication of this announcement

A copy of this announcement will be made available subject to certain restrictions relating to persons resident in restricted jurisdictions on the Company's website no later than 12 noon on 2 October 2020 (www.pollenstreetsecuredlending.com/investor-announcements).

The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.

Appendix

Mirabella is an authorised person for the purposes of the Financial Services and Markets Act 2000 (''FSMA'') and as such is authorised and regulated the Financial Conduct Authority of the United Kingdom or any successor authority (the ''FCA''). Mirabella is a full-scope AIFM under the Alternative Investment Fund Managers Directive (2011/61/EU) ("AIFMD") which requires certain articles of the recast Financial Instruments Directive (2014/65/EU as subsequently amended) ("MiFID") and the Market in Financial Instruments Regulation (Regulation (EU) 600/2014) to be adhered to. Mirabella has permission to undertake certain MiFID investment activities as defined in Article 6(4) of AIFMD and classified by the FSMA as Managing Investments as well as other ancillary functions supporting this activity. 

Mirabella currently manages $17.7bn (end of July 2020) of assets under management across 69 mandates including alternative investment funds and segregated mandates as well as providing services to other alternative investment managers and UCITS management companies. The mandates are across all asset types, including equity, multi-strategy, credit, relative value and private equity. Mirabella has over 30 individuals involved in the key functions of compliance oversight and risk management across its mandates.