LCP Proudreed PLC - Irish Stock Exchange

RISK FACTORS
The following is a summary of certain aspects of the Notes about which prospective Noteholders should be
aware. This summary is not intended to be exhaustive and prospective Noteholders should also read the
detailed information set out elsewhere in this Offering Circular and reach their own views prior to making
any investment decision.
1. Risks Relating to the Notes and the Issuer
Liability under the Notes
The Notes will be obligations of the Issuer only. The Notes will not be obligations or responsibilities of,
or guaranteed by, any person or entity other than the Issuer. In particular, the Notes will not be obligations
or responsibilities of, or guaranteed by, any of the Note Trustee, the Issuer Security Trustee, the Borrower
Security Trustee, the Joint Lead Managers, the Account Bank, the Cash Manager, the Agent Bank, the
Paying Agents, the Hedging Providers, the Issuer Corporate Services Provider, the Liquidity Facility
Provider, the Property Manager, any of the Borrowers, the Parent Obligors, the LCP Covenantors, the
Proudreed Covenantor or any of their respective affiliates. Furthermore, no person other than the Issuer
will accept any liability whatsoever to Noteholders in respect of any failure by the Issuer to pay any
amount due under the Notes.
Limited resources of the Issuer
The Issuer is a special purpose company and is not carrying on any business other than the issue of the
Notes, the lending of the Commercial Mortgage Loans to the Borrowers and transactions ancillary
thereto. The ability of the Issuer to meet its obligations under the Notes will be principally dependent on
the receipt by it of funds from the Borrowers under the Commercial Mortgage Loans, the receipt of funds
from the Hedging Providers under the relevant Hedging Agreements and, in the circumstances described
in this Offering Circular, the Liquidity Facility Provider. Other than the foregoing, prior to the
enforcement of the Issuer Security and the relevant Obligor Security, the Issuer will not have any other
significant funds available to it to meet its obligations under the Notes and in respect of any payment
ranking in priority to, or pari passu with, the Notes.
Availability of the Liquidity Facility
If there is a Liquidity Shortfall as determined by the Cash Manager on any Determination Date, the Cash
Manager (on behalf of the Issuer) will request a drawdown of funds under the Liquidity Facility (in
accordance with the terms of the Liquidity Facility Agreement). The maximum amount available to be
drawn in aggregate under the Liquidity Facility is £18,900,000 (as reduced in proportion to reductions in
the Principal Amount Outstanding on the Notes), which may not be sufficient at any given time to meet
the Issuer’s payment obligations in full. The Liquidity Facility will only be available to provide liquidity
and will not be a source of credit support for the Notes (please see the section entitled ‘‘Priorities and
conflicts of interest in respect of the Notes’’ below). For further details as to the terms of the Liquidity
Facility Agreement, see further the section entitled ‘‘Resources Available to the Borrowers and the Issuer’’.
Obligor Security
Upon the occurrence of a Loan Event of Default under a Commercial Mortgage Loan and following
enforcement of the relevant Obligor Security, recourse for repayment of the relevant Commercial
Mortgage Loan will be available only in respect of the Secured Properties comprised within the Property
Portfolio of the relevant Borrower, the benefit of the relevant Transaction Documents and monies within
the relevant Borrower Accounts relating to rental income, insurance proceeds and proceeds of sale (if
any) derived from that Property Portfolio.
Any enforcement under the Obligor Security Documents may not result in immediate realisation of the
relevant Obligor Security Assets and a significant delay could be experienced in recovery by the Borrower
Security Trustee of, inter alia, amounts owed under the affected Commercial Mortgage Loan. There can
be no assurance that the Borrower Security Trustee would recover all amounts secured upon enforcement
of the Obligor Security and, accordingly, sufficient funds may not be realised or available to make all
required payments to the Issuer and, accordingly, the Issuer may not have sufficient funds available to
make all required payments to the relevant Noteholders.
In addition, each Borrower Deed of Charge will contain a provision whereby the rent receivable in respect
of Occupational Leases by the relevant Borrower is assigned by way of security to the Borrower Security
Trustee. So long as no receiver has been appointed and/or the Borrower Security Trustee, as mortgagee,
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