ROCKALL CLO B.V. - Irish Stock Exchange

of Class E Subordinated Notes should assume that they will be subject to the U.S. federal income tax
consequences described below that result from owning equity in a PFIC (subject to the discussion below under
"Investment in a Controlled Foreign Corporation").
Unless a U.S. Holder elects to treat the Issuer as a "qualified electing fund" (as described in the next paragraph)
and the PFIC rules are otherwise applicable, upon certain distributions ("Excess Distributions") by the Issuer
and upon a disposition of the Class E Subordinated Notes at a gain, the U.S. Holder will be liable to pay tax at
the highest tax rate on ordinary income in effect for each period to which the income is allocated plus interest on
the tax, as if such distributions and gain had been recognised rateably over the U.S. Holder's holding period for
the Class E Subordinated Notes. An interest charge is also applied to the deferred tax amount resulting from the
deemed rateable distribution. Finally, a U.S. Holder who acquires Class E Subordinated Notes from a decedent
U.S. Holder would not receive the step-up of the income tax basis to fair market value for such Class E
Subordinated Notes, but would have a tax basis equal to the decedent's basis, if lower.
If a U.S. Holder elects to treat the Issuer as a "qualified electing fund" (a "QEF"), distributions and gain will not be
taxed as if recognised rateably over the U.S. Holder's holding period or subject to an interest charge, nor will the
denial of a basis step-up at death described above apply. Instead, a U.S. Holder that makes a QEF election is
required for each taxable year to include in income the U.S. Holder's pro rata share of the ordinary earnings of
the QEF in question as ordinary income and a pro rata share of the net capital gain of the QEF in question as
capital gain, regardless of whether such earnings or gain have in fact been distributed (assuming the discussion
in this section of the Offering Circular headed "Investment in a Controlled Foreign Corporation" below does not
apply), and subject to a separate election to defer payment of taxes, which deferral is subject to an interest
charge. Consequently, in order to comply with the requirements of a QEF election, a U.S. Holder must receive
from the Issuer certain information. The Issuer intends to supply U.S. Holders (at the expense of such U.S.
Holders and provided that the Issuer is paid in advance) with the information needed for such U.S. Holders to
comply with the requirements of their QEF election. Except as expressly set forth below, the discussion below
assumes that a QEF election will not be made.
As a result of the nature of the Issuer Investments that the Issuer intends to hold, the Issuer may hold
investments treated as equity of non-United States corporations that are PFICs. In such a case, assuming that
the Issuer is a PFIC, a U.S. Holder would be treated as owning its pro rata share of the equity of the PFIC owned
by the Issuer. Such a U.S. Holder would be subject to the rules generally applicable to shareholders of PFICs
discussed above with respect to distributions received by the Issuer from such a PFIC and dispositions by the
Issuer of the equity of such a PFIC (even though the U.S. Holder may not have received the proceeds of such
distribution or disposition). Assuming the Issuer receives the necessary information from the PFIC in which it
owns equity, certain U.S. Holders may make the QEF election discussed above with respect to the equity of the
PFIC owned by the Issuer. However, no assurance can be given that the Issuer will be able to provide U.S.
Holders with such information. If the Issuer is a PFIC, each U.S. Holder of a Class E Subordinated Note must
make an annual return on IRS Form 8621, reporting distributions received and gains realised with respect to
each PFIC in which the U.S. Holder holds a direct or indirect interest. Prospective purchasers should consult
their tax advisers regarding the potential application of the PFIC rules.
Investment in a Controlled Foreign Corporation
Depending on the degree of ownership of the Class E Subordinated Notes and other equity interests in the Issuer
by U.S. Holders and whether the Class E Subordinated Notes are treated as voting securities, the Issuer may
constitute a controlled foreign corporation (a "CFC"). In general, a foreign corporation will constitute a CFC if
more than 50 per cent. of the shares of the corporation, measured by reference to combined voting power or
value, are owned, directly or indirectly, by "U.S. 10 per cent. Shareholders". A "U.S. 10 per cent. Shareholder",
for this purpose, is any U.S. person that possesses 10 per cent. or more of the combined voting power of all
classes of shares of a corporation. It is possible that the IRS may assert that the Class E Subordinated Notes
should be treated as voting securities, and consequently that the U.S. Holders owning Class E Subordinated
Notes so treated, or any combination of such Class E Subordinated Notes and other voting securities of the
Issuer, that constitute 10 per cent. or more of the combined voting power of all classes of shares of the Issuer are
"U.S. 10 per cent. Shareholders" and that, assuming more than 50 per cent. of the Class E Subordinated Notes
and other voting securities of the Issuer are held by such U.S. 10 per cent. Shareholders, the Issuer is a CFC.
If the Issuer were treated as a CFC, a U.S. 10 per cent. Shareholder of the Issuer would be treated, subject to
certain exceptions, as receiving a dividend at the end of the taxable year of the Issuer in an amount equal to that
person's pro rata share of the "subpart F income" and investments in U.S. property of the Issuer. Among other
items, and subject to certain exceptions, "subpart F income" includes dividends, interest, annuities, gains from
the sale of shares and securities, certain gains from commodities transactions, certain types of insurance income
and income from certain transactions with related parties. It is likely that, if the Issuer were to constitute a CFC,
predominantly all of its income would be subpart F income. In addition, special rules apply to determine the
appropriate exchange rate to be used to translate such amounts treated as dividends and the amount of any
foreign currency gain or loss with respect to distributions of previously taxed amounts attributable to movements
in exchange rates between the times of deemed and actual distributions, and certain “dividends” from such CFC
could be recharacterised as U.S. source income for foreign tax credit purposes. Unless otherwise noted, the
- 175 -