ROCKALL CLO B.V. - Irish Stock Exchange

the possibility that a third-party co-venturer or partner may at any time have economic or business
interests or goals which are inconsistent with those of the Issuer, or may be in a position to take action
contrary to the investment objective of the Issuer. In addition, the Issuer may in certain circumstances
be liable for actions of its third-party co-venturer or partner.
1.11 Third-Party Litigation
The Issuer's investment activities subject it to the normal risks of becoming involved in litigation by third
parties. The expense of defending against claims by third parties and paying any amounts pursuant to
settlements or judgments would generally be borne by the Issuer and would reduce net assets.
2. RELATING TO THE COLLATERAL
2.1 Risks associated with a Leveraged Structure and Sale of Collateral
The Issuer will be substantially leveraged. The pro forma fully-funded indebtedness of the Issuer under
the VF-1 Notes and the Specified Notes (collectively, the "Initial Borrowing Arrangements") is
expected to be €625,000,000. In addition to indebtedness under the Initial Borrowing Arrangements, the
Initial Borrowing Arrangements permit the Issuer to (i) incur certain other indebtedness secured by the
Collateral and (ii) engage in Hedging and Short-Sale Transactions. Utilisation of leverage is a
speculative investment technique and involves certain risks to investors. The leverage provided to the
Issuer under the Initial Borrowing Arrangements and any other Issuer Indebtedness will result in interest
expense and other costs incurred in connection with such borrowings that may not be covered by the
net interest income, dividends and appreciation of Issuer Investments.
The Initial Borrowing Arrangements permit the Issuer to issue additional VF Notes and Notes, without
the consent of any VF Noteholders or Noteholders, as applicable. Depending on the terms and
conditions of any such future additional VF Notes or Notes, the Issuer may be more or less leveraged
than the Issuer would be with the Initial Borrowing Arrangements alone. The terms of any such
additional VF Notes or Notes may provide for a higher or lower interest rate than the interest rate under
the Initial Borrowing Arrangements. The issue of such additional VF Notes or Notes will result in interest
expense and other costs incurred in connection with such financing(s) that may not be covered by the
net interest income, dividends and appreciation of Issuer Investments.
The use of leverage will increase the volatility of the Net Asset Value from time to time. While the use of
borrowed funds will increase returns to the Issuer if the Issuer earns a greater return on the incremental
investments purchased with borrowed funds than it pays for such funds, the use of leverage will
decrease returns if the Issuer fails to earn as much on such incremental investments as it pays for such
funds. The effect of leverage may therefore result in a greater decrease in the Net Asset Value than if
the Issuer was not so leveraged. The extent of the Issuer's permitted leveraging at any time will be
determined by reference to the Market Value of the Issuer's investments established in accordance with
the Market Valuation Manual. As a consequence, if there is a substantial decline in the Market Value of
the Issuer's investments, the Issuer (or the Collateral Manager on its behalf) may be required to liquidate
investments in order to maintain compliance with its debt covenants and, as a result, the occurrence of a
sudden, precipitous drop in value of Issuer Investments could force the Issuer (or the Collateral
Manager on its behalf) to liquidate the same quickly, and not for fair value, in order to maintain
compliance with such debt covenants.
The VF Instrument will contain events of default which, under certain circumstances, could result in early
amortisation or in the acceleration of the maturities of these obligations. In the event of acceleration of
any debt under a VF Instrument in whole or in part, the Issuer may be required to dispose of all or a
significant portion of the Issuer Investments. Depending upon the liquidity of the Issuer Investment, such
a forced disposal of Issuer Investments could result in realisation of value of such investments
significantly below the anticipated Market Values for such Issuer Investments.
The substantial indebtedness of the Issuer could limit its ability to respond to changing business
conditions or to execute its investment programme. The VF Instrument imposes operating and financing
restrictions on the Issuer. Therefore, no assurance can be given that additional debt financing will be
available when needed or, if available, will be obtainable on terms that are favourable to the Issuer. It is
possible that the Issuer would need to sell Issuer Investments to repay indebtedness in order to meet
such restrictions, and these sales could occur when the value of the Issuer Investments is depressed.
If an event of default occurs under the VF Notes or the Trust Deed and the Collateral is sold, there can
be no assurance that the proceeds of such sale will be sufficient to pay in full the principal of and
accrued interest on the VF Notes (or amounts payable under any Secured Hedging Transactions) and
the Notes. In addition, under such circumstances, pursuant to the subordination provisions contained in
the Security Documents and the Intercreditor Arrangements, no payment on the Class B Notes will be
made until payment in full of obligations senior thereto, no payment on the Class C Notes will be made
until payment in full of obligations senior thereto, no payment on the Class D Notes will be made until
payment in full of obligations senior thereto and no payment on the Class E Subordinated Notes will be
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