Titan Europe 2007-1 (NHP) Limited - Irish Stock Exchange

A Note will be considered issued with OID if its “stated redemption price at maturity” exceeds its “issue
price” (i.e., the price at which a substantial portion of the respective class of Notes is first sold (not including
sales to the Manager)) by an amount equal to or greater than 0.25 per cent. of such Note’s stated redemption
price at maturity multiplied by such Note’s weighted average maturity (“WAM”). In general, a Note’s “stated
redemption price at maturity” is the sum of all payments to be made on the Note other than payments of
“qualified stated interest”. The WAM of a Note is computed based on the number of full years each distribution
of principal (or other amount included in the stated redemption price at maturity) is scheduled to be outstanding,
rounding down each anticipated distribution of principal to the next lowest number of whole year. The schedule
of such likely distributions should be determined in accordance with the assumed rate of prepayment (the
“Prepayment Assumption”) used in pricing the Notes. The pricing of the Notes was calculated on the
assumption that there will be no prepayments other than scheduled amortisation.
In general, interest on the Notes will constitute “qualified stated interest” only if such interest is
“unconditionally payable” at least annually at a single fixed or qualifying variable rate (or permitted
combination of the foregoing) within the meaning of applicable United States Treasury Department Regulations.
Interest will be considered “unconditionally payable” for these purposes if legal remedies exist to compel timely
payment of such interest or if the Notes contain terms and conditions that make the likelihood of late payment or
non-payment “remote”. Although the conditions of the Notes provide that a holder cannot compel the timely
payment of any interest accrued in respect of the Notes (other than the Class A Notes), unless all more senior
classes of Notes are not outstanding regulations provide that in determining whether interest is unconditionally
payable the possibility of non-payment due to default, insolvency or similar circumstances is ignored.
Accordingly, the Issuer intends to take the position that interest payments on the Notes, other than the Class X
Notes and the Class V Notes, constitute “qualified stated interest”. It is possible that the IRS could take a
contrary position.
Because the Class X Notes consist entirely of interest payments, the Issuer intends to take the position that
such classes do not bear “qualified stated interest” and that all payments thereon will be included in their stated
redemption price at maturity. A United States holder will not be able to deduct any “negative OID” if future
payments are reduced by rapid reduction of the notional amounts of the Class X Notes but will be able to offset
such amounts only against future positive accruals of OID, if any. The Issuer will take the position that the
Class X Notes will not be subject to the rules applicable to contingent payment debt instruments, and United
States holders should consult their tax advisers in this regard. See “—Taxation of the Class V Notes” below.
A United States holder of any class of Notes deemed to bear OID generally would be required to accrue
OID on the Note for United States federal income tax purposes for each day on which the United States holder
holds such instrument. Special rules applicable to debt instruments such as the Notes as to which the repayment
of principal may be accelerated as a result of the prepayment of other obligations securing the debt instruments
provide that the periodic inclusion of OID is determined by taking into account the prepayment assumption used
in pricing the debt instrument and actual prepayment experience. Under these rules, the OID accruing in any
period will likely equal the amount by which (a) the sum of (i) the present value of all remaining distributions to
be made on the Note as of the end of such period plus (ii) the distributions made during such period included in
the Note’s stated redemption price at maturity, exceeds (b) the “adjusted issue price” of the Note as of the
beginning of the period. The present value of the remaining distributions to be made on a Note is calculated
based on (w) the original yield to maturity of such instrument, (x) events (including actual prepayments) that
have occurred prior to the end of the period, (y) the Prepayment Assumption and (z) the value of three-month
LIBOR on the Closing Date. The “adjusted issue price” of a Note at the beginning of any accrual period
generally would be the sum of its issue price and the amount of OID allocable to all prior accrual periods, less
the amount of any payments (other than payments of qualified stated interest) made in all prior accrual periods.
The OID accruing in any period generally will increase if prepayments on the Libra Loan exceed the
Prepayment Assumption and decrease if prepayments are slower than the Prepayment Assumption.
Sourcing: Interest on a Note will constitute foreign source income for United States federal income tax
purposes. Subject to certain limitations, United Kingdom and Irish withholding tax, if any, imposed on
payments on the Notes will generally be treated as foreign tax eligible for credit against a United States holder’s
United States federal income tax (unless such tax is refundable under the relevant treaty). For foreign tax credit
purposes, interest will generally be treated as foreign source passive income (or, in the case of certain United
States holders, financial services income).
Foreign Currency Considerations: A United States holder that receives a payment of interest in sterling
with respect to the Notes will be required to include in income the United States dollar value of the amount of
interest income that has accrued and is otherwise required to be taken into account with respect to the Notes
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