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

Under the terms of the Credit Agreement, no new lease may be entered into and no existing lease may be
amended, surrendered, sub-leased or assigned and no rent review may be agreed in relation to any lease without
the consent of the Lender under the Credit Agreement. However, certain such things may be done in particular
circumstances without the consent of the Lender.
However, there can be no assurance that leases on terms (including rent payable and covenants of the
landlord) equivalent to those applicable to the leases in place on the Closing Date will be obtainable in the
market at such time, that market practice will not have changed or that the circumstances of prospective tenants
will not make some or all of such provisions inappropriate. The discretions given to the Borrower under the
Credit Agreement as to the matters described above may result in a diminution in the quality of the tenants of
the Properties or the terms of their occupational leases over the life of the Notes.
No assurance can be given that Tenants in the Properties will continue making payments under their leases
or that any such Tenants will not become insolvent or subject to administration in the future or, if any such
tenants become subject to administration, that they will continue to make rental payments in a timely manner.
In addition, a Tenant may, from time to time, experience a downturn in its business, which may weaken its
financial condition and result in a failure to make rental payments when due. If a Tenant defaults in its
obligations under its Occupational Lease, the relevant Property Owner may experience delays in enforcing its
rights as lessor and may incur costs and experience delays associated with protecting its investment, including
costs incurred in renovating and re-letting the relevant Property. In addition, if a Tenant is a subsidiary of a
rated parent company, absent a guarantee or other profit and loss absorption agreement, the parent company will
not be responsible for its subsidiary’s obligations under the related Occupational Lease.
A petition was presented to the Court of Session in Edinburgh by HM Revenue & Customs on 14 March
2007 for the winding up of Britannia Healthcare Limited (“Britannia Healthcare”). The same petition also
included an application for a liquidator to be appointed in respect of Britannia Healthcare. Britannia Healthcare
guarantees the leases of its affiliate (Britannia Leased Homes Limited (“BLHL”)) which operates six freehold
Properties located in England, representing 1.8 per cent. of the Cut-Off Date Securitised Loan Principal Balance
based upon the aggregate Cut-Off Date Allocated Loan Amount, and representing in aggregate 1.9 per cent. of
Annualised Base Rent. At the date of this document, there is no further information on the status of the petition,
other than that it has been presented, and no order to wind up has been granted (or dismissed) by the Court. On
17 May 2007, the Loan Arranger received a certified statement from the Managing Director of Britannia
Healthcare, confirming that on 10 May 2007 the amount due to HM Revenue & Customs (of £51,408.14) was
paid to HM Revenue & Customs in full in settlement of all amounts due and payable by Britannia Healthcare to
HM Revenue & Customs.
Should, notwithstanding the above, a winding up order be made in respect of Britannia Healthcare, the
relevant occupational leases may be forfeited by the relevant Occupational Tenant (BLHL, for whom Britannia
Healthcare is surety). If the Court were to order that Britannia Healthcare is wound up and a liquidator
appointed, then the relevant landlord (which is a member of the Borrower Group) may commence forfeiture
proceedings against the relevant tenant, BLHL. If the landlord regains possession of the property it may re-let
the Properties to another tenant.
Any of these factors may result in a decline in the income produced by the Properties or the incurrence by
the Property Owners of unforeseen liabilities, which may in turn adversely affect the ability of the Borrower to
meet their obligations in respect of the Libra Loan and hence the ability of the Issuer to make payments on the
Notes.
Frustration of Tenancies: A tenancy could, in exceptional circumstances, be frustrated under English law,
Scots law or Northern Irish law, whereupon the parties need not perform any obligation arising under the
relevant agreement after the frustration has taken place. Under English or Northern Irish law, frustration may
occur where superseding events radically alter the continuance of the arrangement under the agreement for a
party thereto, so that it would be inequitable for such an agreement or agreements to continue. Under the
equivalent Scots law principle of rei interitus, a tenancy will (subject to express agreement to the contrary)
terminate if the leased property is destroyed to the extent that it is no longer tenantable or if an event occurs
which otherwise precludes performance of the parties’ rights and obligations under the relevant tenancy
agreement. If a tenancy granted in respect of a property is frustrated this could operate to have an adverse effect
on the income derived from, or able to be generated by, a particular property, which could cause the owner of
such property to default on the Libra Loan. Therefore, there can be no assurance that any lease will not
terminate earlier than its term as a result of frustration.
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