Joint Second True-up Distribution and Catch-up Distribution

The Joint Administrators can announce that LBIE is now in a position to make a further Common Terms Distribution which will be a joint ‘Second True-up Distribution’ and a ‘Catch-up Distribution’ (each as defined below).

Although for ease of understanding they are described separately in this announcement, the Second  True-up Distribution and the Catch-up Distribution will be conducted as a single Common Terms Distribution.

Capitalised terms used in this announcement but not otherwise defined shall have the meaning given to such terms in the Common Terms. 

Proposed Second True-up Distribution

The funds released for the Second True-up Distribution will be distributed to those Consenting Beneficiaries who participated in the January and June catch up Common Terms Distributions ("January and June Beneficiaries") and for whom Attributable Reserves were made in respect of potential U.S. tax liabilities and to those Consenting Beneficiaries who received the first Common Terms Distribution in September 2013 and for whom Attributable Reserves were made in respect of potential U.S. tax liabilities but did not participate in the first true up distribution in June. The determination of amounts to be distributed in the Second True-Up Distribution is consistent with the methodology applied to determinethe First True-Up Distribution.

The Common Terms still require LBIE to send Notices of Distribution to all ‘Qualifying Consenting Beneficiaries’, but in the case of those  whose circumstances are different to those described in the preceding paragraphs, their Notice of Distribution for the Second True-up Distribution will show a Gross Distribution of zero.

 Catch-up Distribution

Simultaneously with the Second True-up Distribution,  LBIE will also make a catch-up distribution (the “Catch-up Distribution”)  for a handful of Consenting Beneficiaries who now satisfy the eligibility criteria for this Common Terms Distribution but who did not participate in previous Common Terms Distributions (“Catch-Up Beneficiaries”).

Catch-up Beneficiaries will be brought into the same position as if they had participated in all previous Common Terms Distributions (i.e. the sum total of all amounts paid, appropriated or reserved for them will be equivalent to 106% of their Best Claim).

Until LBIE has received additional IRS guidance specific to distributions over 100% of Best Claim, LBIE will continue to make a 30% withholding reserve on distributions in excess of 100% paid to counterparties or beneficial owners that have not provided a Form W-9. LBIE will continue to reserve amounts in respect of the anticipated US federal income tax required to be withheld by LBIE and its withholding agent on a distribution up to 100% of the Best Claim based on the same methodology applied to other Consenting Beneficiaries

Changes in Withholding Statements

In June 2014, following agreement with the IRS as to the character and source of the September distribution for US federal income tax purposes, LBIE was able to release to counterparties funds reserved in September which exceeded the actual tax agreed with the IRS with respect to the September distribution (the "True Up distribution").  In this regard, for US federal income tax withholding and reporting purposes, LBIE will treat the True Up distribution as being paid entirely to those beneficiaries who did not submit a Form W-9 in respect of the September distribution (regardless of any subsequent withholding statement you may have supplied to LBIE).

Key Dates

The relevant dates for the proposed Common Terms Distribution are as follows:

Notice of Intended Distributions                                                               3^rd September, 2014       

Notice of Distribution                                                                                3^rd October, 2014

Distribution                                                                                               30^th October, 2014