Disclaimer

The past performance results presented herein do not guarantee and are not indicative of future results. There can be no assurance that these or comparable returns will be achieved from investments made by the Courage Special Situations Master Fund, L.P. (“Master Fund”), either individually or in the aggregate. All returns shown have been calculated on a consistent basis and assume a theoretical continuous investment in Class A interests of the Master Fund’s domestic feeder fund through March 31, 2010, which are charged a 1% annual management fee and 20% annual incentive allocation, and Class B interests of the Master Fund’s domestic feeder from and after April 1, 2010, which are charged a 1.25% annual management fee and 20% annual incentive allocation. All returns reflect the reinvestment of dividends and interest and the deduction of all fees, expenses and incentive allocation. Beginning March 2008, all returns presented reflect returns for a ‘‘new issue eligible’’ investor. Allocation of new issues to new issue eligible investors may result in returns to such investors that are higher than the returns to “new issue ineligible” investors. Investors should be aware that, when the Funds have been able to achieve positive returns, it has done so partially due to various hedging strategies, such as the “short” selling of securities and the selling and buying of options of underlying securities and commodities and futures contracts. The performance data listed above for the domestic feeder fund was developed internally by the fund itself and such performance numbers are unaudited. It is possible that performance goals of the fund may not be achieved and that an investor could lose all or a significant portion of its investment. Portfolio position data reflects holdings of the Master Fund.

Disclaimer

The past performance results presented herein do not guarantee and are not indicative of future results. There can be no assurance that these or comparable returns will be achieved from investments made by the Courage Credit Opportunities Fund II, L.P. (the “Credit Fund II”), either individually or in the aggregate. All returns shown have been calculated on a consistent basis and assume a theoretical continuous investment in Credit Fund II. All returns reflect the reinvestment of dividends and interest and the deduction of all fees, expenses and incentive allocation. The performance data listed above was developed internally by the fund itself and such performance numbers are unaudited. It is possible that performance goals of the fund may not be achieved and that an investor could lose all or a significant portion of its investment.

Disclaimer

The past performance results presented herein do not guarantee and are not indicative of future results. There can be no assurance that these or comparable returns will be achieved from investments made by the Courage Long Short Opportunity Fund, L.P. (the “Long Short”), either individually or in the aggregate. All returns shown have been calculated on a consistent basis and assume a theoretical continuous investment in Long Short. All returns reflect the reinvestment of dividends and interest and the deduction of all fees, expenses and incentive allocation. The performance data listed above was developed internally by the fund itself and such performance numbers are unaudited. It is possible that performance goals of the fund may not be achieved and that an investor could lose all or a significant portion of its investment.

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Credit Opportunities

Overview

The Credit Opportunities strategy focuses on long-term investing in the stressed and distressed debt of Lower Middle Market companies.

Key components of the strategy include:

  • Capitalizing on the inherent inefficiencies in the lower middle and distressed debt markets
  • Sourcing underfollowed opportunities within our circle of expertise
  • Leveraging our team's extensive experience and longstanding relationships
  • Investing in the debt securities at a significant discount

  • Providing capital and resources to improve the balance sheet
  • Creating value by providing operational expertise and resources

Strategy

The Credit Opportunities strategy seeks to generate long-term value and equity-like returns through opportunistic investments in the stressed and distressed debt securities of U.S. Lower Middle Market companies.

Courage seeks to construct a diversified portfolio of investments at discounted enterprise values (3.5x to 5.5x EBITDA) versus typical private equity sponsor transaction multiples (7x to 11x EBITDA).  Through its strategy of purchasing discounted debt in the secondary market, Courage seeks to generate equity-like returns with downside protection.

Courage seeks to support senior management in developing and executing a business plan designed to maximize enterprise value. Courage may sit on company boards and deploy its operating partners when appropriate.

Approach

Downside Protection & Capital Preservation

The strategy employs a deep-value approach to investing with a long-term investment horizon and an emphasis on downside protection. Courage focuses on the less competitive, more inefficient Lower Middle Market segment.

The strategy provides current income and  downside protection consistent with credit investing yet offers significant upside potential typical of private equity strategies.

The team’s substantial financial, restructuring, operational and industry expertise, coupled with its ability to source unique opportunities has enabled Courage to generate attractive investment returns through multiple market cycles.

Investment Characteristics

Company Characteristics

Industry Focus

Strategy Profile

  • Quality businesses with defendable market positions and competitive advantages
  • Enterprise values between $75 million and $500 million
  • Ability to generate at least $25 million EBITDA
  • Identifiable restructuring event within 24 months
  • Located in the U.S. and Canada
  • Healthcare Services, Pharma, Devices
  • Restaurants, Retail, Consumer Services
  • Energy, Metals
  • Transportation
  • Technology, Media, Telecommunications
  • Avoid — financials and real-estate companies
  • 10-15 Core investments over 3-year investment period
  • Typical investment of $10 - $40 million
  • Average holding period of 3 - 4 years
  • No portfolio level leverage