NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

4 December 2024

Blackstone Loan Financing Limited

("BGLF" or the "Company")

Publication of Circular and Notice of General Meetings

As announced by the Board on 21 November 2024, the Company has entered into a conditional agreement for the sale of 100 per cent. of the Profit Participating Notes ("PPNs") issued by Blackstone Corporate Funding DAC ("BCF") and held by Blackstone / GSO Loan Financing (Luxembourg) S.à.r.l. ("LuxCo"), a wholly-owned subsidiary of the Company, to Blackstone Corporate Funding II S.à.r.l. (the "Purchaser"), an acquisition vehicle  directly and/or indirectly owned by vehicles managed and/or advised by Blackstone Alternative Credit Advisors LP or an affiliate thereof (the "Proposed Transaction").

The Proposed Transaction, which is subject to Shareholder approval and certain other conditions, would result in a significant acceleration and fulfilment of the Company's existing Managed Wind-down process and generate gross cash proceeds of approximately €304 million for the Company on completion.

Shortly following completion of the Proposed Transaction, the Company will, subject to Shareholder approval at the Second EGM, effect the Summary Winding-up of the Company under the Companies (Jersey) Law 1991 (the "Summary Winding-up" and together with the Proposed Transaction, the "Proposals") and intends to distribute a substantial portion of its remaining net assets (including all, or the vast majority, of the net proceeds of the Proposed Transaction) in the form of a further third compulsory redemption of Shares as soon as practicable thereafter (the "Third Redemption").

A circular (the "Circular") has today been published setting out details of, and to seek Shareholder approval for, the Proposals and explain why the Board is recommending that all Shareholders vote in favour of: (i) the Ordinary Resolution of the Shareholders approving the Proposed Transaction at the First EGM (the "First EGM Resolution"); and (ii) the Special Resolution approving the Summary Winding-up at the Second EGM (the "Second EGM Resolution" and together with the First EGM Resolution, the "Resolutions"). The formal Notices of the EGMs, containing the full text of the Resolutions, are set out in the Circular.

The above summary should be read in conjunction with the full text of this announcement and the Circular, extracts of which are set out in Appendix I below. Please refer to Appendix I to this announcement which sets out further details of the Proposed Transaction, as extracted from the Circular.

Unless otherwise states, capitalised terms in this announcement have the meanings ascribed to them in Appendix II to this announcement and in the Circular.

Expected Timetable of Events

* Events subject to postponement in the event of a delay in completion of the Proposed Transaction and/or in the receipt by the Company of any requisite regulatory consents.

** The Company will make a Redemption Announcement through an RIS in advance of the Third Redemption confirming exact details of the timing and amount of the redemption payment to be made to Shareholders.

Each of the times and dates in the expected timetable of events may be extended or brought forward without notice. If any of the above times and/or dates change, the revised time(s) and/or date(s) will be notified to Shareholders by an announcement through an RIS provider. All references are to London time unless otherwise stated.

Enquiries:

APPENDIX I

Recommended Proposed Sale of Profit Participating Notes

Recommended Proposal for Summary Winding-up of the Company

Notice of Extraordinary General Meetings

1.         INTRODUCTION

As announced by the Board on 21 November 2024, the Company has entered into a conditional agreement for the sale of 100 per cent. of the Profit Participating Notes ("PPNs") issued by Blackstone Corporate Funding DAC ("BCF") and held by Blackstone / GSO Loan Financing (Luxembourg) S.à.r.l. ("LuxCo"), a wholly owned subsidiary of the Company, to Blackstone Corporate Funding II S.à.r.l. (the "Purchaser"), an acquisition vehicle directly and/or indirectly owned by vehicles managed and/or advised by Blackstone Alternative Credit Advisors LP or an affiliate thereof (the "Proposed Transaction").

The Proposed Transaction, which is subject to Shareholder approval and certain other conditions, would result in a significant acceleration and fulfilment of the Company's existing Managed Wind-down process and generate gross cash proceeds of approximately €304 million for the Company on completion.[1]

Shortly following completion of the Proposed Transaction, the Company will, subject to Shareholder approval at the Second EGM, effect the Summary Winding-up of the Company under the Companies (Jersey) Law 1991 (the "Summary Winding-up" and together with the Proposed Transaction, the "Proposals") and intends to distribute a substantial portion of its remaining net assets (including all, or the vast majority, of the net proceeds of the Proposed Transaction) in the form of a further third compulsory redemption of Shares as soon as practicable thereafter (the "Third Redemption").

Further details relating to the Proposals outlined above are set out in sections 2 to 8 below.

The purpose of the Circular is to set out details of, and seek your approval for, the Proposals and explain why the Board is recommending that all Shareholders vote in favour of: (i) the Ordinary Resolution of the Shareholders approving the Proposed Transaction at the First EGM (the "First EGM Resolution"); and (ii) the Special Resolution approving the Summary Winding-up at the Second EGM (the "Second EGM Resolution" and together with the First EGM Resolution, the "Resolutions"). The formal Notices of the EGMs, containing the full text of the Resolutions, are set out in Part II of the Circular.

2.         THE PROPOSALS

2.1       Proposed Transaction

Background to and reasons for the Proposed Transaction

On 15 September 2023, 99 per cent. of voting Shareholders approved the change in the Company's Investment Objective and Policy to implement a managed wind-down of the Company (the "Managed Wind-down"). The Managed Wind-down is being implemented by returning to Shareholders in an orderly manner the net proceeds from the realisation of the Company's investment in BCF, through which the Company obtains its investment exposure.

As at the date of the Circular, the Company has distributed approximately €23 million to Shareholders by way a compulsory partial redemption of Shares in June 2024 and has announced that a further approximately €61 million will be distributed on or around 19 December 2024. Shareholders have, in addition, received dividend distributions since the Managed Wind-down of €50.9 million (inclusive of the Q3 2024 Dividend declared on 21 October 2024). As outlined in the latest Q3 2024 investor report (published on the Company's website), the Company's indicative forward-looking CLO portfolio cashflow profile illustrates that the Company's pro rata share of the underlying CLO portfolio held by BCF is not expected to be fully redeemed until 2030. The existing modelling projects that c. 58 per cent. of remaining cashflows will not be returned until 2027 or later, and c. 26 per cent. will not be returned until 2029 or later.

Since the vote for the Managed Wind-down, a number of Shareholders have asked the Board about the prospects for an acceleration of the wind-down process. Given that the majority of the underlying CLO investments must be retained by BCF until redemption or final maturity in accordance with risk retention rules for CLO securitisations, the two main viable opportunities for an acceleration would have been an offer for the entire issued share capital of the Company or the sale of the PPNs issued by BCF and held by LuxCo, which was a potential wind-down option contemplated in the circular posted to Shareholders in respect of the Managed Wind-down. It is worth noting that ownership of the PPNs does not give a purchaser the right to sell a CLO position or direct its redemption as the CLO portfolio is wound down. Consequently, this significantly limits how attractive the acquisition of the Company's PPNs would be to a third-party buyer. As at 30 September 2024, LuxCo owned a minority portion of approximately 35 per cent. by value of the PPNs issued by BCF.

The Company's Portfolio Adviser is Blackstone Ireland Limited, part of the Blackstone Credit and Insurance business ("BXCI") of Blackstone Inc. ("Blackstone"). Given BXCI's expertise in the CLO marketplace, its familiarity with the wider BGLF structure and its strong investor relationships, the Board considered BXCI to be a credible potential acquirer of the Company or the PPNs, should a sale transaction be considered by the Board.

The Board had therefore prepared, without Blackstone's involvement, for the possibility of Blackstone emerging as a purchaser of the Company or PPNs, which included establishing additional key principles and processes for dealing with any potential conflict of interest and identifying a suite of advisors independent of Blackstone, such as the use of an independent CLO valuation expert for any potential offer. Despite not being strictly required in the circumstances, the Board insisted on the holding of a voluntary Shareholder vote on any proposal. The Board also made clear to BXCI during the course of negotiations that it would expect Blackstone-affiliated Shareholders to abstain from voting the Shares that they hold in the Company.

As announced by the Company on 21 November 2024, BXCI initially approached the Board with a proposal. As explained in more detail below, after a series of detailed negotiations and deliberations, during which the Purchaser twice agreed to increase its offer price, the Board determined the offer to be in the best interests of Shareholders.

Details of the Proposed Transaction

Under the terms of the Proposed Transaction, the total cash consideration to be paid by the Purchaser for the acquisition of 100 per cent. of the Company's PPNs is €303,974,504.41 (the "PPN Purchase Value"), minus any payment made in respect of any redemptions or distributions from BCF to LuxCo in respect of the PPNs ("PPN Distributions") between 30 September 2024 and the closing date for the Proposed Transaction. Such PPN Distributions will simultaneously: (i) decrease the PPN Purchase Value by the Euro amount of the PPN Distributions; and (ii) increase the other net assets of the Company by an equivalent offsetting amount. Accordingly, after accounting for other net assets of the Company and other planned Shareholder distributions already announced, the cumulative proceeds delivered to the Company are expected to remain unchanged.

As set out in Figure 1 below, the Company has received PPN Distributions of approximately €42.7 million since 30 September 2024 (and does not expect to receive further PPN Distributions between the date of the Circular and completion of the Proposed Transaction). Consequently, in accordance with the terms agreed with the Purchaser, the PPN Purchase Value to be received by the Company through the Proposed Transaction will be reduced by approximately €42.7 million to approximately €261.3 million. 

As announced by the Company on 8 November 2024, the Company intends to return approximately €61.0 million to Shareholders on or around 19 December 2024 by way of a compulsory partial redemption of Shares (the "Second Redemption"), which will be funded by the recent PPN Distributions in combination with the Company's existing cash resources. The Company also confirms that it will proceed with the Second Redemption irrespective of completion of the Proposed Transaction. 

Inclusive of the planned distribution of other net assets of the Company (in part, via the Q3 2024 Dividend (to be paid on 6 December 2024) and the Second Redemption), the Proposed Transaction represents total value to Shareholders of approximately €338 million (as illustrated in Figure 1 below). In total, with 417,959,768 Shares in issue as at 21 November 2024 (being the date of the announcement of the Proposed Transaction), this represents:

·      €0.808 per Share, as illustrated in Figure 1 below;

·      a premium of 15.8 per cent. to the three-month volume weighted average price of €0.6984 per Share and a premium of 7.8 per cent. to the closing price of €0.7500 per Share² as at 20 November 2024;

·      a premium of 30.4 per cent. to volume-weighted average price since the Board's approval of the Managed Wind-down in September 2023; and

·      a discount of 9.9 per cent. to the Company's latest mark to model NAV of €0.8970 per Share as at 31 October 2024 (or a discount of 12.1 per cent. when including the dividend of €0.0225 per Share, which went "ex" on 31 October 2024) and a discount of 4.3 per cent. to the Company's latest mark to market NAV of €0.8451 per Share as at 30 September 2024.

Figure 1: Total estimated value to Shareholders of the Proposed Transaction based on issued share capital of 417,959,768 Shares as at 31 October 2024

Notes:

1. Based on 417,959,768 Shares in issue as at 31 October 2024.

2. Q3 2024 Dividend declared 21 October 2024, with 31 October 2024 "ex" date and payment date of 6 December 2024.

3. Second Redemption announced 8 November 2024, with 2 December 2024 "ex" date and payment date on or around 19 December 2024.

4. Estimated other net assets of the Company represents net assets that are outside of the PPNs, including undistributed cash, feeder-level cash, other receivables and other payables at the Company, before transaction and the Company's dissolution costs.

5. Combined pro forma estimated value (per Share) to Shareholders from the Q3 2024 Dividend, the Second Redemption and the Proposed Transaction.

6. Stated before transaction costs of €0.0064/Share and costs associated with the dissolution of the Company.

7. Please note the following paragraph which explains how this pro forma number is affected by the change in share capital following the Second Redemption.

As noted in the 21 November 2024 announcement, the total value to Shareholders of €337.9 million corresponds to a value of €0.808 per Share at the then current Share count of 417,959,768 Shares. This value includes the proceeds of the Second Redemption of €61 million and the Q3 2024 Dividend of €9.4 million to be paid on 6 December 2024. As the Second Redemption of €61 million is delivered, however, it will reduce the Share count from 417,959,768 to 349,955,289, resulting in a different presentation of the same Euro-value figures on a per Share basis.

Specifically, the total estimated value to Shareholders after the Q3 2024 Dividend and the Second Redemption of €267.5 million (€337.9 million less €61.0 million less €9.4 million) will be divided over a smaller Share count. While the total value of €337.9 million remains unchanged, and €0.808 per Share will have been delivered on the basis of 417,959,768 Shares, at completion the €267.5 million of total estimated value to Shareholders after the Q3 2024 Dividend and the Second Redemption will be divided over 349,955,289 remaining Shares, corresponding to €0.764 per Share on that basis.

Based on 349,955,289 Shares in issue as at the date of the Circular, taking into account the net proceeds received from the Proposed Transaction and the Summary Winding-up, and after deducting the estimated costs of the Proposed Transaction, costs associated with the dissolution of the Company and other known liabilities, Shareholders are estimated to receive approximately €0.755 per Share as a result of the Proposals if both Resolutions are approved at the EGMs. This is equal to the aforementioned €0.764 per Share, less costs of approximately €0.009 per Share.

The distribution of the Third Redemption, which is expected to comprise a substantial portion of its remaining net assets (including all, or the vast majority, of the net proceeds of the Proposed Transaction), is anticipated to take place on or around 4 February 2025[2]. The Company will publish further announcement(s) with details of the Third Redemption to be made to Shareholders in due course if the Proposed Transaction is approved by Shareholders and completes.

For the Summary Winding-up, the Company will retain an appropriate amount of cash with which to settle all of its remaining affairs and liabilities prior to any final cash being returned to Shareholders and the Company being dissolved. Further details relating to the Summary Winding-up are set out in section 2.2 below.

Costs of the Proposed Transaction

The costs of implementing the Proposed Transaction are not expected to exceed approximately €2.6 million in total.

Such costs include additional one-off remuneration for the Directors to reflect the additional work involved in connection with the Proposed Transaction of £84,000 in aggregate (equal to approximately four-and-a-half months' worth of the fees payable to Directors in the ordinary course of business each year).

Valuation

The Company publishes a NAV per Share on a monthly basis in accordance with its prospectus. This published NAV is based upon the valuation of the BCF portfolio using a CLO intrinsic calculation methodology as set out in the prospectus, which is referred to as a 'mark to model' approach. This does not include 'market colour' (market clearing levels, market fundamentals, bids wanted in competition ('BWIC'), broker quotes or other indications).

On a quarterly basis, the valuation of BCF's portfolio is also carried out at fair value using models that incorporate market colour at the relevant date, referred to as a 'mark to market' approach. This approach complies with International Financial Reporting Standards (IFRS) and is used for annual and semi-annual financial reporting purposes.

Both mark to model and mark to market approaches are valid reference points for the Proposed Transaction. However, the Board focused on the mark to market approach as the best indication of fair value for a willing seller and willing buyer of CLO equity in the market as at 30 September 2024.

In valuing its portfolio on both the mark to model and mark to market basis, BCF uses the services of an independent CLO valuation specialist (the "Original Valuer"). However, the Original Valuer is engaged by BCF and not the Company and has an ongoing business relationship with Blackstone. The Board therefore engaged another independent service provider to provide CLO valuation advice (the "Transaction Valuer") for the purposes of the Proposed Transaction. The Board is aware that the Transaction Valuer is engaged on an ongoing basis to value the portfolio of one of the Company's peers.

In the view of the Transaction Valuer, the mark to market valuation of BCF's CLOs by the Original Valuer (as included in the mark to market NAV per Share of €0.8451) is within the range that a reasonable market participant would have assigned to the equity as at 30 September 2024. The assumptions and methodologies used by the Original Valuer are generally accepted market inputs and calculation methods. However, in the Transaction Valuer's opinion, the CLO prices used by the Original Valuer were, generally, above the prices that the Transaction Valuer would have used. The Transaction Valuer's own mid prices more closely align to the value to Shareholders of €0.8080 resulting from the Proposed Transaction than to the published mark to market NAV per Share of €0.8451 as at 30 September 2024. Shareholders should note that the valuation of CLO equity is highly subjective and reliant on sophisticated modelling and numerous assumptions, and that this value difference is within a reasonable range.

Directors' assessment of the Proposed Transaction

In considering whether to accept the offer from BXCI and put the Proposed Transaction forward to a Shareholder vote, the Board weighed three options: (i) accepting the offer; (ii) continuing the Managed Wind-down of the Company in the manner set out in the Company's circular to Shareholders dated 25 August 2023; and (iii) commencing a more public formal sales process for the PPNs or the Company.

Having consulted with its advisers other than the Portfolio Adviser, the Board considered that a more public sales process would be unlikely to achieve a better outcome for Shareholders in the circumstances, as this could extend the timeline whilst incurring additional fixed costs and could result in no credible offers from non-Blackstone-affiliated parties and/or risk the offer from BXCI being withdrawn. The main asset of the Company is the PPNs (rather than the underlying CLOs), which give indirect exposure to the underlying portfolio and are therefore not as tradeable or marketable as the CLO securities themselves. BXCI and the Company's brokers have also consistently sought investor interest in the Shares and the Company since the Company's initial public offering with limited success.

The Board therefore felt that its decision was between the Proposed Transaction and the continuing Managed Wind-down and, in fact, the cashflow profile of the continuing Managed Wind-down was the best 'competition' when considering the offer from BXCI[3]. Given the conclusion of the valuation assessment was that the offer represented a fair market value, the two options were finely balanced. Of course, any individual investor may favour one option over the other if they take a different view to the market on risk[4]. In the Board's view, however, there were also other factors to consider:

·      Shareholders voted for an orderly wind-down in September 2023. Since then, a number of Shareholders have expressed the desire for an accelerated return of capital. The Proposed Transaction significantly accelerates and fulfils the Managed Wind-down process.

·      As the Managed Wind-down progresses towards maturity there is a likelihood that the quantum of future cashflows and therefore the NAV of the Company will become increasingly volatile and more difficult to realise at the prevailing valuation. Such tail risk may result from holding a residual portfolio of CLOs for which a call has not been possible due to the valuation of the underlying loan portfolio. The Proposed Transaction insulates Shareholders from any such tail risk.

·      The costs of running the Company until 2030 are significant. These are estimated at €1.2 million per year (totalling €7.4 million for 2025 to 2030) with limited scope for reduction as the size of the Company reduces given the nature of the Company's activities. This equates to €0.0178 per Share compared to estimated transaction costs of €0.0064 per Share for the Proposed Transaction based on the issued share capital of 417,959,768 Shares as at 31 October 2024.

·      As the Managed Wind-down progresses, the market capitalisation of the Company will fall and the liquidity in the Shares is likely to fall.

·      Blackstone's knowledge of the portfolio allows for a quick transaction process with minimal additional due diligence compared to a third party unrelated to the Portfolio Adviser and certainty of execution.

·      The Company has not received any indicative offer or approach for the Company or the PPNs besides that of the Proposed Transaction since the Managed Wind-down commenced.

After a series of detailed negotiations and deliberations, during which the Purchaser twice agreed to increase its offer price, the Board determined the Proposed Transaction to be the most effective and valuable offer available to Shareholders, providing acceleration of value realisation for Shareholders via a cash exit at a premium to the Company's historic Share prices.

The Board has also consulted with certain of the Company's major Shareholders on the Proposed Transaction. These Shareholders (together with the Directors' own holdings), who represented approximately 28 per cent. of voting rights (not including Blackstone-affiliated shareholders) in the Company as at 21 November 2024, have indicated their support for the Proposed Transaction.

Taking into consideration the reasons outlined above, amongst other points, the Board has concluded that the Proposed Transaction represents the best practicable means of maximising Shareholder value on an expedited basis in the present circumstances.

Information on the Purchaser

The Purchaser is a newly formed acquisition vehicle directly and/or indirectly owned by vehicles managed and/or advised by Blackstone Alternative Credit Advisors LP ("BACA") or an affiliate thereof. BACA is an affiliate of Blackstone, a global investment and advisory firm that was founded in 1985. Through its different investment businesses, as of 30 September 2024, Blackstone has total assets under management of approximately US$1.1 trillion, including approximately US$345 billion in corporate private equity, approximately US$325 billion in real estate funds, approximately US$83 billion in multi-asset investing and approximately US$355 billion in credit‐oriented and insurance strategies. Blackstone's asset management businesses include global investment strategies focused on real estate, private equity, infrastructure, life sciences, growth equity, credit & insurance, real assets, secondaries and hedge funds.

Key terms of the Sale and Purchase Agreement

Parties and Structure

The Sale and Purchase Agreement was entered into on 21 November 2024 between the Company, LuxCo (together with the Company, the "Seller Parties") and the Purchaser. Pursuant to the terms of the Sale and Purchase Agreement, the Purchaser has conditionally agreed to purchase 100 per cent. of the PPNs from LuxCo for cash.

Timing and conditions to completion

Completion of the Proposed Transaction under the Sale and Purchase Agreement is expected to occur on 31 December 2024, subject to the Purchaser's right to extend the completion date for up to 20 Business Days (as defined in the Sale and Purchase Agreement) after 31 December 2024, and is conditional upon satisfaction (or waiver, where applicable) of the following conditions (the "Conditions"):

·      the passing of the First EGM Resolution at the First EGM; and

·      no event of default under the LuxCo PPNIPA having occurred and not having been waived or cured.

Purchase price

The purchase price for the PPNs payable on completion of the Proposed Transaction under the Sale and Purchase Agreement shall be the PPN Purchase Value of €303,974,504.41, minus an amount equal to the aggregate of any PPN Distributions, as notified by the Seller Parties to the Purchaser. For further details, please see the section headed "Details of the Proposed Transaction" above.

Warranties

The parties to the Sale and Purchase Agreement have given warranties which are customary for a transaction of this nature. These include, amongst other things, warranties in respect of their capacity to enter into and perform the Sale and Purchase Agreement, regulatory matters, insolvency and (in the case of the Seller Parties) title to the PPNs.

Termination

Either Seller Party or the Purchaser may terminate the Sale and Purchase Agreement with immediate effect at any time after the First EGM if the First EGM Resolution is not passed, or if a Condition has not been fulfilled (or waived, where applicable) by 3.00 p.m. on the Long Stop Date.

Governing Law

The Sale and Purchase Agreement is governed by English law. The courts of England and Wales have exclusive jurisdiction in relation to all disputes arising out of, or in connection with, the Sale and Purchase Agreement.

Shareholder approval

Implementation of the Proposed Transaction is conditional on its approval by Shareholders at the First EGM, which will be held on 19 December 2024 at 11.00 a.m. Further details of the First EGM and the First EGM Resolution are set out in section 3 below. Shareholders (together with the Directors' own holdings) who represented approximately 28 per cent. of voting rights (excluding Blackstone-affiliated shareholders) in the Company as at 21 November 2024 have indicated their support for the Proposed Transaction.

Although the Proposed Transaction does not constitute a related party transaction for the purposes of the UK Listing Rules, the Board's view is that, in the interests of good governance, any proposal for the sale of the entirety of the Company's assets to Blackstone-affiliated entities should be subject to a Shareholder vote on a voluntary basis (by way of Ordinary Resolution). As is customary in such situations, the Company has procured that Blackstone-affiliated shareholders will abstain from voting on the Resolution to approve the Proposed Transaction.

The sale of the Company's PPNs falls within the scope of the Company's existing Investment Objective and Policy to effect an orderly realisation of its assets, following the approval by Shareholders of the Managed Wind-down on 15 September 2023.

For the avoidance of doubt, the Proposed Transaction does not contemplate an acquisition of or offer for the Company's shares, and so is not subject to the UK Takeover Code.

Publication of NAV

If the Proposed Transaction is approved by Shareholders at the First EGM, the Company will cease to publish its monthly NAV (including the 30 November 2024 NAV, which would ordinarily be published on or around the date of the First EGM).

In the event that the Proposed Transaction is not approved, the Company will continue to publish its NAV on a monthly basis in accordance with its current practice.

2.2       Summary Winding-up and Third Redemption

Following the Second EGM, subject to Shareholder approval of the Second EGM Resolution, the Company will commence the Summary Winding-up process in accordance with the provisions of Chapter 2 (Summary winding up) of Part 21 (Winding up of companies) of the Companies Law, delist from trading on the London Stock Exchange and cease to be regulated as a collective investment fund under the Funds Law (subject to the approval of the JFSC).

Shortly thereafter, the Company intends to distribute a substantial portion of its remaining net assets (including all, or the vast majority, of the net proceeds of the Proposed Transaction) pursuant to the Third Redemption, which is expected to take place on or around 4 February 2025[5].

The Summary Winding-up will further entail the disposal of any remaining assets of the Company, the settlement of all the remaining liabilities of the Company and the return of any net remaining surplus cash to Shareholders (after deduction of all applicable costs and expenses). The Company will retain an appropriate amount of cash with which to settle all of its remaining affairs and liabilities prior to any final cash being returned to Shareholders and the Company being dissolved. If, however, the amount payable to any Shareholder upon such final distribution is less than €5.00, it shall not be paid to such Shareholder but instead shall be paid to the Nominated Charity.

Implementation of the Summary Winding-up is conditional on:

·      approval of the Proposed Transaction by Shareholders at the First EGM; and

·      approval of the Summary Winding-up by Shareholders at the Second EGM, which will be held on 15 January 2025 at 11.00 a.m.

Further details of the Second EGM and the Second EGM Resolution are set out in section 3 below.

Based on 349,955,289 Shares in issue as at the date of the Circular, taking into account the net proceeds received from the Proposed Transaction and the Summary Winding-up, and after deducting the estimated costs of the Proposed Transaction, costs associated with the dissolution of the Company and other known liabilities, Shareholders are estimated to receive approximately €0.755 per Share as a result of the Proposals if both Resolutions are approved at the EGMs. Please see the section headed "Details of the Proposed Transaction" above for further detail.

The Company will publish further announcements with details of the Third Redemption to be made to Shareholders in due course if the Proposed Transaction is approved by Shareholders and completes.

Costs of the Summary Winding-up

The costs of implementing the Summary Winding-up are not expected to exceed approximately €0.3 million in total (the "Summary Winding-up Costs").

The Directors have agreed to a 50 per cent. reduction in their fees, which will be effective from the date of approval of the Second EGM Resolution and for the duration of the Summary Winding-up.

The proceeds from the Proposed Transaction will be held by the Company in Euro from completion and will earn interest. Such interest is not included in the above calculations but may mitigate a large portion of the Summary Winding-up Costs.

2.3       Certain risks associated with the Proposals

In considering your decision as a Shareholder in relation to the Proposals, you are referred to the risks set out below.

You should read the Circular carefully and in its entirety and, if you are in any doubt about the contents of the Circular or the action you should take, you are recommended to seek immediately your own personal financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the UK Financial Services and Markets Act 2000 or, if you are in a territory outside the United Kingdom, from an appropriately authorised independent financial adviser.

Only those risks which are material and currently known to the Board have been disclosed below. It is possible that additional risks and uncertainties not currently known to the Board, or that the Board currently deems to be immaterial, may also have an adverse effect on the Company.

Risks relating to the Proposed Transaction

·      Completion of the Proposed Transaction is conditional upon the satisfaction or waiver (as applicable) of the Conditions on or before the Long Stop Date, after which either the Seller Parties or the Purchaser may terminate the Sale and Purchase Agreement. Whilst the Seller Parties and the Purchaser have obligations in relation to the satisfaction of these Conditions, there can be no assurance that the Conditions will be satisfied or waived (to the extent they are capable of being waived). Further, there can be no assurance that the satisfaction of these Conditions will not be delayed due to factors outside the control of the Seller Parties and/or the Purchaser. If the Proposed Transaction does not proceed to completion, the Company will not receive the net proceeds from the sale of the PPNs. Additionally, any delay in completing the Proposed Transaction may result in the accrual of additional costs for the Company.

·      As a listed company, the Company is exposed to potential approaches from third parties seeking to instigate a public takeover of the Company which might delay or prevent completion of the Proposed Transaction. The Company might also be approached by a third party seeking to make a more favourable offer than that of the Purchaser for the PPNs and the Directors might consequently be required to consider that offer in accordance with their fiduciary duties owed to the Company. The Sale and Purchase Agreement contains certain provisions which limit the action the Seller Parties can take in connection with any proposed alternative transaction, including the Company's ability to solicit or initiate offers or expressions of interest from any third party in connection with or with a view to agreeing or implementing any such transaction. If the Company were to terminate the Sale and Purchase Agreement other than in accordance with its terms, or were to otherwise breach the terms of the Sale and Purchase Agreement (for example, by not convening the First EGM to approve the Proposed Transaction), the Company may be found liable to pay damages to the Purchaser in respect of the loss it has suffered as a result of such termination or breach. Alternatively, at a court's discretion, the Company may be ordered to perform its obligations under the Sale and Purchase Agreement if such performance remained possible. There can be no certainty as to the amount of any damages that the Company may be required to pay, although such damages typically seek to provide redress to a party as if the breached contract had been properly performed.

·      Whilst the Board believes it has appropriate arrangements in place to manage the expected costs and expenses in relation to the Proposed Transaction, including post-completion costs, there can be no assurance that the costs and expenses will not exceed the amounts currently estimated. There may also be further additional and unforeseen expenses incurred in connection with the Proposed Transaction either due to delays or otherwise. Such costs and expenses may adversely affect the net proceeds from the Proposed Transaction that the Company expects to have at or following completion, or (if approved by Shareholders at the Second EGM) upon commencement of the Summary Winding-up of the Company.

·      The Proposed Transaction involves the direct sale by the Company of the PPNs to the Purchaser, an acquisition vehicle directly and/or indirectly owned by vehicles managed and/or advised by Blackstone or an affiliate thereof. Further, Blackstone and/or its affiliates (including: (a) investment vehicles managed and/or advised by Blackstone and/or its affiliates; and/or (b) a Blackstone affiliate indirectly capitalised by Blackstone) will directly and/or indirectly capitalise the Purchaser in part or in full. Accordingly, there are numerous conflicts of interest inherent in a transaction of this nature. It is not possible to describe or fully mitigate all conflicts of interest and the Circular does not purport to do so; however, Shareholders should note in particular the following:

o  The Company and LuxCo are each advised or managed by an affiliate of Blackstone, and the Purchaser (and/or the direct and/or indirect equity holders thereof) is capitalised and/or advised by an affiliate of Blackstone. This creates a misalignment between the interests of the Company and Shareholders on the one hand and the Purchaser on the other, who are each incentivised to maximise the value of the Proposed Transaction for their own benefit.

o  The purchase price which has been agreed between the Seller Parties and the Purchaser in respect of the Proposed Transaction may not represent the maximum value that Shareholders could receive for the PPNs, either by the Company continuing to hold the PPNs until the end of the Managed Wind-down or by transferring the PPNs to another buyer now or in the future.

o  The Company and the Purchaser respectively have access to different information which may be relevant to the Proposed Transaction.

The Board has taken various steps to mitigate such conflicts, including taking independent advice, obtaining valuation advice from an independent valuer and putting the Proposed Transaction to a Shareholder vote (from which Blackstone-affiliated Shareholders will abstain), as described elsewhere in the Circular.

·      Neither Blackstone nor the Purchaser, nor any of their respective affiliates, or their or their affiliates' respective shareholders, members, partners, officers, employees or consultants (other than the Company), shall be responsible in any way for any of the contents of the Circular (including the fairness, accuracy, completeness, currentness, reliability or reasonableness hereof) and accordingly none of the foregoing shall have any liability in respect of the Circular.

Risks relating to the Summary Winding-up

·      Any distributions made in the course of the Summary Winding-up will be solely at the discretion of the Board and subject to ensuring the Company's ongoing ability to settle its remaining liabilities as they fall due.

·      The amounts which may be owing to the creditors of the Company, or which the Board may choose to retain in respect of current and future, actual and contingent liabilities of the Company, and any unascertained liabilities, and the costs and expenses of the liquidation are uncertain and may affect the amount and timing of distributions to Shareholders.

·      If the Second EGM Resolution is not passed, the Company will continue in its current form, as a Jersey Listed Fund whose Shares are listed and admitted to trading on the Main Market, until such time as other proposals can be put forward to Shareholders; and, during any such period, the Company would be required to bear proportionally greater ongoing costs and expenses relative to its remaining assets.

3.         EXTRAORDINARY GENERAL MEETINGS

As noted above, the Proposals are conditional, amongst other things, upon Shareholders' approval of the Resolutions to be proposed at the First EGM and the Second EGM.

Both EGMs will be held at the offices of BNP Paribas S.A. Jersey Branch, IFC 1, The Esplanade, St Helier, Jersey JE1 4BP.

The Notices of the EGMs, including the full text of the Resolutions, are set out in Part II the Circular.

The quorum for each EGM is two Shareholders who, being entitled to vote, are present in person or proxy. If within twenty minutes (or such longer time as the Chair decides to wait) after the time appointed for the relevant EGM a quorum is not present, the meeting shall stand adjourned for five Business Days at the same time and place or to such other day and at such other time and place as the Board may determine and no notice of adjournment need be given. On the resumption of an adjourned meeting, those Shareholders who, being entitled to vote, are present in person or proxy shall constitute the quorum.

3.1       First EGM

The First EGM will be held on 19 December 2024 at 11.00 a.m.

The Resolution to be considered at the First EGM (the "First EGM Resolution") is an Ordinary Resolution and will, if passed, approve the terms of, and authorise the Directors to implement, the Proposed Transaction. The First EGM Resolution is not conditional on the Second EGM Resolution.

Subject to the following paragraph, to become effective, the First EGM Resolution must be approved by a simple majority of the votes cast by Shareholders who, being entitled to vote, are present in person or by proxy at the First EGM.

Blackstone-affiliated Shareholders have agreed to abstain from voting on the First EGM Resolution and the Board will only consider the First EGM Resolution to have been validly passed in the event that a majority of independent (i.e, non-Blackstone-affiliated) Shareholders vote in favour of such Resolution.

3.2       Second EGM

The Second EGM will be held on 15 January 2025 at 11.00 a.m. In the event that the First EGM Resolution is not passed by Shareholders, the Second EGM will be adjourned indefinitely.

The Resolution to be considered at the Second EGM (the "Second EGM Resolution") is a Special Resolution and will, if passed, approve the Summary Winding-up of the Company in accordance with the provisions of the Companies Law.

To become effective, the Second EGM Resolution must be approved by a two-thirds majority of the votes cast by Shareholders who, being entitled to vote, are present in person or by proxy at the Second EGM.

4.         DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the offices of Herbert Smith Freehills LLP, Exchange House, Primrose Street, London EC2A 2EG and at the registered office of the Company during normal business hours on any Business Day from the date of the Circular until the conclusion of the Second EGM (or, in the event that the First EGM Resolution is not passed by Shareholders, the First EGM) and at the place of each Extraordinary General Meeting for at least 15 minutes prior to, and during, the relevant meeting:

·      the Memorandum of Association of the Company and the Articles; and

·      the Circular.

Copies of these documents are also available free of charge at the Company's registered office.

A copy of the Circular has been submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism. The Circular will also be available on the Company's website: www.blackstone.com/fund/bglfln-blackstone-loan-financing-limited.

5.         TAXATION

The following comments are intended only as a general guide to certain aspects of current UK tax law and HM Revenue & Customs' published practice, both of which are subject to change possibly with retrospective effect. They are of a general nature and do not constitute tax advice and apply only to Shareholders who are resident in the UK (except where indicated) and who hold their Shares beneficially as an investment. They do not address the position of certain classes of Shareholders such as dealers in securities, insurance companies or collective investment schemes. The information below does not constitute legal or tax advice to any Shareholder. If you are in any doubt about your tax position, or if you may be subject to tax in a jurisdiction other than the United Kingdom, you should consult your independent professional adviser.

(1) Tax residency of the Company

The Board has been advised that following certain changes to the United Kingdom tax rules regarding "alternative investment funds" implemented by the Finance Act 2014 and contained in section 363A of the Taxation (International and other Provisions) Act 2010, the Company should not be resident in the United Kingdom for United Kingdom tax purposes and it is the intention of the Board to continue to conduct the affairs of the Company so that it does not carry on any trade in the United Kingdom for taxation purposes.

(2) Taxation of chargeable gains

(a) Offshore Fund Rules

The treatment described below is based on any gain arising on a disposal of a Shareholder's Shares not being taxed as income under the "offshore fund" rules which apply for the purposes of UK tax legislation. Under current law, if the Company (or any class of shares) were to be treated for UK taxation purposes as an "offshore fund", gains on disposals of shares realised by a Shareholder would be taxable as income and not as capital gains.

(b) Individual Shareholders

Subject to the comments in the next paragraph, any Shareholder who is an individual and UK tax resident may, depending on that Shareholder's personal circumstances, be subject to capital gains tax in respect of any gain arising on a redemption of their Shares (or on a distribution in the final liquidation of the Company).

For such individuals, capital gains are taxed at a rate of 18 per cent (for basic rate taxpayers) or 24 per cent (for higher or additional rate taxpayers). Individuals may, depending on their personal circumstances, benefit from certain reliefs and allowances (including an annual exemption from capital gains which is £3,000 for the tax year 2024-2025). Shareholders who are not resident in the UK for taxation purposes will not normally be liable to UK taxation on chargeable gains arising from the disposal of their Shares unless those Shares are held for the purposes of a trade, profession or vocation through a UK branch, agency, or permanent establishment, although they may be subject to foreign taxation depending on their own particular circumstances. Individual Shareholders who are temporarily not resident in the UK for tax purposes may be liable to capital gains tax under anti-avoidance legislation.

(c) Corporate Shareholders

For Shareholders who are UK resident companies, the redemption of Shares may be treated as giving rise to both an income distribution and a capital disposal. The extent to which the proceeds are treated as an income distribution will depend (amongst other things) on the amount initially subscribed for the redeemed Shares by the original subscriber and may be affected by certain subsequent transactions.

Shareholders within the charge to UK corporation tax which are "small companies" (for the purposes of UK taxation of distributions) should expect to be subject to tax on any distribution deemed to arise on the redemption of Shares. Other Shareholders within the charge to UK corporation tax will not be subject to tax on any such distribution so long as the distribution falls within an exempt category and certain conditions are met. In general, a distribution to a UK corporate Shareholder who holds beneficially less than 10 per cent of the Company's issued share capital (or any class of that share capital) should fall within an exempt category. However, the exemptions are not comprehensive and are subject to anti-avoidance rules. If the conditions for exemption are not or cease to be satisfied, or such a Shareholder elects for an otherwise exempt distribution to be taxable, the Shareholder will be subject to UK corporation tax on any distribution deemed to arise on redemption of the Shares.

Based on the existing practice of HM Revenue & Customs, the part of the proceeds that is not treated as an income distribution should be treated as consideration for a disposal of the Shares for a Shareholder within the charge to UK corporation tax. This may, depending upon the Shareholder's circumstances and subject to any available exemption or relief, give rise to a chargeable gain or an allowable loss for the purposes of UK corporation tax.

Shareholders within the charge to corporation tax should be subject to corporation tax on chargeable gains on any chargeable gain arising on any distribution in the final liquidation of the Company. The main rate of UK corporation tax is 25 per cent.

(3) Taxation of dividends

(a) Individual Shareholders

Dividends received by any UK tax resident individual Shareholder in respect of their Shares will be subject to UK income tax. To the extent dividends received (in aggregate) in any given tax year fall within the dividend allowance, they will be exempt from UK income tax. The dividend allowance for the tax year 2024-2025 is £500.

To the extent dividends received (in aggregate) in any given tax year exceed the dividend allowance, they will be subject to UK income tax. The applicable rates of income tax for the tax year 2024-25 are:

·      8.75 per cent for basic rate taxpayers;

·      33.75 per cent for higher rate taxpayers; and

·      39.35 per cent for additional rate taxpayers.

In determining whether and, if so, to what extent dividend income falls above or below the threshold for the higher rate of income tax or, as the case may be, the additional rate of income tax, the Shareholder's total taxable dividend income for the tax year in question (including the part falling within the dividend allowance) will be treated as the highest part of the Shareholder's total income for income tax purposes. In addition, dividends within the dividend allowance which would otherwise have fallen within the basic or higher rate bands will use up those bands respectively and so will be taken into account in determining whether the threshold for higher rate or additional rate income tax is exceeded.

(b) Corporate Shareholders

Shareholders within the charge to UK corporation tax (other than those which are "small companies" for the purposes of UK taxation of dividends) will not generally be subject to UK corporation tax on dividends paid on the Shares so long as the dividends fall within an exempt category and certain other conditions are met. In general, dividends paid to a UK corporate Shareholder who holds beneficially less than 10 per cent of the Company's issued share capital (or any class of that share capital) should fall within an exempt category. However, the exemptions are not comprehensive and are subject to anti-avoidance rules. If the conditions for exemption are not or cease to be satisfied, or such a Shareholder elects for otherwise exempt dividends to be taxable, the Shareholder will be subject to UK corporation tax on dividends paid on the Shares. Shareholders are advised to consult their independent professional tax advisers to determine whether such dividends will be subject to UK corporation tax. The main rate of UK corporation tax is 25 per cent.

6.         CONSEQUENCES OF THE PROPOSALS NOT BEING APPROVED

In the event that the First EGM Resolution is not passed by Shareholders, the Proposed Transaction will not be implemented and the Second EGM will be adjourned indefinitely. In such circumstances, the Company will proceed with the Managed Wind-down in the manner set out in its circular to Shareholders dated 25 August 2023.

In the event that the First EGM Resolution is passed but the Second EGM Resolution is not passed by Shareholders, the Proposed Transaction will proceed but the Company will not be summarily wound up under the Companies Law and it will continue in its current form (as a Jersey Listed Fund whose Shares are listed and admitted to trading on the Main Market) until alternative proposals can be put forward to the Shareholders.

7.         ACTION TO BE TAKEN BY SHAREHOLDERS

Whether or not you intend to be present at either or both EGMs, you are requested to return a Proxy Appointment in respect of each EGM by one of the following methods: (i) in hard copy form by post, by courier or by hand to Link Group, PXS 1, Central Square, 29 Wellington Street, Leeds, LS1 4DL; (ii) via the Registrar's app LinkVote+ which can be downloaded on the Apple App Store or Google Play; (iii) online via Signal Shares (please refer to the Notes of the Notices of Extraordinary General Meeting for further information); or (iv) in the case of CREST members, by utilising the CREST electronic Proxy Appointment service, in each case so as to be received by Link Group as soon as possible and, in any event, not less than 48 hours before the time at which the relevant EGM (or any adjournment thereof) is to begin. In calculating such 48 hour period, no account shall be taken of any part of a day that is not a Business Day

The completion and return of a Proxy Appointment will not preclude you from attending the relevant EGM and voting in person if you wish to do so.

Each Shareholder is requested to consider and vote on the Resolutions, in person or by proxy, at or before the relevant EGM. The First EGM will be held on 19 December 2024 at 11.00 a.m. and the Second EGM will be held on 15 January 2025 at 11.00 a.m. Both EGMs will be held at the offices of BNP Paribas S.A. Jersey Branch, IFC 1, The Esplanade, St Helier, Jersey JE1 4BP.

The full text of the Resolutions is set out in the Notices of the Extraordinary General Meetings contained in Part II of the Circular.

8.         RECOMMENDATION

The Board, which has been so advised by Singer Capital Markets, acting in its capacity as the Company's financial adviser, considers that the Proposals are fair and reasonable so far as the Shareholders of the Company are concerned. In providing its advice, Singer Capital Markets has taken into account the Board's commercial assessment of the Proposals and the views of certain large Shareholders. The Board considers that the Proposals are in the best interests of the Company and its Shareholders as a whole.

The Board recommends that all Shareholders (other than, in the case of the First EGM Resolution, Blackstone-affiliated Shareholders) vote in favour of the Resolutions, as the Directors intend to do in respect of their own beneficial holdings of Shares, including Shares held by persons closely associated with them, which, in aggregate, amount to 625,755 Shares, representing approximately 0.2 per cent of the total voting rights in the Company.

Yours faithfully

Steven Wilderspin

Chair

APPENDIX II

DEFINITIONS