Completion of the Disengagement Transaction is subject to formal documentation and certain consents and approvals, including the approval of the creditors of Silverstone, the approval of the Bank and a final approval of the trustees of Global DIGIT II and of Silverstone. There can be no assurances that all such approvals will be obtained or that the Disengagement Transaction will otherwise be completed. In particular, the approval of the creditors of Silverstone will largely depend on whether or not such creditors approve the restructuring plan for third party asset-backed commercial paper, as contemplated in the press release dated December 23, 2007 issued by the Pan-Canadian Investors Committee for Third Party Structured Asset Backed Commercial Paper (the "ABCP Restructuring").
If and when the Disengagement Transaction is completed, distributions and redemptions would resume, and it is anticipated that the distributions would generally be at the same level as was previously the case (subject to losses in any of the portfolios of reference obligations and restructuring costs which cannot presently be assessed), until the next reset date (being March 2, 2010). As a result of the Disengagement Transaction, the $0.37 that has been accrued for recovery of issue costs would be remitted by Silverstone to Global DIGIT II, but the balance of $0.28 not yet accrued would not be recovered. Funds available to pay distributions and redemptions would flow directly from the Bank, and would no longer be dependant on Silverstone's ability to renew or replace its outstanding indebtedness or otherwise be subject to any claim by Silverstone to withhold payments to Global DIGIT II. Funds presently held in escrow under the standstill agreement between Global DIGIT II and Silverstone would be released to Global DIGIT II. The Disengagement Transaction would be expected to become effective on the date that the ABCP Restructuring becomes effective.
Unless and until the Disengagement Transaction is completed, the previously announced suspension of distributions and redemptions will continue until conditions otherwise allow for their resumption, which is the objective of the Trustees.
About Global DIGIT II
Global DIGIT II provides an economic interest in an equity tranche of credit default swap agreements in respect of portfolios of mortgage-backed securities, asset-backed securities, structured finance securities, synthetic corporate exposures and other fixed-income securities.
Silverstone is a special purpose vehicle rated R-1(high) (short-term) and AAA (long-term) by DBRS that funds the purchase of eligible assets by issuing asset-backed commercial paper, extendible commercial paper and floating rate notes.
SOURCE: GLOBAL DIVERSIFIED INVESTMENT GRADE INCOME TRUST II