Media Releases

• Debt repayments of $31.1 million since end of September
• Debt reduction ahead of schedule
• Operating environment remains uncertain

Investments Portfolio

Prior to changes in carrying values, which are yet to be determined for the half year to December, the composition by asset class of Keybridge’s investments portfolio as at 31 December 2009 was as follows:

Apart from foreign exchange movements, changes in the portfolio from 30 September 2009 reflect, in the main, repayments received in the quarter. These repayments were as follows:

• $12 million from the sale of a Spanish solar investment;
• $3 million repayment of a loan to a US water business;
• $2 million as final repayment of a loan to an Australian pipeline company; and
• $3 million of repayments from a range of Lending and Property transactions.

Since the end of December, a further amount of approximately $10 million has been received, being the repayment of a loan to a company in the Aviation sector. This repayment was at a discount to Keybridge’s book value and was flagged in a market release last month.

In keeping with its previously stated intention, the Company originated no new investments in the December quarter.

In preparing its accounts for the six months to December 2009, the Company will review the carrying value of its assets. Key considerations in undertaking this review will include the following:

• The operating environment for the Company’s investments remains difficult: Bank lending in the various markets is still restricted and prices in secondary markets continue to be depressed.
• With these conditions, the senior debt facilities within some of the Company’s investments, especially in Shipping and Property, continue to be under pressure of being accelerated. If this were to occur, it would impact on Keybridge’s realisable value from the relevant transactions.
• Keybridge is considering bringing forward the realisation of selected transactions at discounts to current book values. These potential discounts may need to be reflected in the Company’s accounts.
• At 30 June 2009, the Company’s balance sheet included an intangible asset, in the form of a Deferred Tax Asset (DTA), of $16 million. The continuing difficult market conditions impacts negatively on the outlook for Keybridge’s profitability and may mean that the carrying value of the DTA will need to be reconsidered.

The Company is looking to release its half-year accounts on 4 February 2010.

Currency Exposure

At 31 December 2009, the approximate currency breakdown of the Company’s assets and liabilities (prior to any changes in carrying values) is as follows:

This net foreign currency asset position means that the Company incurs translation losses when the Australian Dollar appreciates against the US Dollar and Euro and benefits from translation gains when the Australian Dollar depreciates. Over the December half year, the Australian Dollar appreciated against these other currencies.

Debt Facility

Under the terms of Keybridge’s corporate debt facility, repayments of $7 million were required to be made by 31 December 2009, and a further $23.5 million by 30 June 2010. Repayments of $31.1 million have been achieved up to the date of this report, meaning that both these requirements have been satisfied.

By 31 December 2010, additional repayments of $30 million will need to be made. The Company is confident of meeting this requirement.

Outlook

The Company’s priority is to achieve realisations of investments to reduce its outstanding corporate borrowings. At the same time, in those transactions where market liquidity and pricing do not permit realisations in the short-term, we continue to pursue strategies to preserve as much value for Keybridge and its shareholders as possible.

Keybridge Capital is a financial services company that has invested in, or lent to, transactions which predominantly are in the core asset classes of property, aviation, shipping and infrastructure.

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