DAG Strategy Team Update 03 04 2009

RESPONSE TO SCHEME OF ARRANGEMENT (SoA) AND TSC REPORT

This update outlines what the DAG team will be doing in the next few days in the run up to the next hearing on 9 April.

Late this morning we will be receiving an embargoed copy of the Treasury Select Committee report – it is published at midnight tonight. We also expect to receive the latest affidavit from IOMG although that is already late again. The DAG Strategy team will be reading both documents and discussing options and angles with our lawyers and PR advisers. This process will be undertaken over the weekend and probably into Monday.

We will post each document on the website as soon as possible or permitted.

We will also be putting in place three small additional teams who will be studying the proposed SoA with a sharper focus:

1. Commercial: We will be preparing a simple “personal cash flow” spreadsheet based on the SoA proposals. We will post this so that each individual DAG member can input their personal deposit at risk and hence work out what they personally should receive from the SoA.

2. Legal: We will scrutinise the detail of the SoA to ensure we are protected and have adequate guarantees. Isle of Man Treasury (IOMT) has verbally assured us that it will be a “Liquidation Plus” arrangement – we will have all the benefits of liquidation while remaining in provisional liquidation and the SoA will sit alongside the provisional liquidation process as a money distribution scheme. This sounds fine in theory but the devil will be in the contractual detail.

3. Depositor category: We will ask a group of different depositor types (e.g. under £50k, Bondholder, etc) to study the SoA through personal eyes and give us feedback

Next week we will be briefing counsel and preparing to submit our response to the Court. Some PR initiatives may also take place, depending on the content of the SoA and TSC report. We will also publish a brief factual summary of the SoA and the TSC report on the forum.

We cannot and will not be providing any advice to individual DAG members. Decisions for or against the SoA do not get made until creditors vote at a meeting in late May.

Please also understand that we cannot provide a preview of our affidavit to the DAG network, for tactical and legal reasons. Our legal and PR advisers will be recommending an appropriate course of action and we will at all times have the continuing objective of 100% return for all depositors in mind.