ACAS BUSINESS LOAN TRUST

Transcription

1 OFFERING MEMORANDUM [LOGO] ACAS BUSINESS LOAN TRUST U.S.$300,500,000 CLASS A FLOATING RATE ASSET BACKED NOTES DUE 2019 U.S.$37,500,000 CLASS B FLOATING RATE DEFERRABLE ASSET BACKED NOTES DUE 2019 U.S.$63,000,000 CLASS C FLOATING RATE DEFERRABLE ASSET BACKED NOTES DUE 2019 U.S.$31,500,000 CLASS D FLOATING RATE DEFERRABLE ASSET BACKED NOTES DUE 2019 ACAS Business Loan Trust , a Delaware statutory trust, as the issuer (the Issuer ), is governed by an Amended and Restated Trust Agreement, dated August 7, 2007 (the Trust Agreement ), between ACAS Master Business Loan LLC, as the trust depositor (the Trust Depositor ) and Wilmington Trust Company, as the owner trustee (the Owner Trustee ). The Issuer will issue the ACAS Business Loan Trust Asset Backed Notes (the Notes ), consisting of U.S.$300,500,000 Class A Floating Rate Asset Backed Notes (the Class A Notes ), U.S.$37,500,000 Class B Floating Rate Deferrable Asset Backed Notes (the Class B Notes ), U.S.$63,000,000 Class C Floating Rate Deferrable Asset Backed Notes (the Class C Notes ), U.S.$31,500,000 Class D Floating Rate Deferrable Asset Backed Notes (the Class D Notes and, together with the Class A Notes, the Class B Notes and the Class C Notes, the Offered Notes ), U.S.$42,500,000 Class E Principal Only Asset Backed Notes (the Class E Notes ) and the U.S.$25,000,000 Class F Principal Only Asset Backed Notes (the Class F Notes ). American Capital Strategies, Ltd. ( American Capital ) or an Affiliate will acquire the full $63,000,000 of the Class C Notes and the full $31,500,000 of the Class D Notes on the Closing Date. Application will be made to the Irish Financial Services Regulatory Authority (the IFSRA ), as competent authority under Directive 2003/71/EC, for the Offering Memorandum to be approved. Application will be made to the Irish Stock Exchange for the Offered Notes to be admitted to the Official List and trading on its regulated market. Approval of the IFSRA relates only to the Offered Notes that are admitted to trading on the regulated market of the Irish Stock Exchange or other regulated markets for purposes of Directive 2003/71/EC. No application will be made to list any other class of Notes on any stock exchange. Investing in the Offered Notes involves risks. See Risk Factors beginning on page 14. The Offered Notes represent non-recourse obligations of the Issuer payable solely from the pool of assets pledged by the Issuer to the Indenture Trustee. The Offered Notes do not represent an interest in or obligations of, and are not insured or guaranteed by, the Indenture Trustee, American Capital Strategies, Ltd., Citigroup Global Markets Inc. ( Citi ), J.P. Morgan Securities Inc. ( JPMorgan ), Banc of America Securities LLC ( Banc of America Securities ), Credit Suisse Securities (USA) LLC ( Credit Suisse Securities ), HSBC Securities (USA) Inc. ( HSBC Securities ), HVB Capital Markets, Inc., Wachovia Capital Markets, LLC ( Wachovia Capital Markets ) or any of their respective Affiliates. The Offered Notes have not been registered under the Securities Act of 1933, as amended (the Securities Act ), and are being offered only (1) to Qualified Institutional Buyers under Rule 144A under the Securities Act who are Qualified Purchasers ( Qualified Purchasers ) for purposes of Section 3(c)(7) under the Investment Company Act of 1940, as amended (the 1940 Act ), (2) to a limited number of institutional accredited investors ( Institutional Accredited Investors ) within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act ( Regulation D ) who are Qualified Purchasers and (3) to certain investors who are Qualified Purchasers outside of the United States in compliance with Regulation S under the Securities Act ( Regulation S ). Because the Offered Notes are not registered, they are subject to certain restrictions on resale that are described under Notice to Investors. The Issuer has not been registered as an investment company under the 1940 Act. Class of Offered Notes Principal Amount as of Closing Date Percentage Expected Ratings of all Notes Note Interest Rate (1) (S&P/Moody s/fitch) Weighted Average Life (2) Final Maturity Date A $300,500, % LIBOR % AAA/Aaa/AAA 2.99 years November 18, 2019 B $37,500, % LIBOR % AA/Aa2/AA 3.75 years November 18, 2019 C (3) $63,000, % LIBOR % A/A2/A 3.96 years November 18, 2019 D (3) $31,500, % LIBOR % BBB/Baa2/BBB 3.98 years November 18, 2019 (1) (2) (3) LIBOR on the Offered Notes is Three-Month LIBOR; provided that LIBOR with respect to the initial Interest Accrual Period will be determined though the use of a straight-line interpolation as described in Description of the Notes and Indenture Calculation of LIBOR. The weighted average life of the Offered Notes has been calculated assuming (i) certain collateral characteristics, including that the cash flow profile of any Additional Loans purchased during the Pre-Funding Period or the Replenishment Period will be similar to that of the Initial Loans, (ii) that the Replenishment Period will continue until the Business Day preceding the Payment Date in February 2008, (iii) that there will be no defaults or delinquencies, (iv) a constant prepayment rate of 21%, (v) the Class F Noteholder will cause an Optional Repurchase of the Notes at its earliest opportunity to do so, (vi) a Closing Date of August 7, 2007, (vii) that during the Replenishment Period all Principal Collections, including Scheduled Payments and Prepayments, will be immediately reinvested and no Special Redemption will occur, and (viii) on the Payment Date occurring in February 2008, the Weighted Average Life of the Loans is equal to the Maximum Weighted Average Life. There can be no assurance that these assumptions will be met. American Capital or an Affiliate will acquire the full $63,000,000 of the Class C Notes and the full $31,500,000 of the Class D Notes on the Closing Date. The issue price of the Offered Notes is 100% of their principal amount. The Initial Purchasers expect to deliver the Offered Notes to purchasers on or about August 7, CITI BANC OF AMERICA SECURITIES LLC CREDIT SUISSE HSBC The date of this Offering Memorandum is February21, HVB CAPITAL MARKETS, INC. JPMORGAN WACHOVIA SECURITIES

2 The Offered Notes are being offered by the Initial Purchasers from time to time in one or more negotiated transactions or otherwise at varying prices to be determined, in each case, at the time of sale. The Offered Notes are offered when, as and if issued, subject to prior sale or withdrawal, cancellation or modification of the offer without notice and subject to approval of certain legal matters by counsel and certain other conditions. The Notes will be issued pursuant to an Indenture, dated as of the Closing Date (as amended, modified, restated, waived or supplemented from time to time, the Indenture ), between the Issuer and Wells Fargo Bank, National Association, as the indenture trustee (together with its successors and assigns, the Indenture Trustee ). The Notes issued by the Issuer evidence the right to receive payments of principal and interest in accordance with the terms of the Notes from amounts available therefor. The Notes will be secured by the assets of the Issuer. Additionally, pursuant to the Trust Agreement, the Issuer will issue a certificate representing a fractional undivided ownership interest in the Issuer (the Certificate ). Only the Offered Notes are being offered hereby. The Class B Notes will be subordinated to the Class A Notes to the extent described herein. The Class C Notes will be subordinated to the Class B Notes and the Class A Notes to the extent described herein. The Class D Notes will be subordinated to the Class C Notes, the Class B Notes and the Class A Notes to the extent described herein. The Class E Notes will be subordinated to the Class D Notes, the Class C Notes, the Class B Notes and the Class A Notes to the extent described herein. The Class F Notes will be subordinated to the Class E Notes and the Offered Notes to the extent described herein. The assets of the Issuer will include (a) a pool of loans or portions thereof (including additional loans and substitute loans), or interests therein, but excluding the Retained Interest and the Excluded Amounts, that satisfy certain representations and warranties described in this Offering Memorandum (the Offering Memorandum ) and that arise under certain note purchase agreements, commercial loan agreements or facilities (the Designated Loan Agreements ) originated or purchased by American Capital (in its capacity as originator, together with its successors and assigns in such capacity, the Originator ) from time to time, and include First Lien Loans, Second Lien Loans and Subordinated Loans (collectively, the Loans ), (b) the right to receive payments of principal and interest (the Payment Obligations ) due on, and other proceeds of, such Loans, (c) net hedge receipts, (d) all monies on deposit in certain bank accounts of the Issuer and (e) the Issuer s interest in the related collateral, if any, securing such Loans. The Designated Loan Agreements will generally include multi-lender agented facilities and direct (bilateral) loans to borrowers of American Capital. There will be no revolving loans or partially funded term loans in the Loan Pool. The Loans will be serviced by American Capital, as servicer (together with its successors and assigns in such capacity, the Servicer ). Interest will accrue on the Outstanding Principal Balance of each class of Offered Notes at the applicable Note Interest Rate from the Closing Date. Interest with respect to the Offered Notes for each Interest Accrual Period will be distributed, to the extent funds are available therefor, quarterly in arrears on each Payment Date, commencing on November 16, The Class E Notes and the Class F Notes are principal only Notes and will not bear any interest. Principal on the Notes will be distributed, to the extent funds are available therefor, on each Payment Date. On any Pro Rata Payment Date, principal payments on the Notes will be made to the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes and the Class F Notes, pro rata until the Outstanding Principal Balance of each such class of Notes is reduced to zero. On any Sequential Payment Date, principal payments on the Notes will be made to the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes and the Class F Notes sequentially until the Outstanding Principal Balance of each class of Notes is reduced to zero and no principal payments will be made to any subordinated class of Notes until the Outstanding Principal Balance of the immediately senior class of Notes is reduced to zero. See Description of the Notes and Indenture Principal Allocations. The principal of the Offered Notes is required to be paid on November 18, 2019 (the Legal Final Maturity Date ), unless redeemed or repaid prior thereto. Payments on the Notes will be made in U.S. dollars. The Notes are subject to full or partial redemption under the circumstances described under Description of the Notes and Indenture Optional Repurchase of Notes, Mandatory Redemption of Notes, Priority of Payments Interest Allocations and Priority of Payments Principal Allocations. -i-

3 No Offered Notes may be sold without delivery of this Offering Memorandum. It is a condition of their offering that each class of Offered Notes receives the respective ratings set forth under Rating of the Notes herein and that certain other legal conditions are met. The Offered Notes sold within the United States or to U.S. persons in reliance on Rule 144A under the Securities Act will initially be issued in the form of one or more global notes in fully registered form without coupons (each, a Rule 144A Global Note ) to be deposited with the Indenture Trustee as custodian for, and registered in the name of a nominee of, The Depository Trust Company ( DTC ). The Offered Notes sold within the United States or to U.S. persons who are Institutional Accredited Investors and also Qualified Purchasers will be issued in the form of definitive physical certificates in fully registered form without coupons. The Offered Notes sold in offshore transactions in reliance on Regulation S under the Securities Act to Persons that are not U.S. persons (as defined in Regulation S) will initially be issued in the form of one or more temporary global notes in fully registered form without coupons (each, a Regulation S Global Note ) to be deposited with the Indenture Trustee as custodian for, and registered in the name of a nominee of, DTC, for the accounts of Euroclear Bank S.A./N.V. ( Euroclear ) as operator of the Euroclear system (the Euroclear System ) and Clearstream Banking, société anonyme ( Clearstream ). During the Distribution Compliance Period, beneficial interests in a Regulation S Global Note may be held only through Euroclear or Clearstream. The Initial Purchasers will deliver the Offered Notes, in the case of Global Notes, through the facilities of the DTC, Clearstream and Euroclear, and in the case of individual, certificated Notes, if any, at the offices of Citi, New York, New York, against payment therefor in immediately available funds. Interests in a Regulation S Global Note may not be held at any time by a U.S. person (as defined in Regulation S under the Securities Act), and re-offers or resales of such Offered Notes offered outside the United States in reliance on Regulation S under the Securities Act may be effected only in a transaction exempt from the registration requirements of the Securities Act and not involving directly or indirectly the Issuer or its agents, affiliates or intermediaries. In addition, until the expiration of 40 days after the later of the Closing Date and the commencement of the offering of the Offered Notes, a re-offer or resale of any Offered Note originally sold pursuant to Regulation S to, or for the account or benefit of, a U.S. person by a dealer or Person receiving a concession, fee or remuneration in respect of the Offered Note may violate the registration requirements of the Securities Act, unless such offer and sale is made in compliance with an exemption from such registration requirements. Each purchaser of an interest in an Offered Note in the initial offering thereof and each subsequent transferee will be required to make or will be deemed to have made certain representations and agreements. See Certain Federal Income Tax and Benefit Plan Considerations Benefit Plan Considerations and Notice to Investors. The Initial Purchasers do not make any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this Offering Memorandum. The Offering Memorandum is personal to each offeree to whom it has been delivered and does not constitute an offer to any other Person or to the public generally to subscribe for or otherwise acquire the Offered Notes. Distribution of this Offering Memorandum to any persons other than the offeree and those persons, if any, retained to advise such offeree with respect thereto is unauthorized and any disclosure of its contents, without the prior consent of the Trust Depositor or the Initial Purchasers, is prohibited. Any reproduction or distribution of this Offering Memorandum, in whole or in part, and any disclosure of its contents or the use of any information in this Offering Memorandum for any purpose other than considering any investment in the Offered Notes is prohibited. Each offeree of the Offered Notes, by accepting delivery of this Offering Memorandum, agrees to the foregoing. Market data used in this Offering Memorandum, including information relating to American Capital, or any Obligors, is based on American Capital s estimates, which estimates were formulated with commercially reasonable care and based on American Capital s review of internal surveys, independent industry reports and publications and other publicly available information. None of American Capital, Citi, JPMorgan, Banc of America Securities, Credit Suisse Securities, HSBC Securities, HVB Capital Markets, Inc., Wachovia Capital Markets or any of their respective Affiliates has independently verified such data. The Issuer accepts responsibility for the information contained in this Offering Memorandum. To the best knowledge and belief of the Issuer, the information contained in this Offering Memorandum is in accordance with the facts and does not omit anything likely to affect the import of such information.

4 THE DISTRIBUTION OF THIS OFFERING MEMORANDUM AND THE OFFER OR SALE OF THE OFFERED NOTES MAY BE RESTRICTED BY LAW IN CERTAIN JURISDICTIONS. PERSONS INTO WHOSE POSSESSION THIS OFFERING MEMORANDUM OR ANY OF THE SECURITIES COME MUST INFORM THEMSELVES ABOUT, AND OBSERVE, ANY SUCH RESTRICTIONS. INVESTORS SHOULD ASSUME THE INFORMATION APPEARING IN THIS OFFERING MEMORANDUM IS ACCURATE ONLY AS OF THE DATE ON THE FRONT COVER OF THIS OFFERING MEMORANDUM. EACH PROSPECTIVE PURCHASER OF ANY OF THE OFFERED NOTES MUST COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS IN FORCE IN ANY JURISDICTION IN WHICH IT PURCHASES, OFFERS OR SELLS SUCH OFFERED NOTES OR POSSESSES OR DISTRIBUTES THIS OFFERING MEMORANDUM AND MUST OBTAIN ANY CONSENT, APPROVAL OR PERMISSION REQUIRED BY IT FOR THE PURCHASE, OFFER OR SALE BY IT OF THE OFFERED NOTES UNDER THE LAWS AND REGULATIONS IN FORCE IN ANY JURISDICTION TO WHICH IT IS SUBJECT OR IN WHICH IT MAKES SUCH PURCHASES, OFFERS OR SALES, AND NEITHER THE ISSUER NOR ANY OF THE INITIAL PURCHASERS SHALL HAVE ANY RESPONSIBILITY THEREFOR. THE OFFERED NOTES DESCRIBED HEREIN HAVE NOT BEEN REGISTERED WITH, RECOMMENDED BY OR APPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER SECURITIES COMMISSION OR REGULATORY AUTHORITY, NOR HAS ANY SUCH COMMISSION OR REGULATORY AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFERING MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. NOTICE TO NEW HAMPSHIRE RESIDENTS NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE ATTORNEY GENERAL OR THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE ATTORNEY GENERAL OR THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. NOTICE TO CALIFORNIA RESIDENTS THE OFFERED NOTES MAY NOT BE PURCHASED BY A CORPORATION IN THE STATE OF CALIFORNIA UNLESS IT HAS A NET WORTH OF AT LEAST $14,000,000 ACCORDING TO ITS MOST RECENT AUDITED FINANCIAL STATEMENTS. NOTICE TO CONNECTICUT RESIDENTS THE OFFERED NOTES HAVE NOT BEEN REGISTERED UNDER THE CONNECTICUT SECURITIES LAW. THE OFFERED NOTES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND SALE.

5 NOTICE TO FLORIDA RESIDENTS THE OFFERED NOTES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER SECTION OF THE FLORIDA SECURITIES ACT (THE FLORIDA ACT ) AND HAVE NOT BEEN REGISTERED UNDER THE FLORIDA ACT IN THE STATE OF FLORIDA. FLORIDA RESIDENTS WHO ARE NOT INSTITUTIONAL INVESTORS AS DESCRIBED IN SECTION (7) OF THE FLORIDA ACT HAVE THE RIGHT TO VOID THEIR PURCHASES OF THE OFFERED NOTES WITHOUT PENALTY WITHIN THREE DAYS AFTER THE FIRST TENDER OF CONSIDERATION. NOTICE TO GEORGIA RESIDENTS THE OFFERED NOTES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13) OF CODE SECTION OF THE GEORGIA SECURITIES ACT OF 1973, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION THAT IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT. NOTICE TO REGULATION S INVESTORS THIS OFFERING MEMORANDUM HAS BEEN PREPARED BY THE ISSUER, THE ORIGINATOR AND THE TRUST DEPOSITOR FOR USE BY THE INITIAL PURCHASERS IN MAKING OFFERS AND SALES OF THE OFFERED NOTES OUTSIDE THE UNITED STATES TO NON-U.S. PERSONS IN RELIANCE ON REGULATION S UNDER THE SECURITIES ACT. THIS OFFERING MEMORANDUM IS ALSO BEING USED BY THE INITIAL PURCHASERS IN CONNECTION WITH OFFERS AND SALES OF OFFERED NOTES MADE IN THE UNITED STATES IN RELIANCE ON RULE 144A UNDER THE SECURITIES ACT AND TO INSTITUTIONAL ACCREDITED INVESTORS WITHIN THE MEANING OF RULE 501 OF THE SECURITIES ACT WHO ARE QUALIFIED PURCHASERS FOR PURPOSES OF SECTION 3(c)(7) UNDER THE 1940 ACT. THE OFFERED NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND MAY NOT BE OFFERED, SOLD OR DELIVERED IN THE UNITED STATES TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON, UNLESS THE OFFERED NOTES ARE REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE. THE OFFERED NOTES WILL BEAR A LEGEND TO THE EFFECT OF THE PRECEDING SENTENCE, UNLESS THE ORIGINATOR DETERMINES OTHERWISE IN COMPLIANCE WITH REQUIREMENTS OF LAW. THE DISTRIBUTION OF THIS OFFERING MEMORANDUM AND THE OFFER AND SALE OF THE OFFERED NOTES IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY LAW. YOU ARE REQUIRED BY THE ORIGINATOR AND THE INITIAL PURCHASERS TO INFORM YOURSELF ABOUT AND TO OBSERVE ANY SUCH RESTRICTIONS. NOTICE TO RESIDENTS OF THE UNITED KINGDOM THIS DOCUMENT IS ONLY BEING DISTRIBUTED TO AND IS ONLY DIRECTED AT (A) PERSONS WHO ARE OUTSIDE THE UNITED KINGDOM, (B) TO INVESTMENT PROFESSIONALS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 ( FSMA ) (FINANCIAL PROMOTION) ORDER 2005 (THE ORDER ) OR (C) HIGH NET WORTH ENTITIES, AND OTHER PERSONS TO WHO IT MAY LAWFULLY BE COMMUNICATED, FALLING WITHIN ARTICLE 49(2)(a) TO (d) OF THE ORDER (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS RELEVANT PERSONS ). THE OFFERED NOTES ARE AVAILABLE ONLY TO, AND ANY INVITATION, OFFER OR AGREEMENT TO SUBSCRIBE, PURCHASE OR OTHERWISE ACQUIRE SUCH OFFERED NOTES WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. ANY PERSON WHO IS NOT A RELEVANT PERSON SHOULD NOT ACT OR RELY ON THIS DOCUMENT OR ANY OF ITS CONTENTS.

6 IMPORTANT NOTICE REGARDING THE NOTES THE OFFERED NOTES REFERRED TO IN THIS OFFERING MEMORANDUM, AND THE ASSETS BACKING THEM, ARE SUBJECT TO MODIFICATION OR REVISION (INCLUDING THE POSSIBILITY THAT ONE OR MORE CLASSES OF OFFERED NOTES MAY BE SPLIT, COMBINED OR ELIMINATED AT ANY TIME PRIOR TO ISSUANCE OR AVAILABILITY OF A FINAL OFFERING MEMORANDUM) AND ARE OFFERED ON A WHEN, AS AND IF ISSUED BASIS. EACH PROSPECTIVE INVESTOR UNDERSTANDS THAT, WHEN SUCH PROSPECTIVE INVESTOR IS CONSIDERING THE PURCHASE OF THESE OFFERED NOTES, A CONTRACT OF SALE WILL COME INTO BEING NO SOONER THAN THE DATE ON WHICH THE RELEVANT CLASS OF OFFERED NOTES HAS BEEN PRICED AND THE INITIAL PURCHASERS HAVE CONFIRMED THE ALLOCATION OF THE OFFERED NOTES TO BE MADE TO SUCH PROSPECTIVE INVESTOR; ANY INDICATIONS OF INTEREST EXPRESSED BY ANY PROSPECTIVE INVESTOR, AND ANY SOFT CIRCLES GENERATED BY THE INITIAL PURCHASERS, THE SERVICER, THE ISSUER OR ANY OF THEIR RESPECTIVE AGENTS OR AFFILIATES, WILL NOT CREATE BINDING CONTRACTUAL OBLIGATIONS FOR SUCH PROSPECTIVE INVESTOR, ON THE ONE HAND, OR THE INITIAL PURCHASERS, THE SERVICER, THE ISSUER OR ANY OF THEIR RESPECTIVE AGENTS OR AFFILIATES, ON THE OTHER HAND. AS A RESULT OF THE FOREGOING, A PROSPECTIVE INVESTOR MAY COMMIT TO PURCHASE OFFERED NOTES THAT HAVE CHARACTERISTICS THAT MAY CHANGE, AND EACH PROSPECTIVE INVESTOR IS ADVISED THAT ALL OR A PORTION OF THE OFFERED NOTES MAY NOT BE ISSUED WITH THE CHARACTERISTICS DESCRIBED IN THIS OFFERING MEMORANDUM. THE INITIAL PURCHASERS OBLIGATION TO SELL ANY OFFERED NOTES TO, AND THE PLACEMENT AGENTS OBLIGATION TO PLACE ANY OFFERED NOTES WITH, ANY PROSPECTIVE INVESTOR IS CONDITIONED ON THE OFFERED NOTES HAVING THE CHARACTERISTICS DESCRIBED IN THIS OFFERING MEMORANDUM. IF THE INITIAL PURCHASERS DETERMINE THAT THE FOREGOING CONDITION IS NOT SATISFIED IN ANY MATERIAL RESPECT, SUCH PROSPECTIVE INVESTOR WILL BE NOTIFIED, AND NEITHER THE ISSUER NOR THE INITIAL PURCHASERS WILL HAVE ANY OBLIGATION TO SUCH PROSPECTIVE INVESTOR TO DELIVER ANY PORTION OF THE OFFERED NOTES THAT SUCH PROSPECTIVE INVESTOR HAS COMMITTED TO PURCHASE, AND THERE WILL BE NO LIABILITY BETWEEN THE INITIAL PURCHASERS, THE SERVICER, THE ISSUER OR ANY OF THEIR RESPECTIVE AGENTS OR AFFILIATES, ON THE ONE HAND, AND SUCH PROSPECTIVE INVESTOR, ON THE OTHER HAND, AS A CONSEQUENCE OF THE NON-DELIVERY. EACH PROSPECTIVE INVESTOR IN THE OFFERED NOTES REQUESTED THAT THE INITIAL PURCHASER OR THE PLACEMENT AGENTS PROVIDE TO SUCH PROSPECTIVE INVESTOR INFORMATION IN CONNECTION WITH SUCH PROSPECTIVE INVESTOR S CONSIDERATION OF THE PURCHASE OF CERTAIN OFFERED NOTES DESCRIBED IN THIS OFFERING MEMORANDUM. THIS OFFERING MEMORANDUM IS BEING PROVIDED TO EACH PROSPECTIVE INVESTOR FOR INFORMATIVE PURPOSES ONLY IN RESPONSE TO SUCH PROSPECTIVE INVESTOR S SPECIFIC REQUEST. THE INITIAL PURCHASERS DESCRIBED IN THIS OFFERING MEMORANDUM MAY FROM TIME TO TIME PERFORM INVESTMENT BANKING SERVICES FOR, OR SOLICIT INVESTMENT BANKING BUSINESS FROM, ANY COMPANY NAMED IN THIS OFFERING MEMORANDUM. THE INITIAL PURCHASERS, AND/OR THEIR AFFILIATES AND EMPLOYEES MAY FROM TIME TO TIME HAVE A LONG OR SHORT POSITION IN ANY CONTRACT OR SECURITY DISCUSSED IN THIS OFFERING MEMORANDUM. THE INFORMATION CONTAINED HEREIN SUPERSEDES ANY PREVIOUS SUCH INFORMATION DELIVERED TO ANY PROSPECTIVE INVESTOR AND MAY BE SUPERSEDED BY INFORMATION DELIVERED TO SUCH PROSPECTIVE INVESTOR PRIOR TO THE TIME OF SALE. THE OFFERED NOTES WILL BEAR RESTRICTIVE LEGENDS AND WILL BE SUBJECT TO RESTRICTIONS ON TRANSFER AS DESCRIBED HEREIN, INCLUDING THE REQUIREMENT THAT

7 EACH INITIAL INVESTOR IN A GLOBAL SECURITY SHALL BE DEEMED TO HAVE MADE, AND EACH INITIAL INVESTOR IN THE OFFERED NOTES IN CERTIFICATED FORM WILL BE REQUIRED TO MAKE, CERTAIN REPRESENTATIONS AND AGREEMENTS AS DESCRIBED HEREIN. ANY RESALE OR OTHER TRANSFER, OR ATTEMPTED RESALE OR OTHER TRANSFER, OF ANY OF THE OFFERED NOTES THAT IS NOT MADE IN COMPLIANCE WITH THE APPLICABLE TRANSFER RESTRICTIONS WILL BE VOID. BECAUSE OF THE RESTRICTIONS ON TRANSFER, AN INVESTOR SHOULD BE PREPARED TO BEAR THE RISK OF ITS INVESTMENT IN THE OFFERED NOTES UNTIL MATURITY. THE OFFERED NOTES AND RELATED DOCUMENTATION (INCLUDING, WITHOUT LIMITATION, THE INDENTURE) MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, WITHOUT THE CONSENT OF, AND WITHOUT NOTICE TO, THE HOLDERS OF THE OFFERED NOTES, AMONG OTHER THINGS, TO MODIFY THE RESTRICTIONS ON AND PROCEDURES FOR RESALES AND OTHER TRANSFERS OF THE OFFERED NOTES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION THEREOF). THE OFFERED NOTES AND RELATED DOCUMENTATION (INCLUDING, WITHOUT LIMITATION, THE INDENTURE) MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, EXISTING RESTRICTIONS UPON THE RESALE OR TRANSFER OF THE OFFERED NOTES MAY BE ALTERED, AND ANY OTHER ACTION MAY BE TAKEN, IN EACH CASE WITHOUT THE CONSENT OF THE REGISTERED HOLDERS, TO ENABLE THE ISSUER TO RELY UPON ANY EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR THE 1940 ACT (AND TO REMOVE CERTAIN EXISTING RESTRICTIONS TO THE EXTENT NOT REQUIRED UNDER SUCH EXEMPTION); PROVIDED THAT NO SUCH CHANGE WILL CAUSE THE RATING OF THE OFFERED NOTES THEN OUTSTANDING TO BE REDUCED OR WITHDRAWN. THE BENEFICIAL OWNER OF ANY OFFERED NOTE SHALL BE DEEMED, BY ACCEPTANCE THEREOF, DIRECTLY OR THROUGH A NOMINEE, TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT (EACH OF WHICH SHALL BE CONCLUSIVE AND BINDING ON SUCH BENEFICIAL OWNER AND ALL FUTURE BENEFICIAL OWNERS OF SUCH OFFERED NOTE AND ANY OFFERED NOTE ISSUED IN EXCHANGE OR SUBSTITUTION FOR SUCH OFFERED NOTE WHETHER OR NOT ANY NOTATION THEREOF IS MADE THEREON). SEE DESCRIPTION OF THE NOTES AND INDENTURE AMENDMENTS HEREIN. EXCEPT AS SET FORTH IN THIS OFFERING MEMORANDUM, NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS OFFERING MEMORANDUM, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON. NEITHER THE DELIVERY OF THIS OFFERING MEMORANDUM AT ANY TIME NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, IMPLY THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS OFFERING MEMORANDUM. APPLICATION WILL BE MADE TO THE IFSRA FOR THIS OFFERING MEMORANDUM TO BE APPROVED AS A PROSPECTUS AND TO ADMIT THE OFFERED NOTES TO TRADING ON THE IRISH STOCK EXCHANGE. SUCH APPROVAL WILL RELATE ONLY TO THE OFFERED NOTES WHICH ARE TO BE ADMITTED TO TRADING ON THE REGULATED MARKET OF THE IRISH STOCK EXCHANGE OR OTHER REGULATED MARKETS FOR THE PURPOSES OF DIRECTIVE 2003/71/EC. IN CONNECTION WITH THE FOREGOING, THIS DOCUMENT COMPRISES A PROSPECTUS UNDER DIRECTIVE 2003/71/EC (THE PROSPECTUS ). THIS OFFERING MEMORANDUM CONTAINS SUMMARIES BELIEVED TO BE ACCURATE WITH RESPECT TO CERTAIN TERMS OF CERTAIN DOCUMENTS AND SUCH SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO SUCH DOCUMENTS. THE CONTENTS OF THIS OFFERING MEMORANDUM ARE NOT TO BE CONSTRUED AS LEGAL, BUSINESS OR TAX ADVICE. THIS OFFERING MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE OFFERED NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE

8 OFFERED NOTES TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. EACH INITIAL INVESTOR IN AND EACH SUBSEQUENT TRANSFEREE OF AN INTEREST IN AN OFFERED NOTE IN THE FORM OF A GLOBAL NOTE WILL BE DEEMED TO REPRESENT, AND EACH INITIAL INVESTOR AND EACH SUBSEQUENT TRANSFEREE OF AN OFFERED NOTE IN CERTIFICATED FORM WILL BE REQUIRED TO REPRESENT, WARRANT AND COVENANT, (A) THAT IT IS NOT, AND IS NOT DIRECTLY OR INDIRECTLY ACQUIRING SUCH OFFERED NOTE OR ANY INTEREST THEREIN FOR, ON BEHALF OF OR WITH ANY ASSETS OF, AN EMPLOYEE BENEFIT PLAN OR OTHER ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ( ERISA ), A PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE CODE ), OR A PLAN OR OTHER ARRANGEMENT SUBJECT TO ANY PROVISIONS UNDER ANY FEDERAL, STATE OR LOCAL LAWS OR REGULATIONS THAT ARE SUBSTANTIVELY SIMILAR OR OF SIMILAR EFFECT TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE ( SIMILAR LAW ) OR (B) EITHER (1) ITS ACQUISITION AND HOLDING OF THE OFFERED NOTE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE BY REASON OF ANY OF SECTION 408(b)(17) OF ERISA OR SECTION 4975(d)(20) OF THE CODE, PTCE 96-23, PTCE 95-60, PTCE 91-38, PTCE 90-1, PTCE 84-14, EACH AS AMENDED, OR AN EXEMPTION SIMILAR TO THE FOREGOING EXEMPTIONS, OR (2) IN THE CASE OF A PLAN OR ARRANGEMENT SUBJECT TO SIMILAR LAW, WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT VIOLATION OF SIMILAR LAW. SUCH REPRESENTATION SHALL BE DEEMED MADE ON EACH DAY FROM THE DATE ON WHICH SUCH INVESTOR OR TRANSFEREE ACQUIRES ITS INTEREST IN THE OFFERED NOTES THROUGH AND INCLUDING THE DATE ON WHICH SUCH INVESTOR OR TRANSFEREE DISPOSES OF ITS INTEREST IN THE OFFERED NOTES. NEITHER THE INITIAL PURCHASERS NOR THE ISSUER MAKES ANY REPRESENTATION TO ANY OFFEREE OR PURCHASER OF THE OFFERED NOTES REGARDING THE LEGALITY OF INVESTMENT THEREIN BY SUCH OFFEREE OR PURCHASER UNDER APPLICABLE LEGAL INVESTMENT OR SIMILAR LAWS OR REGULATIONS OR THE PROPER CLASSIFICATION OF SUCH AN INVESTMENT THEREUNDER. THE CONTENTS OF THIS OFFERING MEMORANDUM ARE NOT TO BE CONSTRUED AS LEGAL, BUSINESS OR TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN ATTORNEY, BUSINESS ADVISOR OR TAX ADVISOR AS TO LEGAL, BUSINESS AND TAX ADVICE. THERE MAY BE RESTRICTIONS ON THE ABILITY OF CERTAIN INVESTORS, INCLUDING DEPOSITORY INSTITUTIONS, EITHER TO PURCHASE OFFERED NOTES OR TO PURCHASE OFFERED NOTES REPRESENTING MORE THAN A SPECIFIED PERCENTAGE OF THE INVESTOR S ASSETS. INVESTORS SHOULD CONSULT THEIR OWN LEGAL ADVISORS IN DETERMINING WHETHER AND TO WHAT EXTENT THE OFFERED NOTES CONSTITUTE LEGAL INVESTMENTS FOR SUCH INVESTORS. DISCLOSURE OF TAX STRUCTURE Notwithstanding anything herein to the contrary, each prospective investor (and each employee, representative, or other agent of such prospective investor) may disclose to any and all persons, without limitation of any kind, the United States federal income tax treatment and tax structure (in each case, within the meaning of Treasury Regulation Section ) of the transaction and the portions of all materials of any kind (including opinions or other tax analyses) that are provided to such prospective investor (or such prospective investor s representatives or agents) relating to such tax treatment or tax structure. Any such disclosure of the tax treatment, tax structure and other tax-related materials shall not be made for the purpose of offering to sell the Offered Notes or soliciting an offer to purchase any such Notes to the extent such disclosure for such purpose would be in violation of applicable securities laws.

9 AVAILABLE INFORMATION The Issuer is not currently required by law to publish financial statements. However, to permit compliance with Rule 144A under the Securities Act in connection with the sale of the Offered Notes, the Issuer under the Indenture will be required to furnish, upon written request of a Holder of a Note, to such Holder and a prospective purchaser designated by such Holder the information required to be delivered under Rule 144(d)(4) under the Securities Act if, at the time of the request, the Issuer is not a reporting company under Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act ), or exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act. It is not contemplated that the Issuer will be such a reporting company or so exempt. Any such request for information should be delivered in writing to ACAS Business Loan Trust , c/o American Capital Strategies, Ltd., as Servicer, 2 Bethesda Metro Center, 14 th Floor, Bethesda, Maryland 20814, Attention: Compliance Officer. The Indenture Trustee will provide or cause to be provided, without charge to each investor upon written request, a copy of the Indenture. Requests to the Indenture Trustee should be directed in writing to its corporate trust office located at Wells Fargo Bank, National Association, Attention: Corporate Trust Services Asset Backed Administration (ACAS Business Loan Trust ), 6 th and Marquette Streets, MAC N , Minneapolis, Minnesota In addition, so long as any Offered Notes are listed on the Irish Stock Exchange, certain information and documents, including, without limitation the Indenture, will be available at the office of The Bank of New York (in such capacity, the Ireland Listing Agent ), which is currently located at 1 Canada Square, London, E14 5AL, United Kingdom. Unless otherwise indicated, (a) references herein to dollars, U.S. dollars and $ shall be to the lawful currency of the United States of America; (b) the term Rating Agencies shall, except as otherwise provided herein, mean S&P, Moody s and Fitch; (c) references to a Rating Agency shall mean S&P, Moody s or Fitch; (d) references to a Rating Agency in connection with a rating of the Offered Notes shall be deemed to mean such Rating Agency with respect to the Offered Notes rated by it; (e) references to the term Holder shall mean the Person in whose name a security (i.e., a Note or the Certificate) is registered; except where the context otherwise requires, Holder shall include the beneficial owner of such security; and (f) references to U.S. and United States shall be to the United States of America, its territories and its possessions. MARKET STABILIZATION Certain persons participating in this offering (including the Initial Purchasers) may engage in transactions that stabilize, maintain or otherwise affect the price of the Offered Notes. Such transactions may include over-allotment and stabilizing and the purchase of any Offered Notes to cover short positions and, if commenced, may be discontinued at any time. FORWARD-LOOKING STATEMENTS Any projections, forecasts and estimates contained herein are forward-looking statements and are based upon certain assumptions. Projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results. Accordingly, the projections are only an estimate. Actual results may vary from the projections, and the variations may be material. None of the Issuer, the Trust Depositor, the Originator, the Servicer, the Indenture Trustee, the Initial Purchasers, any of their respective Affiliates or any other Person has any obligation to update or otherwise revise any projections, forecasts or estimates, including any revisions to reflect changes in economic conditions or other circumstances arising after the date hereof or to reflect the occurrence of unanticipated events, even if the underlying assumptions do not come to fruition. If and when included in this Offering Memorandum, the words expects, intends, anticipates, estimates and analogous expressions are intended to identify forward-looking statements as defined in the Securities Act. Any such statements inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, among others, general economic and business conditions, interest rate risk, prepayment, delinquency and default rates, competition, changes in political, social and economic conditions, regulatory initiatives and compliance with governmental regulations, customer preferences and various other matters, many of which are beyond the originator s control. These forward-looking statements

10 speak only as of the date of this Offering Memorandum. The Originator expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in the Originator s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

11 TABLE OF CONTENTS SUMMARY...1 Principal Parties...1 Description Of The Issuer s Assets...1 Description Of The Notes...1 Certain Key Dates...7 Payments On The Notes...8 Other Terms...10 RISK FACTORS...14 Asset Risks...14 Risks Relating to the Offered Notes...23 Structural Risks...27 Additional Risks Related to the Originator and the Offered Notes...33 USE OF PROCEEDS...35 THE PRE-FUNDING PERIOD...35 THE REPLENISHMENT PERIOD...36 THE PORTFOLIO CRITERIA...37 S&P CDO Monitor Test...38 DELINQUENCY AND LOSS INFORMATION FOR ORIGINATOR S PORTFOLIO OF LOANS...39 THE LOANS...40 Collateral...41 Loan Files...42 Collections...42 MATURITY AND PREPAYMENT CONSIDERATIONS...42 WEIGHTED AVERAGE LIFE...43 AMERICAN CAPITAL STRATEGIES, LTD...45 Public Manager of Funds of Alternative Assets...46 Corporate Information...46 Lending and Investment Decision Criteria...47 Operations...47 Portfolio Valuation...48 Loan Grading...48 Employees...49 Legal Proceedings...49 Management...49 THE ISSUER...49 Formation...49 Issuer s Limited Activities...49 Capitalization of the Issuer...50 Issuer Assets and Liabilities...50 Administration of the Issuer...50 The Owner Trustee...51 Termination of Issuer x-

12 THE TRUST DEPOSITOR...52 DESCRIPTION OF THE NOTES AND INDENTURE...52 General...52 Interest and Principal...53 Principal Payments on the Notes...53 Amounts Available for Payments on the Notes...54 Priority of Payments Interest Allocations...55 Priority of Payments Principal Allocations...56 Reserve Fund...58 Trust Accounts...58 Eligible Depository Institution or Trust Company...59 Eligible Investments...59 Calculation of LIBOR...61 Interest Rate Swap...61 Events of Default...63 Remedies After Events of Default...65 The Indenture Trustee...66 The Backup Servicer...66 Administration...67 Governing Law...67 Amendments...67 Optional Repurchase of Notes...68 Mandatory Redemption of Notes...69 Reports...69 List of Noteholders...71 Form, Denomination, Exchange, Registration and Title of the Offered Notes...71 THE CERTIFICATE...75 THE TRANSFER AND SERVICING AGREEMENT...76 Conveyance of the Loans...76 Representations and Warranties; Definition of Eligible Loans...77 Remedies for Breaches of Representations and Warranties; Definition of Ineligible Loans...81 Material Modifications to Loans...82 Loan Prepayments...82 Optional Repurchase or Substitution...82 Mandatory Repurchase...84 Definition of Defaulted Loans...84 Indemnification...84 Servicing Compensation and Payment of Expenses...85 Servicing Standard and Servicer Advances...86 Servicer Resignation...86 Servicer Default...86 Evidence as to Compliance; Obligor Financial Statements...88 Amendments...89 CERTAIN FEDERAL INCOME TAX AND BENEFIT PLAN CONSIDERATIONS...90 Holders Reliance on this Section...90 Federal Income Tax Considerations...90 Federal Tax Considerations with Respect to the Issuer...91 Federal Tax Considerations with Respect to the Offered Notes...92 Federal Tax Considerations with Respect to Foreign Investors...94 State and Local Tax Considerations...96 Benefit Plan Considerations...96

13 PLAN OF DISTRIBUTION...98 European Economic Area...99 Purchaser Inquiries NOTICE TO INVESTORS ANTI-MONEY LAUNDERING AND ANTI-TERRORISM REQUIREMENTS AND DISCLOSURES LISTING AND GENERAL INFORMATION RATING OF THE NOTES LEGAL MATTERS GLOSSARY INDEX OF TERMS...133

14 SUMMARY The following is only a summary of certain of the terms of the Offered Notes. This summary does not contain all the information that may be important to prospective investors. To understand all of the terms of this offering, prospective investors should read this entire Offering Memorandum. In addition, prospective investors may wish to read the documents governing the transfer of the Loans, the formation of the Issuer and the issuance of Notes. These documents are available from the Originator upon request. Certain capitalized terms used herein are defined in the Glossary. A listing of the pages on which such terms as well as other terms are defined is found in the Index of Terms. There are material risks associated with an investment in the Offered Notes. See Risk Factors for a discussion of some of the risks prospective investors should consider before making an investment in the Offered Notes. Principal Parties The Issuer ACAS Business Loan Trust The Originator and the Servicer The Trust Depositor The Backup Servicer The Indenture Trustee The Owner Trustee American Capital Strategies, Ltd. ACAS Master Business Loan LLC Wells Fargo Bank, National Association Wells Fargo Bank, National Association Wilmington Trust Company Description Of The Issuer s Assets The Loans The Issuer s assets will consist primarily of U.S. dollar denominated First Lien Loans, Second Lien Loans and Subordinated Loans of Obligors principally located in the United States that satisfy eligibility criteria and other criteria in the Transfer and Servicing Agreement, including guidelines concerning maturities, ratings and industry, geographic and Obligor concentrations as described herein. See The Transfer and Servicing Agreement Representations and Warranties; Definition of Eligible Loans, The Pre-Funding Period and The Replenishment Period. Loans representing up to 12% of the Aggregate Outstanding Loan Balance may be to primary Obligors organized under the laws of, or all or substantially all of the assets of which are located in, countries other than the United States. The Loans are subject to a number of risks, including credit, liquidity, interest rate and other risks. See Risk Factors Asset Risks. In addition, the Issuer expects to purchase Additional Loans during the Pre- Funding Period and may apply Principal Collections on the Loans to purchase Additional Loans during the Replenishment Period. The Servicer will determine and report to the Indenture Trustee on the Effective Date the extent of compliance of the Loans with the Portfolio Criteria as of the Effective Date. See The Pre-Funding Period and The Replenishment Period. Description Of The Notes Issued Notes The Notes will be issued on the Closing Date. The Issuer is issuing the following classes of Notes:

15 Original Margin Expected Rating 2 Class Principal Amount Class Size Added to LIBOR 1 S&P Moody s Fitch Final Maturity Date A $300,500, % 0.40% AAA Aaa AAA November 18, 2019 B $37,500, % 1.00% AA Aa2 AA November 18, 2019 C $63,000, % 1.25% A A2 A November 18, 2019 D $31,500, % 3.00% BBB Baa2 BBB November 18, 2019 E $42,500, % N/A NR NR BBB November 18, 2019 F $25,000, % N/A NR NR NR N/A 1 2 The Note Interest Rate for each class of Offered Notes will be calculated as the sum of the applicable margin and the then applicable LIBOR. LIBOR on the Offered Notes is Three-Month LIBOR (provided that LIBOR with respect to the initial Interest Accrual Period will be determined through the use of a straight-line interpolation as described in Description of the Notes and Indenture Calculation of LIBOR ). NR means the referenced Note is not rated. Offered Notes Pre-Funding Period Only the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes are being offered hereby. American Capital or an Affiliate will acquire the full $63,000,000 original principal balance of the Class C Notes and the full $31,500,000 original principal balance of the Class D Notes but will be under no obligation to retain such Notes. The basic terms of the Offered Notes are described in Description of the Notes and Indenture. The Issuer expects that, as of the Closing Date, it will have obtained greater than 85% of the Expected Aggregate Outstanding Loan Balance. The Issuer expects to obtain the remainder of the Expected Aggregate Outstanding Loan Balance during the period (the Pre-Funding Period ) beginning on and including the Closing Date and ending on the earlier of (a) the date that is 60 days following the Closing Date and (b) the date on which the Aggregate Outstanding Loan Balance equals the Expected Aggregate Outstanding Loan Balance (such date, the Effective Date ). During the Pre- Funding Period, the Issuer expects to purchase Additional Loans with Unused Proceeds in the Principal Collection Account and Principal Collections, subject in all cases to the Issuer s compliance with certain conditions set forth in the Transfer and Servicing Agreement, and summarized herein. See The Pre-Funding Period and The Portfolio Criteria. During the Pre-Funding Period, the Issuer may only purchase a Loan if the Servicer on behalf of the Issuer certifies to the Indenture Trustee that, after giving effect to the purchase of such Loan, (a) the Portfolio Acquisition and Disposition Requirements are satisfied, and (b) the Portfolio Criteria are satisfied; provided that if any component of the Portfolio Criteria is not satisfied prior to giving effect to the purchase of a Loan, the Portfolio Criteria shall be deemed satisfied with respect to such component if the component is maintained or improved by the purchase of such Loan. Within ten Business Days after the Effective Date, the Servicer will (a) engage a firm of nationally recognized independent certified public accountants (the Independent Accountants ) to determine the extent of compliance with the Portfolio Criteria of the Loans included in the Collateral as of the Effective Date, (b) deliver to the Indenture Trustee and the Rating Agencies an officer s certificate certifying (x) the extent of compliance with the Portfolio Criteria of the Loans included in the Collateral as of the Effective Date and (y) as to the Aggregate Outstanding -2-

16 Loan Balance and a comparison of the Aggregate Outstanding Loan Balance to the Expected Aggregate Outstanding Loan Balance, and appending thereto the Quarterly Report and (c) request that each Rating Agency confirm in writing, within 60 Business Days after the initial Payment Date (or such later date as each Rating Agency may determine) that such Rating Agency has not reduced or withdrawn any of the ratings assigned to the Offered Notes on the Closing Date (the Effective Date Ratings Confirmation ); provided that the Servicer shall not be required to request such confirmation from Moody s and Fitch if the Issuer is in compliance with the Portfolio Criteria as of the Effective Date. Within 60 Business Days after the initial Payment Date, the Servicer will deliver to the Indenture Trustee and the Rating Agencies a report of the Independent Accountants certifying the results of the determination referenced in clause (b) above. If (A) the Servicer fails to deliver the officer s certificate referenced in clause (b) above, (B) any Rating Agency notifies the Issuer or the Servicer on the Issuer s behalf within 60 Business Days after the initial Payment Date (or such later date as each Rating Agency may determine) that its rating on any class of Offered Notes will be reduced or withdrawn, or fails to respond to the request for an Effective Date Ratings Confirmation, or (C) the Servicer fails to deliver the report of the Independent Accountants referenced above (any of such events, an Effective Date Ratings Downgrade ), the Servicer on behalf of the Issuer shall present a Proposed Plan to the Rating Agencies to obtain an Effective Date Ratings Confirmation. If a Proposed Plan has not been presented and accepted by the Rating Agencies, resulting in an Effective Date Ratings Confirmation on or prior to the first Payment Date following the applicable Effective Date Ratings Downgrade (a Ratings Confirmation Failure ), such Payment Date and any succeeding Payment Date will be a Sequential Payment Date, until such date as each such Rating Agency has delivered an Effective Date Ratings Confirmation or until the Outstanding Principal Balance of each class of Notes is reduced to zero. See The Pre-Funding Period. Replenishment Period The Issuer will have the option to use Principal Collections to purchase Additional Loans during the Replenishment Period. The Replenishment Period will begin on the Effective Date and will terminate on the earlier to occur of (a) the Business Day preceding the Payment Date in February 2008 or (b) an Event of Default (the Replenishment Period ). During the Replenishment Period, Principal Collections received by the Issuer will be deposited in the Principal Collection Account and the Issuer expects to purchase Additional Loans with such Principal Collections. To the extent such Principal Collections are not reinvested within 90 days or otherwise applied as set forth under Special Redemption, such Principal Collections may be required to be paid to the Noteholders in a Special Redemption. In addition, if on any Payment Date during the Replenishment Period any Additional Principal Amount remains unpaid after applying Interest Collections on such Payment Date, Liquidation Proceeds (which shall, for such purpose, be allocated as if such Liquidation Proceeds were Interest Collections) shall be distributed up to the amount of any unpaid Additional Principal Amount prior to any Liquidation Proceeds being available to purchase Additional Loans; provided that following payment in full of any unpaid Additional Principal Amount on any Payment Date during the Replenishment Period, the Issuer shall be entitled to apply Liquidation Proceeds as either Interest Collections or Principal Collections, in its discretion. -3-

17 If terminated as described in clause (a) above, the Replenishment Period cannot be extended without the consent of the Servicer and the Required Holders and satisfaction of the Fitch Rating Condition and the S&P Rating Condition. If the Replenishment Period terminates as a result of the occurrence of an Event of Default, the Replenishment Period cannot be reinstated unless (a) the event giving rise to such termination has been cured or waived, (b) no other events that would terminate the Replenishment Period have occurred, (c) the Servicer and the Required Holders have consented to such reinstatement and (d) the Fitch Rating Condition and the S&P Rating Condition have been satisfied. The Servicer is required to give notice of any extension or reinstatement of the Replenishment Period to Moody s. An extension or reinstatement of the Replenishment Period could result in a Ratings Effect, as determined by each Rating Agency in its sole discretion. Portfolio Acquisition and Disposition Requirements Portfolio Criteria The Portfolio Acquisition and Disposition Requirements will apply to any acquisition (whether by purchase or substitution) or disposition of a Loan by the Issuer, and consist of the following conditions: (a) such Loan, if being acquired by the Issuer, is an Eligible Loan; (b) such Loan is being acquired or disposed of in accordance with the terms and conditions set forth in the Transfer and Servicing Agreement; (c) the acquisition or disposition of such Loan does not result in a reduction or withdrawal of the then-current rating issued by any Rating Agency on any class of Notes then outstanding; and (d) such Loan is not being acquired or disposed of for the primary purpose of recognizing gains or decreasing losses resulting from market value changes. The Portfolio Criteria must be satisfied after (a) any acquisition of Additional Loans during the Pre-Funding Period, (b) giving effect to any use of Principal Collections to acquire Additional Loans during the Replenishment Period and (c) giving effect to any substitution of a Substitute Loan at any time any Offered Notes are outstanding; provided that if any component thereof is not satisfied prior to giving effect to the purchase of an Additional Loan or substitution of a Substitute Loan, as the case may be, the Portfolio Criteria shall be deemed satisfied with respect to such component if the component is maintained or improved by the purchase of such Additional Loan or the substitution of such Substitute Loan, as applicable. Certain other criteria also apply to the inclusion of Substitute Loans in the Collateral. See Replenishment Period The Portfolio Criteria and The Transfer and Servicing Agreement Mandatory Repurchase and Optional Repurchase or Substitution. Following the Effective Date, the Servicer will report the extent of compliance with the Portfolio Criteria as of the most recent Determination Date in each Quarterly Report. The Portfolio Criteria are as follows: (a) the S&P CDO Monitor Test is satisfied; (b) the Moody s Weighted Average Rating Factor is less than or equal to the Maximum Moody s Weighted Average Rating Factor; (c) the Fitch Weighted Average Rating is less than or equal to 30%; (d) the Weighted Average Life Test is satisfied; -4-

18 (e) the Global Weighted Average Spread is greater than or equal to the Minimum Global Weighted Average Spread; (f) the Diversity Score is greater than or equal to the Minimum Diversity Score; (g) the Moody s Weighted Average Recovery Rate equals or exceeds 30%; (h) the S&P Weighted Average Recovery Rate equals or exceeds 40%; (i) not more than 5% of the Aggregate Outstanding Loan Balance may consist of Floating Prime Rate Loans; (j) not more than 20% of the Aggregate Outstanding Loan Balance may consist of Subordinated Loans; (k) not more than 75% of the Aggregate Outstanding Loan Balance may consist of Second Lien Loans and Subordinated Loans; (l) not more than 5% of the Aggregate Outstanding Loan Balance may consist of Loans that pay interest less frequently than quarterly but at least annually; (m) not more than 17% of the Aggregate Outstanding Loan Balance may consist of Loans (other than Defaulted Loans) with a Moody s Rating of Caa1 or lower; (n) not more than 15% of the Aggregate Outstanding Loan Balance may consist of Loans (other than Defaulted Loans) with an S&P Rating of CCC+ or lower; (o) not more than 20% of the Aggregate Outstanding Loan Balance may consist of Loans (other than Defaulted Loans) with a Fitch Rating of CCC+ or lower; (p) not more than 12% of the Aggregate Outstanding Loan Balance may consist of Loans to primary Obligors organized under the laws of, or all or substantially all of the assets of which are located in, any country other than the United States; provided that the full aforementioned 12% may consist of Loans to primary Obligors organized under the laws of, or all or substantially all of the assets of which are located in, Canada; (q) not more than 6% of the Aggregate Outstanding Loan Balance may consist of Loans to primary Obligors organized under the laws of, or all or substantially all of the assets of which are located in, Group I Countries, Group II Countries or Group III Countries; (r) not more than 3% of the Aggregate Outstanding Loan Balance may consist of Loans to a single primary Obligor organized under the laws of, or all or substantially all of the assets of which are located in, a Group II Country; (s) not more than 3% of the Aggregate Outstanding Loan Balance may consist of Loans to a single primary Obligor organized under the laws of, or all or substantially all of the assets of which are located in, a Group III Country; -5-

19 (t) not more than 10% of the Aggregate Outstanding Loan Balance may consist of Broadly Syndicated Loans; and (u) not more than 5% of the Aggregate Outstanding Loan Balance may consist of Loans to a single Obligor. Rating The Issuer will not issue the Offered Notes unless they receive ratings from the Rating Agencies not lower than those set forth below: Class of Notes S&P Moody s Fitch A AAA Aaa AAA B AA Aa2 AA C A A2 A D BBB Baa2 BBB A rating is not a recommendation to purchase, hold or sell Offered Notes since a rating does not address market price or suitability for a particular investor. A rating may be subject to revision or withdrawal at any time by the assigning Rating Agency. See Rating of the Notes. Denominations Listing Sequential Pool Condition Special Redemption Investors may purchase the Offered Notes in minimum denominations of $250,000, and in integral multiples of $1,000 in excess of the minimum denominations. Application will be made to admit the Offered Notes to trading on the Irish Stock Exchange. See Listing and General Information. There can be no assurance that any such admission can be obtained or maintained. No application has been made to list the Notes on any other securities market or exchange. As of the first Payment Date on or after the date on which the Aggregate Outstanding Loan Balance is less than 50% of the Expected Aggregate Outstanding Loan Balance (such condition, the Sequential Pool Condition ) and on each Payment Date thereafter, (a) amounts available for distributions to the Noteholders in payment of principal of the Notes will be made sequentially to the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes and the Class F Notes until the Outstanding Principal Balance of each class of Notes is reduced to zero, and (b) the Additional Principal Amount, if any, will be paid sequentially to the Holders of the Offered Notes in the manner described in clause (a) above. The Issuer will make principal payments on the Notes on any Payment Date during the Replenishment Period (a Special Redemption ) if the Servicer notifies the Indenture Trustee on or before the related Determination Date that: (a) any Principal Collections have remained on deposit in the Principal Collection Account for at least 90 days from the date of their deposit to that account (or, in the case of Principal Collections received during the Pre-Funding Period, for 90 days after the Effective Date); or (b) any Unused Proceeds remain on deposit in the Principal Collection Account on the Effective Date; and (c) the amounts described in the preceding clause (a) equal or exceed $1,000,000 in the aggregate, or the amounts described in the -6-

20 preceding clause (b) are greater than zero (such amounts, Special Redemption Amounts ). Certain Key Dates Cut-Off Date Closing Date Collection Period Payment Date Pro Rata Payment Date Sequential Payment Date Record Date Determination Date Measurement Date Interest Accrual Period The Cut-Off Date with respect to the Initial Loans will be the Closing Date. The Closing Date and each date after the Closing Date on which an Additional Loan or Substitute Loan is transferred to the Issuer is referred to as a Cut-Off Date. August 7, 2007 (the Closing Date ). For the first Payment Date, the period from and including the Closing Date to and including the last day of the calendar month prior to the month in which the first Payment Date occurs, and for each Payment Date thereafter, the period from and including the first day of the calendar month in which the prior Payment Date occurred to and including the last day of the calendar month prior to the month in which such Payment Date occurs (each, a Collection Period ). Distributions of interest and principal will be made quarterly on the 16 th day of each November, February, May and August, or, if that day is not a Business Day, the next Business Day, commencing on November 16, 2007 (the Payment Date ). Any Payment Date other than a Sequential Payment Date (each, a Pro Rata Payment Date ). Any Payment Date (a) following the occurrence of a Servicer Default, an Event of Default, a Downgrade Event, the existence of any Class D Accrued Payable, the Sequential Pool Condition or a Ratings Confirmation Failure, (b) on which the Interest Distributable Test is not satisfied or (c) on which the CCC Excess Condition is not satisfied (each, a Sequential Payment Date ); provided that in the case of a Sequential Payment Date arising due to a Ratings Confirmation Failure, only the first Payment Date following such Ratings Confirmation Failure and each subsequent Payment Date prior to the earlier of (i) the date on which the Effective Date Ratings Confirmation is delivered and (ii) the date on which the Outstanding Principal Balance of each Class of Offered Notes has been reduced to zero shall be a Sequential Payment Date. For book-entry Notes, the calendar day immediately preceding the current Payment Date; for definitive Notes, the last Business Day of the calendar month preceding the current Payment Date (as applicable, the Record Date ). With respect to any Payment Date, the third Business Day prior to such Payment Date (the Determination Date ). (a) The Closing Date; (b) during the Replenishment Period, each Cut-Off Date with respect to an Additional Loan or a Substitute Loan and each Determination Date; and (c) following the Replenishment Period, each Cut- Off Date with respect to any Substitute Loan and each Determination Date (each, a Measurement Date ). For the first Payment Date, the period commencing on the Closing Date to but excluding the first Payment Date, and for each Payment Date thereafter, -7-