Clairvest Reports Fiscal 2010 First Quarter Results

TORONTO, ONTARIO--(Marketwire - Aug. 13, 2009) - Clairvest Group Inc. (TSX:CVG) today reported results for the quarter ended June 30, 2009. (All figures are in Canadian dollars unless otherwise stated).

Clairvest's book value per share for the quarter decreased slightly to $17.83 per share, compared with $17.89 per share at March 31, 2009.

As previously announced, Shepell-fgi sold substantially all of its assets to an unrelated third party and Clairvest received cash proceeds of $26.1 million at closing, and non-interest bearing promissory notes secured by the acquirer for an additional $15.3 million, payable through to July 2010, $9.7 of which had been repaid during fiscal 2009 at a slight discount. During the first quarter of fiscal 2010, a further $4.4 million of the promissory notes was repaid. Clairvest continues to hold $1.1 million of promissory notes which is subject to satisfaction of certain items in the purchase documentation, and which may be received in the form of the acquirer's equity at the option of the acquirer.

Subsequent to quarter end, Clairvest announced that it completed the first closing of its new private equity investment pool which is comprised of a co-investment commitment from Clairvest and a new limited partnership, Clairvest Equity Partners IV Limited Partnership ("CEP IV"). The amount of the first closing was $200 million, half of which was committed by Clairvest. Broad marketing of CEP IV has commenced with subscriptions limited by a cap of $500 million on the private equity investment pool. Clairvest has the right to increase its commitment to $125 million prior to the end of the fundraising period.

"Even though we are in difficult economic times, challenges often lead to opportunities and Clairvest continues to be in a strong capital position to benefit from this challenging and volatile environment," said Ken Rotman, Co-Chief Executive Officer and Managing Director of Clairvest Group Inc. "We look forward to capitalizing on many new opportunities being presented to us for the benefit of our shareholders and our limited partners including CEP IV, our new limited partnership."

Subsequent to quarter end, Clairvest paid an annual dividend of $0.10 per share. The dividend was paid on July 27, 2009 to common shareholders of record as of July 10, 2009. This is an eligible dividend for Canadian income tax purposes.

About Clairvest

Clairvest Group Inc. is a Canadian merchant bank that invests its own capital, and that of third parties through the Clairvest Equity Partners limited partnerships, in businesses that have the potential to generate superior returns. In addition to providing financing, Clairvest contributes strategic expertise and execution ability to support the growth and development of its investee partners. Clairvest realizes value through investment returns and the eventual disposition of its investments.

Forward-looking Statements

This news release contains forward-looking statements with respect to Clairvest Group Inc., its subsidiaries and their investments. These statements are based on current expectations and are subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Clairvest, its subsidiaries and their investments to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include general and economic business conditions, regulatory risks and the possibility that Clairvest may not be successful in obtaining any additional capital commitments for CEP IV. Clairvest is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.

www.clairvest.com

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CLAIRVEST GROUP INC. August 13, 2009
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE QUARTER ENDED JUNE 30, 2009

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The Management's Discussion and Analysis ("MD&A") analyzes significant changes in the unaudited consolidated financial statements of Clairvest Group Inc. ("Clairvest"). It should be read in conjunction with the accompanying unaudited consolidated financial statements and notes of Clairvest for the quarter ended June 30, 2009 and the attached news release.

All amounts are in Canadian dollars unless otherwise indicated.

CRITICAL ACCOUNTING ESTIMATES

Clairvest prepares its financial statements in accordance with Canadian generally accepted accounting principles ("GAAP"). In accordance with Accounting Guideline 18, "Investment Companies" ("AcG-18"), the Company designates its temporary investments and corporate investments as held-for-trading and carries them at fair value. Clairvest has also designated its receivables and payables as held-for-trading in accordance with Canadian Institute of Chartered Accountants Handbook ("CICA Handbook") Section 3855. Accordingly, each of Clairvest's financial assets and liabilities is fair valued on each consolidated balance sheet date.

When a financial asset or liability is initially recognized, its fair value is generally the value of consideration paid or received. Subsequent to initial recognition, the fair value of an investment quoted on an active market is generally the bid price on the principal exchange the investment is traded on. Investments that are escrowed or otherwise restricted on sale or transfer are recorded at fair values which take into account the escrow terms or other restrictions. In determining the fair value for such investments, the Company considers the nature and length of the restriction, business risk of the investee company, its stage of development, market potential, relative trading volume and price volatility, liquidity and collateral of the security and the size of Clairvest's ownership block as well as any other factors that may be relevant to the ongoing and realizable value of the investments. The amounts at which Clairvest's publicly-traded investments could be disposed of may differ from this fair value and the differences could be material. Differences could arise as the value at which significant ownership positions are sold is often different than the quoted market price due to a variety of factors such as premiums paid for large blocks or discounts due to illiquidity. Estimated costs of disposition are not included in the fair value determination.

In the absence of an active market, the fair values are determined by management using the appropriate valuation methodologies after considering the history and nature of the business; operating results and financial conditions; the general economic, industry and market conditions; capital market and transaction market conditions; contractual rights relating to the investment; public market comparables; private market transactions multiples and, where applicable, other pertinent considerations. The process of valuing investments for which no active market exists is inevitably based on inherent uncertainties and the resulting values may differ from values that would have been used had an active market existed. The amounts at which Clairvest's privately-held investments could be disposed of may differ from the fair value assigned and the differences could be material. Estimated costs of disposition are not included in the fair value determination.

In determining the fair value of public company warrants, the underlying security for which is traded on a recognized securities exchange, and if there are sufficient and reliable observable market inputs, including exercise price and term of the warrants, market interest rate, and current market price, expected dividends and volatility of the underlying security, a valuation technique is used. If market inputs are insufficient or unreliable, the warrants are valued at intrinsic value, which is equal to the higher of the closing bid price of the underlying security, less the exercise price of the warrant, or nil. For private company warrants, the underlying security for which is not traded on a recognized securities exchange, the fair value is determined consistently with other investments which do not have an active market as described above.

A change to an estimate with respect to Clairvest's corporate investments would impact corporate investments and unrealized gains/losses on corporate investments.

The process of determining future income tax assets and liabilities requires management to exercise judgment while considering the anticipated timing of disposal of corporate investments, and proceeds thereon, tax planning strategies, changes in tax laws and rates, and loss carry-forwards. Future income tax assets are only recognized to the extent that in the opinion of management, it is more likely than not that the future income tax asset will be realized. A change to an accounting estimate with respect to future income taxes would impact future tax asset or liability and income tax expense.

OPERATING RESULTS

Net income for the first quarter of fiscal 2010 was $0.6 million compared with net income of $20.3 million for the first quarter of fiscal 2009. The net income for the first quarter of fiscal 2010 is comprised primarily of $0.9 million of net corporate investment losses, $1.3 million of net operating income and $0.2 million of income tax recoveries. This compares with net corporate investment gains of $25.8 million, $1.7 million of net operating losses, and 3.8 million of income tax expense for the first quarter of fiscal 2009.

The net corporate investment losses of $0.9 million for the first quarter of fiscal 2010 comprised of $0.2 million of net realized gains on corporate investments and $1.1 million of net unrealized losses on corporate investments.

Net realized gains on corporate investments for the first quarter of fiscal 2010 resulted from the repayment of a promissory note received on the sale of Shepell-fgi, which was previously carried at a discount.

Net unrealized losses on corporate investments for the first quarter of 2010 resulted primarily from unrealized loss on Lyophilization Services of New England Inc. ("LSNE") and N-Brook Mortgage LP ("N-Brook") offset by an unrealized gain on Landauer Metropolitan Inc. ("Landauer"). Refer to Note 6 to the interim financial statements for detailed disclosure.

Distributions and interest income for the quarter was $6.4 million, compared with $3.2 million for the same quarter last year. Distributions and interest income for the first quarter of fiscal 2010 included general partner distributions of $3.4 million from Clairvest Equity Partners Limited Partnership ("CEP"), net priority distributions of $1.1 million from Clairvest Equity Partners III Limited Partnership ("CEP III"), interest on cash, cash equivalents and temporary investments of $0.8 million and $0.7 million of unrealized gains on temporary investments. Distributions and interest income for the first quarter of fiscal 2009 included interest on cash, cash equivalents and temporary investments of $1.4 million, net priority distributions of $1.0 million from CEP III and distributions totaling $0.4 million from Wellington Financial Fund II and Wellington Financial Fund III ("Wellington Funds").

Clairvest earned $0.3 million in net management fees during the quarter for its services in the administration of CEP's portfolio and $0.2 million in advisory and other fees from its corporate investments. The CEP management fee is reduced to the extent of 75% of fees earned by Clairvest from joint Clairvest/CEP corporate investments.

Administration and other expenses for the quarter were $5.9 million, compared with $5.6 million for the same quarter last year. Included in administrative and other expenses for the first quarter of fiscal 2010 were performance based compensation expense totaling $3.5 million. Included in administrative and other expenses for the first quarter of fiscal 2009 were $2.9 million in performance based compensation expense.

Finance and foreign exchange gains of $0.3 million for the first quarter of fiscal 2010 represented foreign exchange gain of $0.4 million net of $0.1 million in interest expense and bank charges. The foreign exchange gains were driven by gains realized on U.S. dollar foreign exchange forward contracts entered into in anticipation of future investment gains. Finance and foreign exchange expense of $0.2 million for the first quarter of fiscal 2009 represented interest expense and bank charges.

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SUMMARY OF QUARTERLY RESULTS
----------------------------

Net income
(loss) per
Quarterly results Net income common share
($000's except per Gross Net income (loss) per fully diluted(i)
share information) revenue $ (loss) $ common share $ $
----------------------------------------------------------------------------
June 30, 2009 6,003 662 0.04 0.04
March 31, 2009 8,643 3,822 0.24 0.23
December 31, 2008 1,658 (606) (0.04) (0.04)
September 30, 2008 5,406 2,558 0.16 0.16
----------------------------------------------------------------------------
June 30, 2008 29,873 20,314 1.27 1.23
March 31, 2008 8,469 5,216 0.33 0.32
December 31, 2007 19,708 6,707 0.42 0.41
September 30, 2007 12,403 6,562 0.41 0.40
(i) The sum of reported quarterly net income (loss) per common share may not
equal to the full year reported net income (loss) per common share due to
rounding and on the fully diluted, the anti-dilutive effect of any quarters
where the Company reported a net loss.

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Significant variations arise in the quarterly results due to unrealized gains/losses on corporate investments which result from Clairvest re-valuing its corporate investments on a quarterly basis. Corporate investments are re-valued when conditions warrant an adjustment to the fair value of the corporate investment.

FINANCIAL POSITION AND LIQUIDITY

Clairvest has sufficient capital to support its current and anticipated new investments. In addition to cash, cash equivalents and temporary investments of $179.1 million at June 30, 2009, Clairvest has a $20.0 million credit facility with a Canadian chartered bank, all of which was available at June 30, 2009. Cash equivalents consist of term deposits and fixed income mutual funds which have maturities less than 90 days from date of purchase. Temporary investments consist of guaranteed income contracts and corporate bonds rated not below A- and preferred shares rated not below P-3 which have maturities greater than 90 days from the date of purchase. The maturity dates of these temporary investments range from July 2009 through to April 2012.

During the fourth quarter of fiscal 2009, Clairvest filed a normal course issuer bid enabling it to purchase up to 797,678 common shares during the 12-month period ending March 5, 2010. No shares were purchased under the bid during the quarter. As at June 30, 2009, Clairvest had repurchased a total of 5,709,578 common and non-voting shares over the last six years.

15,953,566 common shares were outstanding at June 30, 2009. During the first quarter of fiscal 2010, Clairvest declared an annual dividend of $1.6 million, or $0.10 per share.

Clairvest has corporate investments with a carrying value of $96.9 million. Changes in the carrying value of Clairvest's corporate investments during the first quarter of fiscal 2010 are primarily a result of investment realizations, net unrealized losses on corporate investments and follow-on investments made. Clairvest's corporate investments decreased $6.0 million during the first quarter of fiscal 2010. Significant events relating to Clairvest's corporate investments, other than with respect to net unrealized losses, are described below.

Casino New Brunswick

During the first quarter of fiscal 2010, Clairvest funded an additional $1.4 million of its $8.0 million commitment to invest in Casino New Brunswick in the form of debentures, which are non-interest bearing until Casino New Brunswick opens and bear interest at a rate of 8% per annum thereafter. At June 30, 2009, the total amount funded was $3.7 million.

Landauer

During the first quarter of fiscal 2010, Clairvest acquired an additional 252,087 common shares of Landauer for $0.5 million.

Shepell-fgi

During fiscal 2009, Shepell-fgi sold substantially all of its assets to an unrelated third party. Clairvest received cash proceeds of $26.1 million at closing, and non-interest bearing promissory notes secured by the acquirer for an additional $15.3 million, payable through to July 2010, $9.7 of which had been repaid during fiscal 2009 at a slight discount. A further $4.4 million of the promissory notes were repaid by the acquirer during the first quarter of fiscal 2010. Further repayment of the remaining $1.1 million promissory notes is subject to satisfaction of certain items in the purchase documentation, all of which may be received in the form of the acquirer's equity at the option of the acquirer. The remaining promissory notes are carried at a fair value of $0.9 million, which was determined by discounting the face value of the promissory notes at 20% per annum from their maturity dates.

TRANSACTIONS WITH RELATED PARTIES

A wholly owned subsidiary of Clairvest ("GP I") has entered into a Management Agreement with the General Partner of CEP, appointing GP I as the Manager of CEP. The General Partner is another wholly owned subsidiary of Clairvest. The Management Agreement provides that a management fee be paid to GP I as compensation for its services in the administration of the portfolio of CEP. The fee was calculated annually as 2% of committed capital until the fifth anniversary of the last closing of CEP (August 21, 2006), and thereafter at 2% of contributed capital less distributions on account of capital and any write-downs of capital invested. The management fee is reduced to the extent of 75% of fees earned by Clairvest or GP I from corporate investments of CEP. During the first quarter of fiscal 2010, GP I earned net management fees of $0.3 million as compensation for its services in the administration of the portfolio of CEP. As per the Management Agreement, fees of $0.1 million from corporate investments of CEP were netted against the management fees.

The General Partner of CEP is entitled to participate in distributions made by CEP equal to 20% of net gains of CEP. These distributions to the General Partner will be determined based on the overall performance of CEP and no such distributions are permitted until CEP's limited partners have received amounts equal to the sum of their contributed capital and a return equal to 6% per annum compounded annually. The distributions received by the General Partner of CEP will be allocated 50% to each of its limited partners one of which is another wholly owned subsidiary of Clairvest ("Clairvest Subsidiary"), and the other of which is another limited partnership (the "Participation Partnership"). The limited partners of the Participation Partnership are principals and employees of Clairvest and GP I (the "Participation Investors"). The Participation Investors have purchased, at fair market value, units of the Participation Partnership. From time to time, additional units in the Participation Partnership may be purchased by the Participation Investors. During the quarter, CEP declared $6.8 million of distributions to the General Partner, 50% of which, or $3.4 million, belongs to Clairvest Subsidiary and is included in income and in accounts receivable and other assets. The amount was received by Clairvest Subsidiary subsequent to quarter end. At June 30, 2009, CEP has declared distributions to the General Partner totaling $9.7 million, 50% of which, or $4.9 million, belongs to Clairvest Subsidiary. If CEP were to sell its corporate investments at their current fair values, the General Partner would receive up to a further $11.9 million of distributions, 50% of which, or $6.0 million, would be payable to Clairvest Subsidiary.

Clairvest is also the parent company of the two General Partners of CEP III (GP I and "GP II"). GP I is entitled to a 2% priority distribution from CEP III. The 2% priority distribution began in August 2006, the month in which CEP III made its first investment. The priority distribution is reduced to the extent of 75% of any fees earned by GP I from corporate investments of CEP III. During the first quarter of fiscal 2010, CEP III declared to GP I net priority distributions of $1.0 million. As per the Limited Partnership Agreement, fees of $0.1 million from corporate investments of CEP III were netted against the priority distributions. GP I is also entitled to distributions made by CEP III equal to 2% of net gains of CEP III determined as described below. To date, CEP III has not made any distributions to GP I other than priority distributions.

GP II, a limited partnership, the General Partner of which is a wholly owned subsidiary of Clairvest, is entitled to participate in distributions made by CEP III equal to 18% of net gains of CEP III. The distributions to GP II, and GP I as noted above, will be determined based on the overall performance of CEP III. No such distributions are permitted until CEP III's limited partners have received amounts equal to the sum of their contributed capital and a return equal to 8% per annum compounded annually. To date, CEP III has not made any distributions to GP II. If CEP III were to sell its corporate investments at their current fair values, GP I and GP II would not receive any distributions other than the priority distributions described above. Any distributions received by GP II will be allocated to each of its two limited partners, one of which is a wholly owned subsidiary of Clairvest which will receive 44.4% of such distributions, and the other of which is another limited partnership (the "Participation III Partnership") which will receive 55.6% of such distributions. The limited partners of the Participation III Partnership are principals and employees of Clairvest and GP I (the "Participation III Investors"). The Participation III Investors purchased, at fair market value, units of the Participation III Partnership. From time to time, additional units in the Participation III Partnership may be purchased by Participation III Investors.

GP II is also entitled to a carried interest in respect of CEP III Co-Investment Limited Partnership ("Clairvest LP") of 10% to June 23, 2008 and 8.25% thereafter. Clairvest LP was established in 2006 as the investment vehicle through which Clairvest would co-invest alongside CEP III. Distributions received by GP II from Clairvest LP will be allocated 100% to the Participation III Partnership.

At June 30, 2009 Clairvest had loans receivable from certain officers of Clairvest and GP I (the "Officers") totaling $0.7 million. The loans are interest bearing, have full recourse to the individual and are collateralized by the common shares of Clairvest purchased by the Officers with a market value of $0.6 million. At June 30, 2009, Clairvest also had loans receivable from certain officers of a company affiliated with Clairvest totaling $0.6 million. The loans are interest bearing and have full recourse to the individual.

Included in accounts receivable and other assets are receivables of $2.5 million from Clairvest's investee companies, $5.8 million from CEP and $2.1 million from CEP III. Included in accounts payable and accrued liabilities is $0.3 million owing to Clairvest's investee companies.

Loans totaling $1.5 million, bearing interest at the prime rate made by the Company to CEP during the first quarter of fiscal 2010 were repaid in full during the quarter.

Loans totaling $4.3 million, bearing interest at the prime rate, were made by the Company to CEP III during the first quarter of fiscal 2010, and $4.2 million of loans were repaid by CEP III during the quarter. The total amount of loans outstanding to CEP III at June 30, 2009 was $8.6 million, all of which was repaid subsequent to quarter end. Interest of $9,000 was earned from loans to CEP III during the first quarter of fiscal 2010.

During the first quarter of fiscal 2010, Clairvest earned $0.4 million in distributions and interest income, and $0.2 million in fee income from its investee companies.

OFF-BALANCE SHEET ARRANGEMENTS

Clairvest has committed to co-invest alongside CEP in all investments undertaken by CEP. Clairvest's total co-investment commitment is $54.7 million, $3.5 million of which remains unfunded at June 30, 2009. Clairvest may only sell all or a portion of a corporate investment that is a joint investment with CEP if the manager of CEP, a wholly owned subsidiary of Clairvest, concurrently sells a proportionate number of securities of that corporate investment held by CEP.

Clairvest has also committed to co-invest alongside CEP III in all investments undertaken by CEP III. Clairvest's total co-investment commitment is $75.0 million, $38.0 million of which remains unfunded at June 30, 2009. Clairvest may only sell all or a portion of a corporate investment that is a joint investment with CEP III if the manager of CEP III, a wholly owned subsidiary of Clairvest, concurrently sells a proportionate number of securities of that corporate investment held by CEP III. Included in the commitment to co-invest with CEP III is an $8.0 million commitment to Casino New Brunswick, $3.7 million of which has been funded at June 30, 2009.

Clairvest has committed $25.0 million to Wellington Fund III, $12.5 million of which has been funded to June 30, 2009. As a result of the closing of Wellington Fund III, any unfunded capital commitments to Wellington Fund II were extinguished. At June 30, 2009, net funds invested in Wellington Fund II were $0.5 million. At June 30, 2009, Clairvest has earned profit distributions totaling $1.9 million through its ownership interest in the general partners of the Wellington Funds. Clairvest has guaranteed, up to the amounts received from the respective general partners, the clawback provisions entered into by the general partners in the event the limited partners of the Wellington Funds do not meet their preferred rate of return as specified in the respective Limited Partnership Agreement.

Clairvest has guaranteed up to $3.0 million of CEP's obligations to a Schedule 1 Canadian chartered bank under CEP's foreign exchange forward contracts with the bank.

Clairvest and CEP III entered into a US$13.0 million credit facility agreement with a Schedule 1 Canadian chartered Bank to allow Clairvest and CEP III to enter into foreign exchange contracts. Clairvest and CEP III are jointly and severally liable on this credit facility.

Under Clairvest's Management Incentive Bonus Program (the "Program"), a bonus of 10% of after-tax cash income and realizations on certain Clairvest's corporate investments would be paid to management as a bonus annually as applicable. Amounts are accrued under this Program to the extent that the cash income and investment realizations have occurred and the bonus has become payable. At June 30, 2009, $3.7 million has been accrued under the Program, $2.9 million of which pertains to fiscal 2009 and was paid subsequent to quarter end. If Clairvest were to sell its corporate investments at their current fair values, an additional bonus of $0.2 million would be owing to management under this Program. As no such realizations have occurred and the terms of the bonus plan with respect to these corporate investments have not yet been fulfilled, the additional $0.2 million has not been accrued at June 30, 2009. The Program does not apply to the income generated from investments made by Clairvest through Clairvest LP.

Clairvest enters into foreign exchange forward contracts to manage the risks arising from fluctuations in exchange rates on its foreign denominated investments. At June 30, 2009, Clairvest had entered into forward contracts to sell US$36.5 million at rates of Canadian $1.1487 to $1.2555 per U.S. dollar through April 2010. The fair value of these US dollar contracts at June 30, 2009 is a gain of $1.1 million. These contracts have been recognized on the consolidated balance sheet as derivative instruments. US$7.7 million of these forward contracts are in anticipation of future growth in value of the Company's U.S. denominated investments. The fair value of these contracts at June 30, 2009 is a gain of $30,000.

Clairvest has also entered into forward contracts to sell Chilean UF0.7 million at rates of Canadian $41.7943 to $43.9144 per UF through January 2010. The fair value of these Chilean UF contracts at June 30, 2009 is a loss of $2.7 million. These contracts have been recognized on the consolidated balance sheet as derivative instruments.

During fiscal 2006, Clairvest and a wholly-owned subsidiary sold their interests in Signature Security Group Holdings Pty Limited ("Signature") and a related company as part of a sale of 100% of Signature and the related company. As part of the transaction, the subsidiary has indemnified the purchaser for various potential claims which will reduce over time.

Clairvest, together with CEP, has guaranteed to fund any operating deficiencies of the Tsuu T'ina charitable casino for a specified period of time. The amount of the guarantee is allocated 75% to CEP, to the extent that the amounts paid thereunder are within the limits of the CEP Limited Partnership Agreement, with the remainder being allocated to Clairvest. Any amounts paid under the guarantee will result in additional debentures being granted to Clairvest and CEP, allocated on the same basis as the participation between Clairvest and CEP in the guarantee funding. As at June 30, 2009, no amounts subject to this guarantee have been funded.

Clairvest, together with CEP III, has guaranteed to fund 50% of any operating deficiencies upon the opening of Casino del Sol for a specified period of time. Amounts paid under the guarantee will be allocated to CEP III to the extent that the amounts paid thereunder are within the limits of the CEP III Limited Partnership Agreement, with the remainder being allocated to Clairvest. Any amounts paid under the guarantee will result in additional equity being granted to Clairvest and CEP III, allocated on the same basis as the participation between Clairvest and CEP III in the guarantee funding. As at June 30, 2009, no amounts subject to this guarantee have been funded.

As part of the holding structure of Casino del Sol, Clairvest, together with CEP III, borrowed $32.9 million through an acquisition entity from an unrelated financial institution, while another acquisition entity deposited $32.9 million with the financial institution as security for the loan. Clairvest intends to settle the loan, the deposit and related interest accruals simultaneously upon the divestiture of the investment in Casino del Sol, and as a result, the deposit and the loan, and the interest revenue and expense have been presented on a net basis. Clairvest's ownership of both acquisition vehicles was 23.8% at June 30, 2009, with CEP III owning 71.5% and the remaining owned by unrelated third party investors.

As part of the holding structure of Latin Gaming Osorno S.A. ("Casino Osorno"), Clairvest borrowed $14.7 million through an acquisition entity from an unrelated financial institution, while another acquisition entity deposited $14.7 million with the financial institution as security for the loan. Clairvest intends to settle the loan, the deposit and related interest accruals simultaneously upon the divestiture of the investment in Casino Osorno, and as a result, the deposit and the loan, and the interest revenue and expense have been presented on a net basis. Clairvest's ownership of both acquisition vehicles was 100% at June 30, 2009.

As part of the holding structure of Latin Gaming Chile S.A. ("Latin Gaming Chile"), Clairvest borrowed $4.9 million through an acquisition entity from an unrelated financial institution, while another acquisition entity deposited $4.9 million with the financial institution as security for the loan. Clairvest intends to settle the loan, the deposit and