An Update:  Letter to Focused Credit Fund Shareholders

March 31, 2017  |  DOWNLOAD PDF OF LETTER AND Q1 2017 REPORT

Dear Fellow Shareholders,

Today, we are pleased to announce that we have entered into an agreement to sell investments from the Focused Credit Fund (the “Fund” or “FCF”) representing approximately one third of the Fund’s remaining value and approximately half of the value of its remaining securities investments (ex cash). The Purchaser of these assets is an investment vehicle managed by ICG Strategic Secondaries Advisors LLC (“ICG”). Including the value of this transaction, the Fund has now liquidated approximately $575 million of investments, representing 75% of the NAV of the Fund measured as of the approval of the Plan of Liquidation (December 9, 2015). In addition, by adding the Fund’s previous liquidating distributions to today’s NAV of $3.95, the total realized and present value per share of $6.52 compares favorably to the Fund’s NAV of $6.46 as of the adoption of the Plan of Liquidation.

Management believes that this transaction is beneficial to shareholders for a number of reasons, including:

  1. selling securities in a block transaction at a reasonable price provides significant liquidity which can be distributed to shareholders in the near term;
  2. several of the portfolio companies sold may require additional capital in the near future, which the Fund is not in a position to provide. This would likely result in the dilution of the value of the Fund’s investments in such portfolio companies; and
  3. the transaction will help the Fund in its efforts to extend its status as a tax pass-through vehicle (thereby avoiding taxation at the fund level) by helping the Fund to meet the Subchapter M asset diversification requirements of the Internal Revenue Code. While this transaction will help the Fund in its efforts to continue to meet these Subchapter M requirements, as the Fund continues to liquidate and make cash distributions to shareholders, the remaining portfolio will be significantly more concentrated, and the Fund may be unable to comply with those diversification requirements in the future. Accordingly, the timing and size of future cash distributions may be affected by our efforts to reduce shareholder tax expenses by maintaining the Fund’s Subchapter M status.

In any event, however, we anticipate making the next liquidating distribution to shareholders in the second quarter of 2017. The details of this distribution will be available soon, and we have scheduled a shareholder information call for 4:00 P.M. on April 19, 2017, when we will have more information about the plans for future distributions and our continuing efforts to liquidate the remaining positions in the Fund. Please see dedicated website – – for more details.

In addition, we are also pleased to inform our shareholders that there is an agreement in principle to resolve all civil litigation matters involving the Fund. As you may recall, following the suspension of redemptions in FCF, several class action and derivative lawsuits were commenced against the Fund’s Adviser, the Fund itself, the Trustees of the Fund and various individual officers of the Adviser. All of the Defendants in those actions have reached agreements with various Plaintiffs’ representatives that would resolve all civil litigation matters and the claims presented therein, subject to Court approval of the terms. These terms have now been presented to the relevant Courts and we look forward to their consideration for approval.

Additional information concerning FCF and its liquidating distributions (including IRS Forms 8937 – Report of Organizational Actions Affecting Basis of Securities) can also be found on FCF’s website. We urge you to consult your tax advisor regarding the proper tax treatment of these distributions. In addition you may contact your client service representative at 212-906-1160.

We appreciate your continued support and will continue to provide updates on the liquidation process.


Third Avenue Management LLC