…There continues to be support of the loan market from banks despite some pressures.

Sources: S&P LCD, TM Capital

…M&A market drives loan market and issuer friendly structures persist…

• Leveraged loan volume grew to $161.8 during Q1 primarily due to strong M&A and recap activity – Despite strong quarter-over-quarter growth, new-issue loan volume was below levels seen in Q1 2013• New-issue activity was down 14.4% overall and 15.1% versus Q1 2013• Refinancing volume fell in Q1 because there were fewer near-term maturities for issuers to push out

and the primary market remained issuer friendly during Q1• Clearing yields remained roughly in the same range as in Q1 2013, with BB loans slightly above the his-

torical tights of last April and single-B loans slightly below – However, in Q1 2013, clearing yields were significantly lower than the prior year, creating future repricing candidates• Repricing activity was $86.7 billion, comprising $17.9 billion of resyndicated loans and $68.8 billion of

spread amendments, up from $68.8 billion during Q4 2013, but below record highs during Q1 2013• Share of CLOs in the primary institutional loan market grew to a post-credit-crunch high of 58% due to

strength of muscular CLO formation, slowing retail inflows and regulatory pressures on banks

• M&A-related loan volume grew to a post-2007 high of $65.9 billion, including $53.5 billion of institu-tional tranches

– Platform acquisitions drove the growth, namely jumbo loans including Community Health Systems ($6.6 billion), Ziggo ($2.4 billion) and Global Payments ($2.3 billion)• LBO volume was not as strong as M&A volume, with $42 billion of new deal volume through Q1, down

21% from Q1 2013 – Headwinds in LBO market due to high asset prices, wide EBITDA margins and regulatory challenges• While LBO volume was down, private equity firms were not sitting idle, with $16.9 billion of dividend-

related recap loans being issued during Q1, the highest amount since Q2 2013• Corporate issuers were largely on the sidelines with regard to recaps during Q1• Second-lien loan volume soared to $11.3 billion, the second largest quarterly total ever• Covenant-lite structures accounted for 60% of new-issue flow

• Recently, demand from banks has been supported by ongoing low default rates, historically low fund-ing costs from the Fed, record deposit levels from investors and pressure to build net interest margin

• However, banks faced regulatory pressures during Q1 and there are fewer low-leverage situations for banks

– Share of leveraged loan volume with 6x or greater total leverage grew to 28% in Q1• Many expect U.S. Treasury rates to rise as the Federal Reserve winds down its QE program• Spreads could compress in response because price in the high-yield market is essentially topped out

Leveraged Lending Market ReportQuarterly Commentary

Q1 2014

Strong growth in leveraged loan volume during Q1…

Key Q1 2014 Themes

Sources: S&P LCD, TM Capital

• CDX, a credit default swap index, is down near levels seen in 2007

• Covenant-lite structures accounted for 60% of new-issue flow

• Default rate fell to 1.02% based on number of loans• Many believe Fed may wind down its QE

program• Fed pullback, in our view, is a sign that

a recession is unlikely to occur in the near-term

Loan Environment Remains Issuer Friendly

0%

10%

20%

30%

40%

50%

60%

70%

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14

New issues Outstandings

Percent of Institutional Loans that are Covenant-Lite

• Banks faced regulatory pressure regarding leverage• OCC and Federal Reserve declared that

if major banks funded new LBOs with greater than 6x EBITDA, they would have to consider them to be non-conforming loans and hold more cash against them

• Some banks are turning down over-levered deals• Regulators will allow a highly leveraged

deal to proceed as normal if a bank can show that either the company can pay off half its debt in seven years, or all of its first-lien loan in that period

• During Q1, banks played in higher qual-ity, better rated loans for the most part

• Fewer low leverage situations for banks

Banks Face Pressures

50%

60%

70%

80%

90%

100%

2005 2006 2007 2008 2009 2010 2011 2012 2013 YTD 2014

Institutional Share of Primary Market for Highly Leveraged Loans

• Robust M&A activity driven by several jumbo loans

• M&A and recap activity lifted leveraged loan volume

• Dividend-related recap loan volume was very strong

• LBO volume lagged

M&A Volume Surged

$32 $32 $31

$5 $1 $2

$5 $10 $10

$27 $26 $22

$30 $36

$29 $29 $27 $32

$46

$40

$47

$34

$54

$61 $66

$0

$10

$20

$30

$40

$50

$60

$70

Institutional Pro Rata

Quarterly M&A Leveraged Loan Volume ($ in billions)

U.S. Leveraged Finance Volume – Bank Debts and Bonds ($ in billions)

New-Issue First-Lien Spreads

Sources: S&P LCD, Barclays Capital, TM Capital

Stock Market Performance

$16 $19 $11 $10 $4 $12 $15 $16 $7 $13 $9 $16

$40 $49 $28 $32

$15

$53 $35 $27 $27

$41 $41 $46

$26

$43

$13 $21

$13

$48

$27 $20 $22

$25 $16

$34 $97

$82

$112 $52

$63

$76 $63

$56 $79

$66

$0

$30

$60

$90

$120

Apr '13 May '13 Jun '13 Jul '13 Aug '13 Sep '13 Oct '13 Nov '13 Dec '13 Jan '14 Feb '14 Mar '14

Total High-Yield Institutional

L+200

L+300

L+400

L+500

Apr '13 May '13 Jun '13 Jul '13 Aug '13 Sep '13 Oct '13 Nov '13 Dec '13 Jan '14 Feb '14 Mar '14

Pro Rata Institutional

-50%0%

50%100%150%200%

Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14S&P 500 Total Return NASDAQ Total Return Gold Total Return iShares Barclays Aggregate Bond Index Total Return

*Includes dividend / interest payments, when applicable

Mar Dec Mar Dec2013 2013 Jan Feb Mar 2013 2013 Jan Feb Mar

Indices Average New-Issue Pricing - B+/B10-Year Treasury 1.87% 3.04% 2.67% 2.66% 2.73% Total Spread 500.7 452.0 434.1 470.1 442.9DJIA 14,579 16,577 15,699 16,322 16,458 YTM 5.34% 4.85% 4.61% 4.98% 4.69%S&P 500 1,569 1,848 1,783 1,859 1,872NASDAQ 3,268 4,177 4,104 4,308 4,199 New-Issue Deal FlowiShares Barclays Aggregate Bond Index 110.5 106.0 107.9 108.2 107.8 Monthly Volume ($ in billions) 62.2 34.6 53.8 49.9 64.9

Monthly Number of Loans 122 84 143 124 155Total Return* YTD Volume ($ in billions) 188.7 606.7 53.8 103.6 168.510-Year Treasury 0.07% (1.88%) 3.77% 0.47% 0.07% YTD Number of Loans 360 1,318 142 267 422DJIA 3.60% 3.19% (5.19%) 4.34% 0.93%S&P 500 3.51% 2.52% (3.46%) 4.57% 0.84% Lagging 12-Month Default RatesNASDAQ 3.17% 2.97% (1.69%) 5.15% (2.45%) By Number 1.83% 1.61% 1.17% 1.16% 1.02%iShares Barclays Aggregate Bond Index 0.06% (0.56%) 1.54% 0.38% (0.15%) By Principal Amount 2.21% 2.11% 1.88% 1.86% 1.21%

Commodities Average Credit Statistics on Highly Leveraged LoansCrude Oil $97.23 $98.42 $97.49 $102.59 $101.58 Lev Thru First-Lien Debt 3.8x 3.3x 3.9x 3.8x 3.9xNatural Gas $4.02 $4.19 $4.94 $4.61 $4.37 Lev Thru Senior Debt 4.7x 4.7x 5.0x 4.8x 5.0xGold $1,598 $1,202 $1,240 $1,322 $1,284 Total Debt / EBITDA 4.9x 4.8x 5.0x 4.9x 5.0x

Currencies Institutional First-Lien StatisticsEUR in USD $1.28 $1.38 $1.35 $1.38 $1.38 % of Tranches with Floors 95.2% 100.0% 99.0% 98.2% 98.0%USD in JPY $94.20 $105.15 $102.25 $102.09 $102.95 Libor Floor Level (bps) 110 100 93 99 97USD in CNY $6.22 $6.05 $6.06 $6.15 $6.22 % Flex Down 30% 31% 38% 21% 18%GBP in USD $1.52 $1.66 $1.65 $1.68 $1.67 % Flex Up 5% 11% 2% 8% 9%

*Includes dividend / interest payments, when applicable

2014 2014

Leveraged Lending Market ReportMarch 2014

Key Market Indicators

About TM Capital

TM Capital’s Leveraged Finance Contacts

TM Capital Corp. is a partner-owned investment banking firm based in New York, Boston and Atlanta, which has completed over 250 transactions with a combined value in excess of $14 billion. Since 1989, we have advised clients navigating a full range of critical transactions, including complex mergers, acquisitions, debt and equity financings, minority and majority recapitalizations, restructurings, and advisory services including takeover defense, fairness and solvency opinions, valuations, as well as litigation support. We have built deep industry expertise in key sectors and our team regularly publishes research highlighting current and emerging trends in targeted industries and markets. TM Capital is a member firm of M&A International Inc., the world’s leading alliance of mid-market investment banks with over 600 M&A professionals in 39 countries. Members have closed over 1,300 transactions totaling more than $75 billion in value over the past five years. For more information, visit www.tmcapital.com.

Jerome Romano Managing Director

jromano@tmcapital.com 617-259-2206

Robert Grien Managing Director

rgrien@tmcapital.com 212-809-1434

Vidur Kapur Analyst

vkapur@tmcapital.com 212-809-1422

New-Issue Loan Volume by Industry – 30 Days Ended 4/3/2014

Par Amount of Outstanding Loans by Industry – 3/28/14

Recent TM Capital Financing Experience

Average Debt Multiples of Highly Leveraged Loans

3.6x 3.3x 3.8x 3.4x 3.3x 3.7x 3.9x 3.6x 3.3x 3.9x 3.8x 3.9x

0.2x 0.6x 0.7x

0.6x 0.5x 0.5x 0.3x 0.7x

0.5x 0.6x 0.6x 0.7x 0.3x 0.3x

0.3x

0.1x 0.3x 0.6x 0.6x 0.4x

0.3x

0.9x 0.5x 0.4x 4.3x 4.2x 4.6x

4.3x 4.4x

4.9x 4.6x 4.7x 4.8x

5.0x 4.9x 5.0x

0.0x

2.0x

4.0x

6.0x

Apr '13 May '13 Jun '13 Jul '13 Aug '13 Sep '13 Oct '13 Nov '13 Dec '13 Jan '14 Feb '14 Mar '14

Sub Debt/EBITDA Other Sr Debt/EBITDA SLD/EBITDA FLD/EBITDA

Total New-Issue Volume: $65.0 billion (30 Days Ended 4/3/2014) Total Par Amount of Outstanding Loans: $712.0 billion (3/28/2014)

Sources: S&P LCD, TM Capital

Aerospace and Defense 2.4%

Automotive 3.3%

Broadcast radio and television

3.4% Building and Development

1.7% Business equip.

and services 7.9% Cable television

2.7%

Chemical/Plastics 3.8%

Containers and glass products

1.4% Electronics/Electric

6.7%

Financial Intermediaries 4.4%

Food products 3.6%

Healthcare 8.6%

Hotels/motels/inns and casinos

5.1%

Leisure 3.3%

Oil and gas 3.9%

Publishing 4.0%

Retailers (other than food/drug)

5.0%

Telcommunications 4.7%

Utilities 5.8%

Other 18.3% Computers &

Electronics 26.1%

Services/ Retail 25.3% Industrial

17.4%

Healthcare 8.1%

Building Materials 4.7%

Gaming & Hotel 3.8%

Entertainment & Leisure

3.6%

Media 3.6%

Oil & Gas 1.3%

Other 6.1%

www.tmcapital.com

New York641 Lexington Avenue30th FloorNew York, NY 10022Tel: 212.809.1360

Boston200 Clarendon Street25th FloorBoston, MA 02116Tel: 617.259.2200

Atlanta15 Piedmont Center NE Suite 1010Atlanta, GA 30305 Tel: 404.995.6230