Keydata Update

21st July 2010


Keydata claims relating to investments in Lifemark SA

This update is for customers of Keydata who hold bonds backed by Lifemark SA, which is a company established in Luxembourg whose bonds were distributed in the UK by Keydata.

The Keydata investments backed by Lifemark SA include investments with names such as the Defined Income Plan, Secure Income Plan and Income Plan. We have previously referred to the Lifemark SA funds as Category Two, Category Three, and Category Five funds. You will find the full list of funds included in Categories Two, Three and Five on PricewaterhouseCoopers’ Keydata website.

As investors may know, on 1 February this year, Luxembourg's financial services regulator, the Commission de Surveillance du Secteur Financier (CSSF), suspended the securities issued by Lifemark SA from trading on the Luxembourg Stock Exchange. The CSSF announced at the same time that it was considering a proposal from Lifemark SA to restructure its debt.

Lifemark SA has since confirmed that it has failed to pay income on a number of its bonds. This means that certain Keydata investors in funds backed by Lifemark SA have not received the regular income payments that they expected to receive from their investments.

Since February we have been carrying out in depth investigations to learn more about what has happened, what it means for investors, and whether the FSCS will have a role in compensating investors for any losses. In particular, we have been considering whether Keydata is legally liable for any capital losses that may arise for investors in funds backed by Lifemark SA and whether we can pay compensation. These investigations are now at an advanced stage, and we hope to be able to confirm our position in relation to the potential liability of Keydata during September.

We have also been liaising with the FSA, Keydata’s Administrators and the other parties involved in the restructuring proposals. There is currently uncertainty around when the parties will be in a position to update investors on the timing and terms of any proposal. Whilst this remains unresolved it is unclear what losses investors may suffer. We will continue to monitor the situation and consider the implications for any compensation we may pay.

We fully recognise the distress and financial difficulties suffered by many Keydata investors who hold funds backed by Lifemark SA, and we will do all we can to provide certainty around the position of the FSCS as soon as we can.

Investors do not need to take any further action at this time.


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