ISDA has prepared this
brief summary of frequently asked questions to assist in your consideration
of the Movie Gallery LCDS Auction Settlement Terms (the "Auction
THIS FREQUENTLY ASKED QUESTIONS DOES
NOT PURPORT TO BE AND SHOULD NOT BE CONSIDERED A GUIDE TO OR AN EXPLANATION
OF ALL RELEVANT ISSUES OR CONSIDERATIONS IN CONNECTION WITH THE AUCTION
TERMS. PARTIES SHOULD CONSULT WITH THEIR LEGAL ADVISERS AND ANY OTHER
ADVISER THEY DEEM APPROPRIATE PRIOR TO USING THE AUCTION TERMS. ISDA ASSUMES
NO RESPONSIBILITY FOR ANY USE TO WHICH ANY OF ITS DOCUMENTATION OR OTHER
DOCUMENTATION MAY BE PUT.
Do I need to adhere to the Auction Terms?
No. If a Credit Event Notice and Notice of Publicly Available Information
have been delivered (or deemed delivered under a settlement agreement)
on or prior to October 22 in respect of a covered transaction (see below),
then that transaction will be cash settled at the Final Price determined
pursuant the Auction Terms.
Scope of Transaction Coverage
Relating to the Auction Terms
Will the Auction Terms affect my single name LCDS trades?
Yes. Single name LCDS trades documented under the Syndicated Secured Loan
Credit Default Swap Standard Terms Supplement (the “LCDS Standard
Terms”) published by ISDA on May 22, 2007 will be subject to the
Auction Terms. This includes LCDS transactions documented under the LCDS
Standard Terms published by ISDA on June 8, 2006, provided both parties
adhered to the ISDA LCDS Protocol. Thus, single name LCDS trades on Movie
Gallery, Inc. First Lien Loans documented on this basis will be subject
to the procedures set forth in the Auction Terms.
What other credit derivative transactions
are affected by the Auction Terms?
Untranched LCDX transactions and portfolio LCDS transactions that
reference Movie Gallery First Lien Loans will be covered by the Auction
Terms if they are documented based on the LCDX Untranched Transactions
Standard Terms Supplement published by ISDA and CDS IndexCo on May 22,
2007 and the LCDS Standard Terms published by ISDA on May 22, 2007, respectively.
Tranched portfolio LCDS transactions, including LCDX tranche transactions,
that reference Movie Gallery First Lien Loans will be covered by the Auction
Terms if they are documented based on the LCDX Tranche Transactions Standard
Terms Supplement published by ISDA and CDS IndexCo on September 25, 2007
or a predecessor draft of that document.
What credit derivative transactions are
not affected by the Auction Terms?
Any credit derivative transaction that is not an LCDS transaction, that
is not documented in one of the ways described above, or that does not
reference Movie Gallery First Lien Loans will not be affected.
Who runs the auction?
The auction will be administered by Creditex and Markit and not by ISDA.
When is the auction?
The auction will be held on Tuesday, October 23, 2007. Details of the
auction results will be posted at www.creditfixings.com.
Cash Settlement Date and Accruals
How are accruals calculated?
When is the Cash Settlement Date?
The Cash Settlement Date will be Tuesday, November 6, 2007.
Accrued Fixed Amount will be calculated up to and including September 19,
2007 (the Common Event Determination Date under the Auction Terms). As this
day coincides with the end of the calculation period with the payment date
of September 20, 2007, no payments of accrued amounts or rebates are necessary
under the Auction Terms.