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CQS Rig Finance Fund Ltd (RIG)

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Friday 04 March, 2011

CQS Rig Finance Fund Ltd

Notice of AGM

For immediate release: 4th March 2010

                          CQS Rig Finance Fund Limited
(incorporated in Guernsey as a closed-ended investment scheme with registration
                                 number 45805)
                                (the "Company")

Notice of Annual General Meeting, Declaration of proposed Final Dividend and
proposed new Investment Object and Investing Policy

Notice of the Annual General Meeting is being given today.

The Board of the Company has today proposed a final dividend and, further to the
Annual  Results announcement on 20 January  2011, a new Investment Objective and
Investing Policy for the Company.

Proposed Final Dividend

The  Board of Directors of the Company is pleased to propose a final dividend of
1 pence per ordinary share of no par value (the "Shares") in respect of the year
ended  30 September 2010.  Shareholders will be asked to approve payment of this
dividend   and  alterations  to  the  Company's  articles  of  association  (the
"Articles") to take advantage of changes to Guernsey law with respect to payment
of  dividends at the Annual  General Meeting to be  held at Dorey Court, Admiral
Park, St Peter Port, Guernsey, GY1 3BG on 7 April 2011 at 9.30am.

Subject  to  the  necessary  shareholder  approvals,  the final dividend will be
payable on 11 May 2011 to all shareholders on the register on not later than the
close of business 15 April 2011. The Shares will go ex-div on 13 April 2011.

On  1 July 2008, an updated  companies legislation came  into force in Guernsey,
entitled  the  Companies  (Guernsey)  Law,  2008 (the  "New  Law") replacing the
Companies (Guernsey) Law, 1994, as amended (the "Previous Law"), under which the
Company  was incorporated.   Although a  number of  transitional provisions were
adopted  to  ensure  as  little  interruption  as  possible  to the operation of
Guernsey  companies, it is anticipated  that the New Law  will be amended during
the  transitional  period  which  expires  in  July  2012. The Directors however
believe  that a  number of  changes are  required, in  advance of the end of the
transitional  period,  to  the  articles  of  the Company to comply with certain
provisions  of the new  legislation which would  be of immediate  benefit to the

Under the New Law there are no longer restrictions on paying dividends only from
profits  available for the purpose. Under the New Law the "profits available for
the  purpose"  test  is  substituted  for  a solvency test whereby distributions
(which  include  dividends)  may  be  made  if  the  directors  of a company are
satisfied  on reasonable grounds, and certify  to that effect, that that company
will immediately after the distribution, satisfy the solvency test as set out in
the New Law.

The  Articles  currently  contain  restrictions  on  the  payment  of  dividends
otherwise  than  out  of  profits  and  as  a consequence, the Articles are more
restrictive  than required  by the  provisions of  the New  Law and to allow the
Company  to utilise the  increased flexibility permitted  by the New  Law, it is
proposed  that the Articles be amended by passing the resolution (set out in the
Notice  convening the Annual General Meeting) as a special resolution and if the
Resolution is approved, dividends will be paid in accordance with the New Law.

Proposed new Investment Objective and Investing Policy

Following  the significant changes that have taken  place in the market in which
the  Company operates since the failure of Lehman Brothers in September 2008, it
has  been necessary to  update the Investment  Objective and Investing Policy of
the  Company  to  reflect  the  current  and  expected  market  environment  and

After  discussion with the Company's Investment Adviser, the Board proposes that
the  Company's Investment Objective  and Investing Policy  be amended to provide
Shareholders  with an attractive total return,  through a combination of capital
appreciation and dividends.

Under   the  current  Investing  Policy,  the  Company's  portfolio  principally
comprises   of   secured  debt  instruments  primarily  issued  to  finance  the
construction, modification and/or refurbishment of rigs and other infrastructure
and/or equipment used for offshore exploration and production of oil and natural

The  Investment  Adviser  believes  that  there  are now an increasing number of
attractive  related  opportunities  available  for  the  Company  to  invest  in
instruments  that are  unsecured and/or  subordinated within individual issuers'
capital   structures.    The   related  opportunities  significantly  widen  the
investable   universe  and  thereby  allow  the  Company  to  source  attractive
investments  while also  widening risk  diversification and  improving portfolio
liquidity.   Additionally, the  Investment Adviser  believes that investments in
convertible  bonds  can  offer  an  attractive  combination  of yield and equity
participation   while   providing   some  protection  from  declines  in  equity
valuations.  It is  therefore proposed  that the  Company expand  its investable
universe  to include  unsecured and/or  subordinated debt instruments, including
convertible  bonds and other associated securities.  Furthermore, the Investment
Adviser believes that expanding the investable universe to include a wider range
of  financing  opportunities  relating  to  oil,  natural gas and other resource
sectors  should also assist in increasing the opportunity to generate attractive
returns  in addition  to widening  both portfolio  diversification and improving
portfolio liquidity.

The proposed new Investment Objective and Investing Policy is set out below:

"The   Company's  investment  objective  is  to  provide  Shareholders  with  an
attractive  total  return,  through  a  combination  of capital appreciation and

The  Investment Adviser seeks to achieve the investment objective of the Company
by  sourcing and trading a  portfolio comprising predominantly debt instruments.
The Investment Adviser will seek to use fundamental credit and industry analysis
to  identify instruments  expected to  provide attractive  risk-adjusted returns
which  meet  the  investment  objective  of  the  Company.  Such instruments are
expected   to   be  issued  primarily  to  finance  companies  involved  in  the
construction,   modification   and   operation  of  offshore  rigs  and  related
infrastructure   equipment,  and  companies  involved  in  the  development  and
operation  of assets used in the offshore and/or onshore exploration, production
and  distribution  of  oil,  natural  gas  and  other  resources. Investments in
adjacent  sectors such  as shipping  and transportation  may be  included at the
discretion of the Investment Adviser.

It  is  expected  that  the  Portfolio  will  be passively managed, although the
Investment  Adviser may elect to become  actively involved in workout situations
should  they arise. It is expected that some investments will be held through to
maturity (or earlier redemption/repayment by the issuer /borrower), while others
may  be held  for shorter  terms to  capture mispricing  of risk. The Investment
Adviser  may trade investments depending on  the prevailing market conditions at
any time.

The  Company seeks, on a global basis,  to capture on its investments attractive
risk-adjusted  yields and  potential capital  appreciation arising from possible
corporate   activity,  including  but  not  limited  to,  refinancing,  industry
consolidation   and  workouts,  and  from  equity  appreciation  for  securities
exhibiting equity characteristics. The Company is permitted to borrow to enhance
the  returns of the Portfolio.  The gearing of the  Portfolio is not expected to
exceed  30% of  Net  Asset  Value,  and  from  time to time the Portfolio may be
constructed  with little or no gearing. The  Company may retain amounts in cash,
or  cash equivalents, pending reinvestment if  this is considered appropriate to
the achievement of its investment objective.

The Company may construct the Portfolio using a range of securities, derivatives
and  other  agreements  including  but  not  limited  to  positions  in secured,
unsecured and subordinated bonds, including convertible bonds, that may be fixed
or  floating  rate  securities,  payment-in-kind  bonds, senior, second lien and
mezzanine  loans, equities and equity warrants. The Company may trade both rated
and  unrated  debt  instruments  although  it  expects, in most cases, that such
instruments  will  not  be  rated  by  a  recognised  rating agency. Exposure to
securities  may be taken directly or synthetically through the use of repurchase
agreements,  total return swaps and other derivatives referencing the securities
selected  for the Portfolio. Interest rate and foreign exchange transactions may
be  effected using swaps,  forwards, futures and  options and other derivatives.
The   Company  may  trade  listed  and  unlisted  securities,  and  may  execute
derivatives transactions on exchange or over the counter."

Adoption of the new Investment Objective and Investing Policy are subject to the
approval  of Shareholders.  An ordinary resolution  to approve the Company's new
Investment  Objective and Investing Policy will be presented for approval at the
Annual General Meeting.

Authority to repurchase Shares

The  current authority to repurchase shares  will terminate at the conclusion of
the Annual General Meeting.

Shareholders  are invited to  continue the authority  granted by Shareholders at
the last annual general meeting by authorising the Company to purchase Shares at
any  time until the annual general meeting  of the Company in 2012 provided that
(i)  the maximum number of  Shares which may be  purchased is 14.99 per cent. of
the  issued  Ordinary  Shares  at  the  date  the resolution is passed; (ii) the
minimum  price per Ordinary Share is 0.1p; and (iii) the maximum price which may
be paid for any Ordinary share is not more than the higher of 5 per cent. above:
(a)  the average  Channel Islands  Stock Exchange  LBG traded value per Ordinary
share  for the 5 business days prior to the day the purchase is made; or (b) the
price  stipulated by  Article 5(i) of  the Buyback  and Stabilisation Regulation
(namely the higher of the price of the last independent trade in Ordinary shares
and  the highest then current independent bid for the Ordinary Shares on the AIM
Market of the London Stock Exchange).

The  Directors will exercise this  authority only when to  do so would be in the
best interests of Shareholders generally.

The Board considers the resolutions to be proposed at the Annual General Meeting
and  contained in the enclosed  notice are in the  best interests of the Company
and  its  shareholders  as  a  whole.   The directors unanimously recommend that
shareholders  vote in favour of the resolutions  as they intend to do in respect
of  their own  beneficial holdings  which amount  in aggregate  to 113446 shares
representing  approximately 0.11 per cent. of the existing issued ordinary share
capital of the Company.

The  notice convening  the Annual  General Meeting  will be sent to Shareholders
today  and  will  be  available  at The Company's Annual
General  Meeting is  scheduled to  be held  at the  offices of  Kleinwort Benson
(Channel Islands) Fund Services Limited on 7 April 2011.

For further information, please contact:

Hugh Field / Richard Johnson
Arbuthnot Securities Limited
Telephone 020 7012 2000

Lynette Le Prevost
Corporate Secretariat
Kleinwort Benson (Channel Islands) Fund Services Limited
Telephone 01481 727111

This announcement is distributed by Thomson Reuters on behalf of 
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(i) the releases contained herein are protected by copyright and 
    other applicable laws; and 
(ii) they are solely responsible for the content, accuracy and 
     originality of the information contained therein. 
Source: CQS Rig Finance Fund Ltd via Thomson Reuters ONE