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Investments — Madison Grant Limited Partnership VFunded Company: QuorumInvestment: QFC #1 LP Company Web site: www.quorum.ca Quorum Press Releases: http://www.quorum.ca/new/new.html Limited Partnership created: December 2003 Partnership Update (March 30, 2005): This investment is currently in progress. Company Update (March 2005) — The Quorum Group of companies made significant progress in its 2004 new initiatives, all of which are owned by QFC #1 LP, the investee of Madison Grant Limited Partnership V. While the first two quarters of 2004 started out slowly, the last two quarters saw success on all three of its new initiatives: the new Quorum–Sikorsky Investment Pool; the new Quorum PIPE initiative (which morphed out of the unsuccessful Quorum Expansion Capital, a Labour Sponsored fund); and Quorum's lead role in the St. George's Renaissance mixed-use development in Bermuda. Each of these initiatives is detailed below. Quorum–Sikorsky Investment Pool: By Memorandum of Understanding, Sikorsky Helicopters selected Quorum to be its exclusive manager of a new $50 million (USD) investment pool if it won the $3.5 billion (USD) federal government helicopter bid. In July 2004, the Canadian Federal Government awarded Sikorsky that contract, which was formally executed in November 2004. Sikorsky has therefore committed $20 million (USD) to the $50 million (USD) pool and has designed very favourable terms for a $30 million (USD) co-investor. Quorum is assisting Sikorsky in finding the right co-investor and has several short-listed candidates. Sikorsky will advance 50 per cent of their $20 million (USD) commitment in March 2005, to facilitate the first seven of 25 pre-identified investments by the Pool. Quorum was paid $300,000 (CDN) in 2004 and early 2005 to advance the Pool's portfolio pending closing of the matching capitals. Quorum's management fees will formally start with the first $10 million (USD) closing in March. The $40 million (USD) balance is expected to close in Quarter 2, 2005. Quorum P.I.P.E.: At the time of the December 2003 Madison Grant LP investment in QFC #1 LP, Quorum had sought capital to support its first entrance into the Q1, 2004 RRSP season as a labour-sponsored fund (Quorum Expansion Capital/QEC). Quorum had engaged Dundee Securities as its underwriter to sell the issue among its 4,000 plus advisors. Internal politics saw a collapse of their marketing efforts. Quorum chose to withdraw gracefully from the market rather than litigate Dundee. However, in that brief selling period, Quorum unearthed keen interest among the advisor channel for high-net-worth investors who liked Quorum's record of accomplishment, its late-stage investing, its "secured" equity form of investing and its success with undervalued public companies. So, in late June, Quorum morphed QEC into Canada's first dedicated fund for "private-investments-in-public-equities" (PIPEs). In December 2004, we closed on $10 million of subscriptions in the Quorum PIPE fund. Since then, another $4 million has been subscribed, with more to come. Quorum will earn a fee of 2.25 per cent of annual management and 16 per cent of the profits after recoupment of capital, as well as 6 per cent preferred return. St. George's Renaissance mixed-use development in Bermuda: Quorum is the founder of St. George's Renaissance $200 million (USD) development project in Bermuda. Quorum has 50 per cent voting control and 40 per cent participation of the Renaissance consortium of entities that control the project. The Government of Bermuda awarded exclusivity to St. George's Renaissance to conclude long-term lease negotiations. In late 2004, Quorum was successful in obtaining conditional approval by a major U.S. investor to invest up to $200 million (USD) of debt and equity to finance the Development. The closing is expected to occur in Q2, 2005, coinciding with the execution of a long-term lease (125 years for the hotel, 499 years for the housing). Quorum will earn project management fees in addition to its ultimate share of the development profits. Post-financing, Quorum's share could exceed $5 million (USD) on completion in 2007. — Wanda Dorosz President, Quorum Funding Corporation
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