Laurie Poggi – Director, IR Bill Sonneborn – CEO Michael McFerran – COO

Gabe Poggi – FBR Capital Markets & Co. Robert Schwartzberg – Compass Point Chris Harris – Wells Fargo Securities Lee Cooperman – Omega Advisors John Hecht – JMP Securities Sam Martini – ECI

Ladies and gentlemen, thank you for standing by. Welcome to the KKR Financial Holdings LLC third quarter 2009 conference call. During today’s presentation, all parties will be in a listen-only mode. Following management’s prepared remarks, the conference will be opened for questions. This conference call is being recorded. At this time, I would like to turn the conference over to Ms. Laurie Poggi, Investor Relations for KKR Asset Management. Laurie, please go ahead.

Good afternoon and welcome to KFN’s third quarter 2009 conference call. I'm Laurie Poggi, Director of Investor Relations for KKR Financial Holdings LLC and participating on today’s call are Bill Sonneborn, the company’s Chief Executive Officer; Michael McFerran, the company’s Chief Operating Officer; and Jeff Van Horn, the company’s Chief Financial Officer. Our financial results released for the third quarter was issued today, and as with prior quarters, a supplemental information packet was posted on our Web site. This call is being webcast live on our Web site and a recording will be available beginning later today through November 19. The audio webcast will be archived in the Investor Relations section of the company’s Web site as well. At this time, I’d like to remind you that this conference call contains forward-looking statements that are based on the beliefs of the management team regarding the operations and the results of the operations of the company, as well as general economic conditions. These beliefs and the related forward-looking statements are subject to substantial risks and uncertainties, which are described in greater detail in the filings we have made with the Securities and Exchange Commission. These filings are available on the SEC’s Web site at www.sec.gov. Our actual results may vary materially from those described in these forward-looking statements. And now, I’ll turn the call over to management. Bill, please go ahead.

Thank you, Laurie, and good afternoon everyone. We are pleased to report solid results for the third quarter resulting from strong credit markets, active investment management, and continued progress with respect to our liquidity picture and capital structure. Net income for the quarter totaled $67.2 million or about $0.42 per diluted common share. This compared to net income for the second quarter of 2009 totaling $20.6 million or $0.14 per diluted common share, which represents a 225% sequential improvement. Our book value also increased materially during the quarter, growing by $210.5 million or $1.32 per share from $5.69 per share as of June 30, to $7.01 per share as of September 30; represents a 23% increase quarter over quarter. Clearly, a strong performance which is in large part driven by strong credit markets. The S&P/LSTA Loan Index posted returns of 10.5% for the quarter and our portfolio’s returns exceeded that benchmark. We continue to demonstrate strong alpha, which was magnified by our capital structure. As of quarter end, our corporate debt investment portfolio had an estimated fair value of 83% of par. In comparison, our portfolio was marked at 74% of par as of June 30, and 59% of par as of December 31, 2008. As for asset quality, we are pleased with the performance of the companies in which we hold investments. For the most part, the companies are performing in line with our expectation. Additionally, certain companies such as NXP and ProSiebenSat.1 Media, in which we hold large positions, have improved significantly both in terms of their respective operating performance and market pricing of their securities. Looking ahead, we are seeking to take advantage of the environment in our unique low cost, long duration liability structure to generate incremental income for the company. We are redeploying cash received from amendments, early paydowns, our scheduled maturities into higher yielding assets with extended durations to match the duration of our CLO liabilities. When redeploying capital and making investment decisions, the team continues to use the same investment process that has guided us to-date. Our investment process leverages the entire resource and intellectual base of KKR, including the industry knowledge of our colleagues in other businesses, our senior advisors, and our management team relationships both for diligence and new investment on origination opportunities. This investment process has served us well as we continue to be quite pleased with how our credits are performing favorably on a fundamental basis. We went through a difficult period of mark-to-market paying, which is driven primarily by market technicals rather than credit fundamentals in most of the companies we own and we have remained confident in the quality of the assets we continue to own. While we know challenging periods still lie ahead, our portfolio is well positioned in names we know really well and like a lot. During the past nine months, we have significantly improved our situation as a result of improved market conditions and some proactive actions taken by the team. We have moved from a position of concern over our ability to handle near-term maturities to one of being able to strategically evaluate various alternatives available to us. We will continue to focus on our 2011 and 2012 capital structure, maturities, and including insulating our balance sheet from risk, and will update our shareholders with our progress. In the meantime, our liquidity picture is positive. Unrestricted cash totaled $126 million as of September 30 and the fair value of our corporate debt investments not held in CLOs was $561.3 million as of quarter end. During the quarter, total borrowings under our senior secured credit facility decreased from $257 million to $187.5 million. When combined with the outstanding face value of our convertible notes as of September 30 of $275.8 million, we have total debt maturing prior to 2036 of $463.3 million. The cash in our balance sheet, combined with the fair value of investments not held in CLOs, was $687 million as of quarter end, which is 1.5 times our total debt balance maturing before the 2036 date. In other words, we can now withstand a substantial market decline and still satisfy our debt obligations due over the next three years. Our CLOs continued to perform ahead of expectations due to the stronger markets and proactive actions taken by the company to improve cash generation from these vehicles. During the third quarter, CLO 2005-1, CLO 2005-2, CLO 2006-1 were in compliance with their respective over collateralization tests. And as a result, we received approximately $15 million in cash proceeds from these transactions during the quarter. CLO 2007-1 and CLO 2007-A remain out of compliance with their respected subordinate overcollateralization tests. However, CLO 2007-A is now in compliance with its senior OC test. We remain focused on maximizing the value of all of our CLOs by actively managing the investments held in each one. There are several variables that will impact when these final two CLO transactions come back into full compliance. As a result, it is difficult to give a target date as to when such an event will occur. Nevertheless, we remain hopeful that in 2010, we will begin realizing at a minimum cash distributions in certain of our mezzanine tranche holdings in each of these deals, including payment of accumulated PIC interest. Before turning the call over to Mike, I want to spend a moment on energy future holdings in light of its recently announced exchange transaction, our significant investment as we have disclosed in the company, and the potential for a selective default rating by S&P. Basically, companies going through these types of recapitalizations are deemed by S&P as examples of any industry to be in technical default and thus are assigned a temporary rating of SD or Selective Default for the period of the recapitalization. This SD rating is considered a downgrade for purposes of the OC test in our CLOs. As of today, CLO 2005-1, CLO 2005-2 and CLO 2006-1 are in compliance with all their respective OC tests. We hope the majority, 95%, of our investment in the term loan positions of Texas Competitive Electric Holdings Company LLC, the balance of our investment is in the bonds of Texas Competitive Electric Holdings Company LLC and Energy Future Holdings. Due to a past ratings actions, we are currently marking those investments within our CLOs and our term loans to market for purposes of the overcollateralization calculation. All else being equal and based upon our calculations, if Energy Future Holdings were downgraded to selective defaults, resulting in the treatment as a defaulted loan for our CLO OC test and the SD with an effect on their respective determination dates for those CLOs, we believe these structures would remain fully in compliance with all their respective OC tests. With that, I will turn the call over to Mike to discuss our financial results in greater detail.

Thanks, Bill, and good afternoon. As Bill summarized, net income for the quarter was $67.2 million or $0.42 per diluted common share. Our operating income for the quarter, reflecting net investment income of $72.7 million less non-investment expenses of $18.5 million, was $54.2 million or $0.35 per diluted common share. The $13 million difference between our operating income at $54.2 million and net income of $67.2 million was due to the $13 million difference of other income. The key components of the $13 million are as follows. We had realized and unrealized gains from our derivative positions totaling $19.9 million. Approximately $19 million of this relates to mark-to-market gains on loan positions held to total rate of return swaps, largest contributors being certain positions in US Food Service and PagesJaunes. We had realized and unrealized gains on investments totaling $21.2 million. This gain was primarily attributable to $24.2 million of mark-to-market gains, our equity investment in Masonite which is out of fair value. This gain was slightly offset by losses on sales of other investments during the quarter. We had $17.7 million of realized and unrealized losses in our mortgage investments, of which $15.9 million relates to mark-to-market losses. The losses of $1 million in short positions during the quarter and other income of $1.2 million, which primarily consists of fee income that we recognized during the quarter. Last, we had $10.6 million in losses on restructuring and extinguishment of debt. This amount consists of a $14.4 million net loss recognized from the termination of CLO 2009-1, which was offset by $3.8 million gain from the repurchase of $5 million of our outstanding trust preferred securities of $1.2 million. Our net interest margin for the quarter was 3.24% as compared to 2.44% for the second quarter. This improvement was driven by a lower cost of funding due to the retirement of the CLO 2009-1 senior notes and a modest increase in the asset yield of our portfolio. We recorded no incremental provision for loan losses during the quarter. The increase in book value per share reflects net income of $67.2 million or $0.42 per share, an increase in accumulated other comprehensive income totaling $141 million or $0.89 per common share, and share based comp of $2.4 million or $0.01 per common share. The increase in accumulated other comprehensive income reflects appreciation in the value of our high-yield bond portfolio of $148.4 million or $0.94 per share, which was offset by decline in value of two interest rate swaps designated as cash flow hedges under GAAP of $7.4 million or $0.05 per common share. As Bill already highlighted, our portfolio has benefited from the continued rally in credit prices. As of quarter end, we had corporate investments with an aggregate par balance of $8.5 billion and an estimated fair value of $7.1 billion. In comparison, our portfolio had a total par balance of $8.6 billion and estimated fair value of $6.4 billion as of June 30. The carrying value of our corporate loans and bonds net of our allowance for loan losses was $7.5 billion or 87% of face value of these investments at quarter end. Included within this is the allowance for our loan losses, which was $470.2 million and represents a reserve totaling 7% of the amortized cost basis of our loans held for investment. Next, I will cover the liability section of the balance sheet. As of September 30, the weighted average cost of financing the senior notes issued by our CLOs is LIBOR plus 53 basis points. Our debt outside of our non-recourse CLO transactions consists of our senior secured credit facility, convertible notes, and trust preferred securities. The weighted average cost of funding of our holding company debt was 5.74% as of quarter end. Our holding company debt totaled $747 million as of quarter end, of which 58% is fixed rate. Also, we have terminated the $100 million standby facility with our manager. As we have made no borrowings under this facility, and due to its high cost of funding at LIBOR plus 15% and in consideration of our strong liquidity situation, we have determined that it was advantageous to terminate the agreement and avoid future obligations to fund the 50 basis points facility pre-required by the agreement. I want to spend just a moment on interest rate sensitivity for our portfolio. We are asset sensitive and fluctuations on LIBOR can have a significant impact on our earnings. With LIBOR sitting under 30 basis points, we have felt the impact of historically low interest rates on our assets and cash flows. That said, we are clearly at the bottom from a rate standpoint and future increases in LIBOR will materially benefit our earnings and cash flow. To highlight this, I would expect to see some volatility in earnings once we begin to see an appreciation in rates. With that, I am going to hand this back to Bill.

Thanks, Mike. We remain focused on some key points and those key points are consistent with some of the things we have talked about in prior quarters. First and foremost, we are actively managing our portfolio with a long-term credit fundamental perspective. This includes harvesting the value of the low-cost financing provided by our financing structure by recycling proceeds from asset sales, principle paydowns or amendments into higher yielding positions with longer duration. Generating attractive risk-adjusted returns will remain core to our principle to the value investor. Next, we remain focused on our capital structure and liquidity profile. While we have made significant progress in our liquidity outlook during the past nine months, we continue to focus our attention on addressing upcoming maturities. Finally, we continue to build out and grow our world-class platform of investment and operational professionals, and I am proud of all they accomplished during the quarter. We believe that the strength and depth of our team continues to provide us with a unique competitive advantage. We are pleased with the results in the past quarter, most importantly, the continued strengthening of our balance sheet and liquidity profile and look forward to providing you updates on progress and news as it is made. Thank you again for joining us on this call. Now, we would welcome the questions. Operator, can you please open up the line for questions?

(Operator instructions) We will go first to Gabe Poggi with FBR Capital Markets & Co. Gabe Poggi – FBR Capital Markets & Co: Hi, good afternoon guys, great quarter. Two quick questions, and I am sure you will be getting questions on this afterwards, I don’t know if you guys mentioned or not or if you can mention, looking through the supplementals, the CLO-7-A looks to be real close to compliance. Can you comment on kind of where we are as of today relative to September 30? And then two, the question is – the second question is just thoughts on dividend going forward, this is a great quarter, and I know Mike you said there is going to be some volatility, but this is a big earnings number and just what your guys thought process is after posting such a big number? Thanks.

Sure. Gabe, CLO 2007-A, we can’t comment how it has performed. Since quarter-end, I don't think it has changed materially, as nothing significant has happened that we are aware of in the portfolio in the last few weeks. As to your point, it's capacity in the senior test, subordinate test is at a reasonable deficit. The prior remarks were hopeful that some of the mezz tranches are now more on a compliance in 2010. But as you know, there is still a lot of variables that can make that happen sooner or extend that out to a later date.

Just following on that, we are focused on that. The subordinated OC test, which is the one way that subordinated free cash flow restructure would begin accruing to the manager, we are about $58 million so of the end of the quarter short with respect to that test, which is about 3.5 points to 4 points of overcollateralization. That is within reach with good market environments and some opportunities with investment perspective to redeploy capital. And your second question with respect to dividend, it is as we have talked about in the last quarter. There remains an absolute key objective of the management team which is to deliver liquidity profile where we can recommend or have a discussion with the Board on that subject. That is a Board level decision and that is all we can say on that question at this point Gabe. Gabe Poggi – FBR Capital Markets & Co: Okay, thanks guys.

We will hear next from Robert Schwartzberg with Compass Point. Robert Schwartzberg – Compass Point: Hi, two questions, one do you have an update on non-accruing loans for the September quarter relative to the June quarter? And perhaps to cover this, but given that you might be receiving cash from CLOs in 2010, what is your outlook on reinstituting a dividend?

I will take the first question, Robbie. It is non-accrual loans, in the 10-Q we filed earlier today, in the footnotes of the loans, I believe it is note 5, we actually break out the non-accrual amount. From a dollar perspective, I don’t think it has materially changed since the last quarter, may have improved slightly. Dividend, Bill?

And then the dividend question, it is the same. That remains the key objective, it is one of the key objectives that we have laid out as a team to deliver dividend to our shareholders, and the Board is clearly focused on that, but I can't really go into more detail on that this time. Robert Schwartzberg – Compass Point: If I could have one follow-up question, do you have any involvement with the Tribune and has that changed now that the Cubs have been sold or does that affect any investment you might have there?

As we have disclosed in the supplement materials, we do have a position in Tribune. Tribune remains in bankruptcy. It has sold the Cubs through a bankruptcy process itself. We continue to believe that Tribune represents an interesting investment a bit relative to its current market price today. Robert Schwartzberg – Compass Point: Great, thanks a lot, great quarter.

Moving on to Chris Harris with Wells Fargo Securities. Chris Harris – Wells Fargo Securities: Great, thanks for taking my questions. First off, relating to book value, I think you guys had a pretty large sequential increase there two quarters in a row and I know you attributed part of that to appreciation in your high yield bond portfolio. How large is that portfolio as of September 30?

If you go into our supplemental materials on page 6, you will see a pie chart that shows the investment portfolio composition. Effectively, in our investment portfolio, 86% of our portfolio in aggregate is loans, 10% of our portfolio is in the form of high-yield bonds, which has an estimated fair value of $736 million as of September 30 quarter end. Chris Harris – Wells Fargo Securities: Okay. And then in your prepared remarks, you talked a little bit about how a rise in LIBOR rates potentially had a positive impact in your earnings. So, I am just curious if you could maybe expand a little bit on that. If your liabilities are floating rate too and you are match funded, I am not clear how you would have a huge benefit to earnings and maybe you can talk a little bit about that.

Sure. The benefit is that, if you kind of break apart KFN, it holds mezzanine notes within our CLOs which are LIBOR plus spread coupon paying securities and it has a subordinated note which is effectively the equity in the structure. So, the equity if you will, the mezz and the equity which is really the underlying asset that KFN at the holding company owns, that is highly LIBOR sensitive because that's why [ph] the assets are LIBOR sensitive relative to the liabilities the equity is not and really LIBOR will drive a lot of the cash flow. Chris Harris – Wells Fargo Securities: Okay. Great, thanks guys.

We will hear next from Lee Cooperman with Omega Advisors. Lee Cooperman – Omega Advisors: Yes, thank you.

Hi Lee, how are you? Lee Cooperman – Omega Advisors: Good. It sounds like you are happy to hear my voice. I guess I have five or six questions. First, I congratulate you; you have done a terrific job, you and your team since the change in management. Obviously markets have helped, but you take the credit because the markets would have to sell you to take the debit. You have heard the questions on the dividend and I have heard your response, and I guess I would ask, is the management – let me try to finesse this question to get you to say something, is the management going to recommend to the Board the payment of a dividend? We have Board decisions, but what is the management’s view?

I just reiterate, Lee, it is – for us to fulfill the plan we laid out for shareholders at the beginning of this year, that is a key objective, that is one that is left to be done. Lee Cooperman – Omega Advisors: Okay.

On our list of To Dos. Lee Cooperman – Omega Advisors: Let me ask you – I am going to try to get around, when is the next Board meeting that the dividend would be considered?

We have frequent Board meetings. Lee Cooperman – Omega Advisors: Okay. And I would appreciate your pointing out to the Board that in your Web site that you talk about cost tax efficiency, and right now we are in an extremely inefficient tax structure because you guys are doing a terrific job generating income, but your poor shareholders are not getting any of that income to pay their taxes. So, I won’t beat this one to death; I will move on to a few other questions, but I think that your shareholders want income, and I think given our tax structure, they deserve it. All of your cross-held KKR CLOs within other CLOs marked for OC purposes are between $0.00 and $0.25 to the dollar, and this is definitely not the marks for those tranches. Can you explain where these marks come from and what has to happen to raise these marks?

Any of those situations are marked by broker quotes because they are discounted obligations within the structures. And so, for purposes overcollateralization, they are not held at par but at market and market is derived from underlying third-party broker quotes. Lee Cooperman – Omega Advisors: Okay, got you. And at the end of the second quarter, you said that you had $50 million more in cash than all maturing liabilities over the next three years. If you cast as a statement in the same context, what would that $50 million number be now?

When we discussed basically those liabilities, we have coverage of 1.5 times between loans, bonds, and cash, the amount of the remaining credit facility that we have of $187.5 million plus the $278 million of converts left outstanding Lee Cooperman – Omega Advisors: But were you not including liabilities beyond the next three years into the calculation?

We were just focusing on any liabilities that are due before 2036. So, the convert and the credit facility, but excluding the TruPS, we just still have quite a bit of time before their ultimate maturity date. Lee Cooperman – Omega Advisors: I am assuming, maybe this is a rough guess and you can help me here. Of the three CLOs that are in compliance, just throwing rough, is it close to $60 million?

I would say thereabout, or again, reflective on rates, Lee, that would clearly go up.

If you annualize the quarter, it's $60 million.

Yes, we did $15 million on three CLOs this quarter. Lee Cooperman – Omega Advisors: Right. So, basically again not beating a dead horse on the dividend, we are generating $16 million of recurring income before the other two CLOs come into compliance.

That is correct.

That is correct. Lee Cooperman – Omega Advisors: And given the liquidity nature of the portfolio, I think it is just a matter of time before we see a dividend. But I won’t go there again, I mean common sense would suggest, given the way this vehicle was sold to the public, given the wonderful job your management team has done in fixing it up, I assume sometime between now and the end of the year, we will hear about a dividend. But congratulations, I have got lots of other questions, but I got to do those offline, but you have done a very fine job and to be congratulated.

Thanks, Lee.

We will hear now from John Hecht with JMP Securities. John Hecht – JMP Securities: Good afternoon. Thanks for taking my questions and forgive me if I ask something you went into detail on the call, I am juggling a couple of earnings calls at this time.

I understand, John. John Hecht – JMP Securities: First is, just wondering on your thoughts on expectations for maybe the new issued CLO market to open. We have seen the credit markets move positively. Is there any possibility that we are able to see new issuance of the CLOs in any time in the future?

You know, it is kind of interesting, it is natural as credit spreads kind of tighten, it is interesting that all of a sudden the ability to obtain leverage to invest in credit spreads becomes available. And so, I can’t predict when and if cash flow CLOs will become a thing of the future. But certainly, there are structures similar to CLOs that are available in the market today, most of which have market triggers as opposed to more cash flow profile in terms of their structures. But at least, if that is evidence that the market is starting to reemerge, you can say that it is starting to reemerge. But in terms of forward looking, whether the market comes back and certainly whether it comes back to the full force and effect, it was in the mid to end of 2007, it is still undetermined. John Hecht – JMP Securities: Okay. And with respect to the $15 million of cash flow that you are generating right now, can you remind me what it was last quarter on a quarterly basis, just to get a sense for trajectory here?

John, just to be clear, the $15 million is in our total cash flow. We highlighted that those three CLOs all in compliance during the quarter we received the cash payments on our notes in them, which in aggregate were $15 million. But the business has clearly generated more than $15 million in cash.

Because outside of the CLOs, we own a bunch of loans, bonds, and mortgages which throw off substantial interest income. John Hecht – JMP Securities: Yes, I understand that. So to clarify just the $15 million in cash distributions from the CLOs.

We use the basic math, John. We said last quarter on a pro forma basis, after reflecting the paydown of 09-1 and receiving some cash out of that vehicle and reducing our senior credit facility from $256 million to $200 million, we had pro forma cash of $68 million. We have come out today saying we have $125 million. That is our net-net cash increase during the quarter. John Hecht – JMP Securities: Okay, thank you very much. And then the last question is, clarification or maybe I just looked at this incorrectly, but the credit markets were strong, generally speaking the mortgage markets were strong during the quarter as well in terms of looking at the value of the securities. Yet, you took a $17.7 million loss in that category this quarter. Can you just explain what happened there?

It's just in the fair value of our mortgage portfolio when we decided to make those fair value determinations, we have continued to see in our ’05 particular vintage mortgage-backed securities, it is only less than $200 million market value portfolio net to KFN. We saw increasing delinquency statistics, and even though spreads generally have tightened for all assets including mortgage securities. We are also seeing higher prepayments which in our mortgage portfolio in terms of the mortgage trusts, we own some IO strips. And so, the result of the higher prepayment has squeezed the value of the IO strips, so the combination of that we took a fair market value adjustment in our mortgage portfolio. John Hecht – JMP Securities: Okay great, thanks for the clarification. Thanks very much.

Moving next to Sam Martini with ECI. Sam Martini – ECI: Hi guys, good afternoon, how are you?

Hi, Sam. Sam Martini – ECI: Just two questions, back to the gentlemen performing – what do you think the positive carry on the loans and bonds outside of the CLOs versus your liabilities is? What is the – the $15 million a quarter is aside and that will be CLOs 05-1, 05-2 and 06-1, and forget about 07-1 and 07-A, but what do you think the ex-CLO asset liability kicks off annually and in cash, I know a lot of that is fixed and some of it is floating, but do you have a rough estimate?

Yes, some of it – I mean, a lot of it is floating on both the liability and the asset sides. I am just going to give you a net number and walk you forward from kind of some past remarks. We used to say, if all the CLOs shut down, we generate enough cash to pay off our debt, I mean to service all of our debt and pay all of our expenses.

And all of our operating expenses and service all of our debt expenses.

:

Exactly.

Now, with LIBOR where it is, it's clearly had a negative effect. We have counteracted that by unwinding the assets in 2009. One, it has obviously increased our assets on balance sheet. We are comfortable today that we are generating outside the CLOs, I would say probably at least $15 million to $20 million annually. Again, we are going to emphasize if rates go up. Sam Martini – ECI: That is net?

That is net, right. Sam Martini – ECI: Okay. Just a question, I have not seen the supplemental, last part of the first question, I have not seen the new supplement, but a lot of these bonds from – the Odessa bonds, the Laureate bonds, the Accellent bonds are up meaningfully pretty close to par. You are still getting positive carry on these things relative to where your revolver is in your 7%. What is sort of the vision on how we are going to trade this sort of ex-CLO portfolio as they approach par and get to points where Laureate at 11.75% [ph] are still probably okay. But at par, are we still going to hold them or we just going to clip a coupon or are we going to try to swap into something else?

We constantly actively manage that portfolio, Sam. So, we don’t just sit there with a static pool outside of the CLOs in the context of investments. We are optimizing return relative to risk and the cost of capital and ROI target to our shareholders. Sam Martini – ECI: The only reason I ask is, and maybe you could help me with this math, is that I look at sections in slide 13 and 07-A were $58 million out of compliance. And if I assume that we've got about $1.5 billion of collateral, with about $1.3 billion of notes, and I assume that we are getting something like 4 [ph] on the collateral and paying 2-ish on the notes, that is about $40 million in net ignoring all the servicing fees. So, we could pay $58 million in cash to cure that and receive $40 million immediately year one with another couple of years reinvestment period and immediately cash flow. And I think that thing will cure, but how do you think about just curing this vehicle with $60 million with an immediate – I don’t even know what the IRR is, it would be so high. Am I thinking about it the right way?

Sam, the option is to take $58 million, write the check, put it in the vehicle, and bring it into compliance. Yes, the risk you run with that is once you put that in, you are not assured to get it back out, if you have an asset default or an asset downgrade, if loan prices go south, then you find yourself out of compliance and $60 million left in liquidity. Sam Martini – ECI: But, am I thinking about the numbers reasonably, that if this were cured, it would –

You could put it in or you could effectively delever within the structure through selling defaults that are credit risk securities, there is a lot of ways to get there. Sam Martini – ECI: Roughly, is the 4% on $1.5 billion and 2% on the $1.3 billion of notes getting me to about $40 million of net interest to the equity, is that about right?

It sounds about right. I mean, I think the cash coupon is going to be south of that. The yield is north of 4% based on when we bought the assets. The actual cost of funding on the senior notes for that deal was lower, about 87 I think. Sam Martini – ECI: So, really to your point, you could put in $60 million, run the risk of not getting it back, but in theory, if you could think you would be cured for a year, you would almost get your whole thing back priced as an IO and any principal you got back above that.

You can be assured, there are two things.

You have that issue which of course, we've talked with you before. We have always looked at that as a way of deploying capital, if it has a high ROI and that is certainly something we could do. We also have to balance out conflicts of interest with other holders of 2007-A, which is also a relevant consideration. Sam Martini – ECI: So, the positive carry of the non-CLOs is $20 million. We are getting $60 million from the existing CLOs and if we cured this, we would get about another $40 million.

Within reason. Sam Martini – ECI: Thanks guys.

And at this time, I would like to turn things back to Bill Sonneborn for closing remarks.

Thank you all for your attention and for the questions. We appreciate it and we are going to get back to work and continue to try to, as a team, focus on improving the business. Thanks.

That concludes today’s conference. Thank you all for your participation.