Tontine Associates Letter

whose goal is the return of their legacy fund investments, while offering investors who are interested in remaining invested with Tontine the opportunity to contribute their legacy fund interests in a newly-formed, ongoing Tontine fund with a focus on thematic, long term investing.

Before we discuss our vision for Tontine going forward and the fund restructuring in detail, it is important to review our activity in the legacy funds this year. After our conference call late last year, we embarked on a program to monetize the legacy funds’ holdings in an orderly fashion. For those securities that were held across funds, we allocated sales pro rata across the relevant funds, and we distributed the proceeds periodically to investors.

unlevered vehicle that is less concentrated, more liquid and less focused on tax efficiency. The portfolio consists primarily of mid-capitalization equities and is highly liquid. TTR’s

The restructuring of the legacy funds will be seamless for most of you. As illustrated in the chart below, the economic interests of legacy fund investors seeking the return of their capital pursuant to the wind-down process (the “Redeeming Investors”) will be separated from the economic interests of legacy fund investors who would like to continue investing with Tontine by contributing their interests into the new TCP2 strategy (the “Contributing Investors”).

To facilitate the restructuring, we will create a new entity, TCP Overseas Master Fund II, which will execute the TCP2 strategy described above. Contributing Investors will contribute

Addition, TCP2 can use newly raised capital along with other cash proceeds to offer to acquire, via tender offer, the interests of the Redeeming Investors in the legacy funds. Any such tender offers would further accelerate the redemption process for participating Redeeming Investors, while also allowing TCP2 to increase its economic interests in the legacy fund holdings. Furthermore, we plan to have discussions with intermediaries in the secondary market for partnership interests who may know of potential purchasers of Tontine legacy fund interests. For legacy investors who are in need of immediate liquidity and wish to explore selling their interests in the secondary market we intend to allow the transfer of part of their valuable high water marks along with their interests, which may act as an incentive to secondary market purchasers. While we would be happy to put these legacy investors in touch with the appropriate people we can not get get involved in price negotiations. It is important to point out that all Contributing Investors into TCP2 will retain their high water marks from the legacy funds. We have already allowed investors to use their

harbor lingering doubts about the strength of recovery and assess the cost implications of the current Administration’s labor policies. Those companies with good balance sheets and

Even more intriguing is the public misunderstanding of the electricity grid in this country. We hear every day about the need for a smart grid, but few people focus on how many “dumb” things we can do before the smart grid arrives. Wind power is now beginning to overwhelm the electric grid in Texas, the Dakotas and upstate New York, and there should be extremely attractive opportunities to take advantage of nearly free power produced at night, to be stored for sale at higher rates in the daytime. Most obvious is the potential of the electric car, which could soak up some of the surplus nighttime power for use during the day. In some areas of the country, over 50% of generating capacity is shut down overnight when power demand drops, as electricity has traditionally been a “use it or lose it” product. At night, hydro plants and many natural gas plants are shut down and coal power plants try to reduce their power output as much as possible. Imagine if we could take 20% of this dormant nighttime capacity and use it to produce and store power to satisfy power demand during the day. In theory, if we could store this power, we would not have to build a new fossil fuel power plant for many years, if ever.