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NewStar Financial Participates in the Recapitalization Of Paradigm Group

NewStar partners with Merrill Lynch Capital to support the recapitalization for ShoreView Industries.

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Boston, MA, September 1, 2005 - NewStar Financial, Inc. ("NewStar"), a Boston-based specialty finance company, announces that it has provided recapitalization financing to the Paradigm Group ("Paradigm"). Paradigm, headquartered in Mississauga, Ontario, Canada, is a manufacturer and marketer of high-end loudspeakers and audio-video components. Paradigm's products are old under the Paradigm® and Anthem™ brand names. ShoreView Industries ("ShoreView") is an independent $300 million private equity fund that invests in middle-market manufacturing, distribution and service businesses in North America. Merrill Lynch Capital served as lead arranger.



NewStar provided $10.0 million of a total of $28.0 million in credit facilities comprising an $8.0 million revolver, a $10.0 million term loan A, and a $10.0 million term loan B for the recapitalization and served as Documentation Agent.



"We are proud to be associated with the exceptional people at Paradigm and Shoreview," said Tim Conway, Chief Executive Officer of NewStar. "This is our second completed transaction with ShoreView over the past year and we are excited to support another of their successful portfolio companies."



NewStar's deal team for the transaction included Tim Shoyer, Paul Holian, Paul Feloney and Michael Purcell.



About NewStar Financial, Inc.:



NewStar Financial, Inc. was formed in June 2004 by a group of senior banking and capital markets executives from leading financial institutions, including FleetBoston Financial, Citigroup and JP Morgan Chase, and leading institutional investors including Capital Z Partners, JP Morgan Corsair Capital Partners and Och-Ziff Capital Management Group. NewStar is focused exclusively on providing customized financing solutions to mid-sized borrowers in three lending groups: Middle Market Corporate, Commercial Real Estate, and Structured Products. For more information, please contact the appropriate individual below.



Corporate Inquiries:
NewStar Financial
Scott Poirier
(617) 848-2525


Press-Related Inquiries:
Gaffney Bennett Public Relations
Chris Riley
(860) 690-0856


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