640 Fifth Avenue, 20th Floor New York, NY 10019 T 212 688-2550 F 212 753-2760

January 30th, 2009

Performance Since Inception
S&P 500 Index -20.94% 28.67% 10.87% 4.91% 15.78% 5.49% -6.00% -3.25% -0.43% 4.87% 1.30% -8.43% -0.84% 1.45% -8.91% -16.79% -7.17% 1.06% -36.99% -8.95% -1.34% Year 2002* Year 2003 Year 2004 Year 2005 Year 2006 Year 2007 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Year 2008
Inception to Date Annualized Inception to Date

Owl Creek I, LP*

Owl Creek II, LP*

Owl Creek Overseas Fund, Ltd*

Gross
5.14% 60.88% 32.67% 3.95% 25.78% 39.75% 3.24% 2.78% -0.76% -5.28% 5.79% 3.45% -13.19% -3.35% -0.37% 6.04% -3.60% -1.84% -8.44% 275.44% 21.07%

Net
4.12% 48.70% 26.14% 3.16% 20.63% 31.80% 2.62% 2.26% -0.62% -4.31% 4.68% 2.82% -10.89% -3.35% -0.37% 5.66% -3.26% -1.84% -7.53% 196.17% 16.99%

Gross
4.98% 61.00% 32.77% 4.07% 26.17% 39.93% 3.24% 2.77% -0.75% -5.27% 5.88% 3.50% -13.18% -3.36% -0.75% 6.35% -3.95% -1.98% -8.85% 275.82% 21.08%

Net
3.98% 48.80% 26.22% 3.25% 20.94% 31.94% 2.62% 2.26% -0.61% -4.30% 4.75% 2.86% -10.85% -3.36% -0.75% 5.96% -3.59% -1.98% -7.93% 196.25% 16.99%

Gross
5.25% 60.69% 33.12% 4.11% 26.94% 40.81% 2.55% 2.66% -0.52% -5.07% 6.90% 4.27% -13.32% -3.15% -1.83% 6.05% -4.14% -1.89% -8.91% 281.58% 21.35%

Net
4.20% 47.67% 26.50% 3.35% 21.35% 32.42% 2.11% 2.21% -0.43% -4.22% 5.70% 3.57% -13.38% -3.17% -1.84% 6.08% -4.16% -1.65% -10.32% 189.89% 16.62%

* Inception Date was February 1, 2002 Past performance should not be viewed as indicative of future results. Performance herein is reflected for an investor who was invested in Owl Creek since inception and is eligible to invest in new issues. This includes the appreciation/depreciation of the fair value of any special investment. Investors who invest with Owl Creek funds in the middle of a particular year, including after the establishment of a special investment, will have different monthly and yearly performance numbers.

Owl Creek Asset Management, L.P. •640 Fifth Avenue, 20th Floor • New York NY 10019 • T 212 688-2550 • F 212 753-2760

Monthly Gross Exposure
300% 250%

Gross Exposure

200% 150% 100% 50% 0% 31-May- 30-Jun08 08 31-Jul- 31-Aug- 30-Sep08 08 08 Gross Long 31-Oct- 30-Nov- 31-Dec08 08 08

Gross Short

31-May Gross Long Gross Short Total Gross 169% 117% 286%

30-Jun 132% 108% 240%

31-Jul 109% 65% 174%

31-Aug 88% 54% 142%

30-Sep 76% 57% 133%

31-Oct 56% 35% 91%

30-Nov 45% 24% 69%

31-Dec 57% 36% 93%

After what felt like an eternity, 2008 is finally in the past. During this tumultuous period in the world’s financial markets, we have seen unprecedented declines in the market averages globally and the daily questioning of the viability of the world’s financial system. We saw the demise of Lehman Brothers, last minute rescues of Bear Stearns, AIG and Merrill Lynch, and now government ownership of what today is a minority interest in all the major banks and what’s left of the investment banks. Europe is not faring any better, and its financial system is even more precarious than ours, as its banks are significantly more levered on an assets to equity ratio than the over-levered US banks and investment banks. Asia, the recent growth engine, producer of the world’s exports and consumer of the world’s commodities, is slowing dramatically. Japan’s rising Yen threatens its export economy, and China’s recent unprecedented growth is showing clear signs of being over-cooked. With that as a backdrop, two words dominate our investing mindset at Owl Creek: patience and conservatism. While we are excited about the potential dislocation that market turmoil will continue to cause and the investment opportunities we expect will emerge from the carnage, we have not and will not jump in head first as we don’t foresee the dramatic snap backs we have seen in recent history. During 2008, our conservative stance served us well as our flagship funds’ blended decline was 9% for the year vs. the S&P 500 being down 37% and the MSCI World Index being down over 40%. While we don’t like losing money we feel very fortunate to have dodged a significant number of
Owl Creek Asset Management, L.P. •640 Fifth Avenue, 20th Floor • New York NY 10019 • T 212 688-2550 • F 212 753-2760

bullets, landmines, and other incendiary devices during this dramatic year. We have now returned 17% on an annualized basis to investors since our start in 2002 versus -1% annualized return for the S&P 500 over that same period. Our skeptical value-driven approach has allowed us to do the one thing we find most important here at Owl Creek, and that’s to preserve capital. With the partners and I at Owl Creek being the 2nd largest investor in the funds and me being the largest individual investor you can be assured that preservation of capital will always be our main focus. Almost everyone we speak to in the investment community has been saying the same thing of late: “I have never seen anything like this before”. This is exactly why we have the defensive portfolio mix and overall conservative tone that we have been expressing for over a year now. The way we think about the investment landscape today and why we believe so many people got it so wrong in 2008 is the fact that most managers didn’t really believe the above statement. Most investors kept thinking they had seen this before and reacted the way the markets had taught them to act over the last 26 years. Media correspondents and long only money managers are on TV every day calling the bottom and saying we should be out there buying the dips. What we are experiencing today is very different. We have had 26 years of various types of bubbles pop, all of which we have corrected by adding additional leverage to the system, and now we are paying the price for all of that. This will not be an easy unwind, and it will take years, not months, to recover from this downturn. Speaking recently with one of the smartest CEOs we know, he described the situation in even more dire terms: “It seems to me the world economy has metastasized cancer, and even when the patient recovers it will be without many of its limbs for a long time to come.” Distressed Debt and Credit We are finally seeing an uptick in the default rate (see chart below), and distressed opportunities are now coming in our direction. As most of you know, we draw a distinction between stressed credits and distressed debt. We don’t dismiss the opportunity to make good risk-adjusted returns in stressed credits, and in fact we have increased our exposure from being net short credit for all of 2007 and most of 2008 to now being net long 8% in stressed credits. However, we believe there is tremendous uncertainty as to how and when this shakeout will begin to stabilize, and we would need to have a larger margin of safety for us to want to aggressively own stressed credits. After the end of a 26 year-long credit and leverage boom, we think it is difficult to get comfortable with the pro forma (or go-forward) business models, income statements, and balance sheets of many of the current wave of stressed companies that will likely become the distressed companies of the future. We will continue to focus on the simple business models and companies that we can get comfortable with, and we are happy to wait for much of the rest to come our way. In distressed, the really fat pitches we have seen have been found in heavily litigated bankruptcy plays. We’ve already found a couple of great opportunities, and we are net long 12% in distressed debt. This gets us to a 20% position in all stressed and distressed credits1.
1

As of January 26th, 2009.

Owl Creek Asset Management, L.P. •640 Fifth Avenue, 20th Floor • New York NY 10019 • T 212 688-2550 • F 212 753-2760

High Yield Default Rate (Trailing Three Months Annualized)
35.0%

2

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0% Dec-82 Dec-83 Dec-84 Dec-85 Dec-86 Dec-87 Dec-88 Dec-89 Dec-90 Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08

We believe that this is just the beginning and that there will be exponentially more great opportunities in the future as the fundamentals continue to deteriorate and a large amount of debt comes due in 2009 and 2010, some of which will not be able to get refinanced. Cash flow CLOs, which made up the vast majority of CLO issuance over recent years and, consequently, demand for leveraged loans, have still largely been unaffected because of the delayed response in the default rate. As this changes and defaults increase, we believe a sizable amount of assets held in CLOs will hit the market as triggers are breached and many of these vehicles become sellers. Because of all this, we continue to have substantial cash on the sidelines, knowing that our menu of options in this environment is pass, buy now, or buy later. We believe that the coming default cycle will be different from prior cycles in at least one important way: bankruptcy courts will favor lower valuations over higher ones. We don’t mean this in the obvious sense that valuations around the world have come crashing down, but we mean it in a more practical sense. As we all know, for most bankruptcies there inevitably comes the point in the process where the pie is divided up amongst creditors. When different parts of the structure can’t arrive at a consensual deal, the judge is called upon to decide valuation. Over the past few years, as the credit bubble continued to inflate, it was easy for junior parts of the capital structure to successfully argue for high valuations which gave them meaningful recoveries on their defaulted debt, as they were able to line up aggressive exit financing which would largely cash out the senior secured parts of the capital structure and demonstrate to a judge that free market participants saw a lot of value in the assets of the company. Now, with the credit markets in no mood to lend, much less to a turnaround situation, we believe the secured lenders
2

Source: JP Morgan; dollar-weighted; does not include Lehman which was investment grade when it filed.
Owl Creek Asset Management, L.P. •640 Fifth Avenue, 20th Floor • New York NY 10019 • T 212 688-2550 • F 212 753-2760

(the banks, and the hedge funds which have purchased bank debt) will largely be calling the shots and trying to keep all the value to themselves. As such, we are carefully trying to continue doing our bottom-up valuation work on distressed companies while reminding ourselves that in distressed investing it is easy to be correct on valuation but wrong on the process. Furthermore, the simple math of understanding that much of the credit expansion of the past few years came in the form of stretched senior secured leverage multiples3 means that bank debt recoveries should be lower in this cycle, and we’ve already started to see that in the past few months. Luckily, we are in the bearish camp already, so it won’t be difficult to talk ourselves into staying higher up in the food chain at the expense of seemingly juicier returns at subordinated levels. Equities On average, equities are still expensive on both an absolute basis and relative to credit. If we were simply going into a run-of-the-mill economic downturn it would be one thing, but our belief is that this is better defined as a structural unwind. We’ve talked in prior letters about the troubling trend in the savings rate for this country since the early 1980s, and the fact that much of increased profits in this bull market have been simply the result of increased leverage, not productivity or other efficiency gains. As Bill Gross recently said, “the U.S. and many of its G-7 counterparts over the past 25 years have become more and more dependent on asset appreciation. Under the policy-endorsed cover of technology and somewhat faux increases in financial productivity, we became a nation that specialized in the making of paper instead of things, and it fell to Wall Street to invent ever more clever ways to securitize assets, and the job of Main Street to “equitize” or, in reality, to borrow more and more money off of them. What was not well recognized was that these policies were hollowing, selfdestructive, and ultimately destined to be exposed for what they always were: Ponzi schemes…” These thoughts affect our portfolio by causing us to look at reversion to the mean not just across five years, but across multiple decades. And even though these negative long-term trends should not have taken anyone by surprise, what has been surprising is how quickly consumers have changed their behavior. If you watch the local nightly news or talk to the average person on the street, you’ll notice a sharp contrast with their mood versus a year ago and versus other recent recessions. This tells us that “the bubble” has officially popped, and we believe it will be bad for a long time. What drives equities higher? Typically the answer to this question is growing earnings and lower interest rates. Interest rates in the US have gone from 12% to 2.5% since the various bubbles started inflating in the 1980s. As you can see from the chart below which compares the 10-year Treasury yield to the S&P 500 from 1985 to today, stocks generally were going up throughout this period as rates were going down. If we are now
3

Merrill Lynch reports in research dated January 8, 2009, that that secured loan obligations today represent 40% of HY debt obligations versus 20% in 2000-2002.
Owl Creek Asset Management, L.P. •640 Fifth Avenue, 20th Floor • New York NY 10019 • T 212 688-2550 • F 212 753-2760

at a 2.5% rate on the 10-year in order to try and inflate our economy out of this mess, what will rates be over the next 5 to 7 years? Our guess is that rates will be higher and maybe substantially higher. So what does that mean for equity valuations? It means that even though we may see earnings trough at some point in late 2009 or early 2010 it will be against a backdrop of rising rates which will at best make equity valuations in some sectors neutral from where we see them today.

Equity markets will have peaks and valleys along the way, but we think it will be multiple years before we enter another secular bull market for stocks. What all this means for Owl Creek is that we continue to be cautious, moving into things gradually, trying more than ever to find hard-catalyst investments which are market agnostic. We feel no pressure at all to call the bottom exactly right and continue to have conviction that our stock and credit-picking abilities provide us the best way to make money in market dislocations like this. How do we do that? One discipline we have is making sure we can recognize the difference between a bad cyclical story and a bad structural story (which, it seems to us, is sometimes missed by investors). Navistar (discussed later in this letter) has a bad cyclical story because they make trucks, and not a lot of trucks are being sold these days. But…Navistar also has a very strong structural story in that they continue to improve their products and consistently gain market share at the expense of their competition. They also have a strong military business which is not cyclical. When stocks, like Navistar, trade at prices that compensate you for the bad economy (and then some) and give you the secular strength for free, we own them. Trucks will eventually be sold again (and, if you look at the data, the average age of the fleet is near all-time highs today), and when they do the cash flows at this company will be something the market cannot ignore. Bring Back America! Since when are we a society where we think it’s a viable solution to give a judge powers to rewrite contracts (like a mortgage) in order to “save” our economy? Isn't a person's right to property and the sanctity of contracts a founding principle of our democracy? Not that anyone in Washington is asking our opinion, but our view is that while
Owl Creek Asset Management, L.P. •640 Fifth Avenue, 20th Floor • New York NY 10019 • T 212 688-2550 • F 212 753-2760

government intervention feels good in the short-run, it only treats the symptoms, not the illness, and it creates bigger long-term risks. In all honesty, we don’t pretend to have the silver bullet solution, and we hate to sound like all those others out there who play Monday morning quarterback. But we believe the better path is an acknowledgment of the excesses that have permeated the system in recent years and decades, and a willingness to now take our medicine. Increased government spending in a downturn, as smart economists assert, is a good thing. But ideally such a period would have been preceded by increased savings while times were good. We clearly have not done that, and for everyone from politicians to ordinary Americans to pretend like there’s “an answer” to all this disheartens us, because it feels as though we are not choosing the right path. We’d rather have a couple bad years than a decade of economic malaise. An Interesting Statistic That Will Amaze Your Friends Number of days the S&P moved up or down more than 5% during the trading day:4 1950-2000: 27 days 2000-2006: 7 days The first three quarters of 2008: 20 days The fourth quarter of 2008: 25 days In Conclusion The Owl Creek team is as strong and focused as we have ever been. The distressed opportunities that we expect will come over time with the market dislocation and increased volatility is where we have historically found the best risk-reward opportunities and generated the best absolute returns. We have more resources today to better take advantage of what’s to come than we have ever had in the past, and we have recently met with a few new people that may be able to add even more firepower to the bankruptcy and distressed team which is already quite strong. We are excited about what’s to come and thank you again for your continued support. It is the strength, fortitude, and overall understanding of our portfolio and investment style that allows our investors to stand apart from the herd, and we appreciate all that you do in understanding and supporting us. Sincerely,

Jeff Altman
Jeffrey A. Altman

Dan Krueger
Daniel E. Krueger

Jeff Lee
Jeffrey F. Lee

Shai Tambor
Shai S. Tambor

…and the rest of the Owl Creek Team.
This information is intended only for the person to whom it has been delivered. This information is not an offer or solicitation with respect to the purchase or sale of any security. Any investment decision in connection with Owl Creek I, L.P., Owl Creek II, L.P., Owl Creek Overseas Fund, Ltd., Owl Creek Socially Responsible Investment Fund, Ltd., Owl Creek Asia I, L.P., Owl Creek Asia II, L.P., and Owl Creek Asia Fund, Ltd. should be made based on the information contained in the Confidential Memorandum for the applicable Fund which will be made available upon request. This information is strictly confidential and may not be reproduced or redistributed in whole or in part nor may its contents be disclosed to any other person under any circumstances. This Brochure is not intended to constitute legal, tax, or accounting advice or investment recommendations. Past performance should not be viewed as indicative of future results.

4

Source: Bloomberg.
Owl Creek Asset Management, L.P. •640 Fifth Avenue, 20th Floor • New York NY 10019 • T 212 688-2550 • F 212 753-2760

EXHIBITS:
Flagship Portfolio ($4.0 billion AUM) - The five largest names as of December 31st, 2008, are (alphabetically): Exxon Mobil (Short) Leap Wireless Navistar International Washington Mutual Williams Companies
The names listed above and discussed below consist of a minority of issuers in Owl Creek’s portfolio and it should not be assumed that these holdings were or will be profitable.

Exxon Mobil Exxon, as the largest and best capitalized of the major oil companies, has outperformed its peer group and the broader market recently as investors seek safety. This outperformance has left Exxon 20-30% expensive relative to peers on a variety of metrics, most notably estimated Net Asset Value. The outperformance and premium valuation began in late September, coinciding with the upward move in the VIX and downward move in the S&P500. At some point, we expect that investor money flowing out of other energy stocks and into Exxon Mobil will slow and Exxon’s valuation will move back in line with its peers. In addition, this position serves as a hedge to some of our long positions which have some energy related exposure.

Leap Wireless Leap recently released fourth quarter subscriber net addition and churn figures which highlight the resilience of its low-priced, unlimited mobile offering in a weakening economy. Net subscriber additions were a record during the quarter, driven by a decline in churn to 3.7% from 4.2% one year ago. This strong growth is a direct result of Leap’s strong value proposition, which is made possible by its low cost structure and is further helped by customers trading down to better value during an economic slowdown. We believe churn will continue to see improvement as a result of the network sharing agreement with Metro PCS, which effectively doubles the on-network footprint for Leap. In 2009, Leap will launch additional markets in Chicago, Philadelphia, Baltimore, and Washington D.C. which will continue to drive growth in the coming years. One area of concern is that Sprint launched an unlimited service plan on their second tier Nextel iDEN network for $50/month which compares to a similar product offering by Leap of $40 per month. While price competition is always a cause for concern, we believe that this recent Sprint offer will not resonate with consumers because of the weaker network, voice quality, and handset selection of the iDEN network. In order to reduce some of the industry risk posed by Sprint’s actions, we have hedged our Leap position with shorts on other competitors in the telecom industry.

Owl Creek Asset Management, L.P. •640 Fifth Avenue, 20th Floor • New York NY 10019 • T 212 688-2550 • F 212 753-2760

Navistar Owl Creek continues to devote a lot of attention to Navistar, a position that has been in our fund for about two years. Most recently, four of us toured facilities in Mississippi and Texas. We give Navistar a lot of attention for a couple reasons. For one, it is a large position. We have continued to add to our Navistar stock and now own 9.5% of the stock as of our most recent 13-D, and we also own a sizable chunk of bank debt. But also, the story is not one that is obvious upon first glance, and there are numerous moving pieces. This, we believe, is why the opportunity exists. As an update since our last letter, the company put out fiscal year 2009 guidance on January 5th which apparently pleased the market in this tough environment, given the stock is up a fair amount since that time with the overall market lower. Based on an assumed industry commercial truck build that is 40% below the average seen from 1999 through 2007, Navistar expects to earn $5.35/share. Based on a 17% incremental margin, that means Navistar earns over $10.00/share at trend industry volume. Is this positive performance due to the company over-earning on military work? No, their new guidance assumes $2.3 billion of 2009 military sales – just a little higher than the $2 billion level which they describe as a base level of recurring military sales. We have seen first-hand and believe in the unique efficiency and flexibility they bring to the military business. We think that the $2.3 billion is conservative for 2009 and that military sales should be well above that level for the foreseeable future. All of the above combine to make the stock dramatically undervalued by our analysis, and we believe the markets will realize this in the medium-term as financial performance ramps up.

Washington Mutual In the ten days leading up to the largest bank failure in U.S. history, in the midst of a plunging stock price and negative headlines, Washington Mutual experienced a fatal “run on the bank” as paranoid customers withdrew more than $16 billion of deposits. On September 25, 2008, the regulators seized WaMu Bank, the primary operating subsidiary of the holding company, and on the same day, in an FDIC-brokered transaction, JPM purchased the assets and assumed all of the deposits of the bank in exchange for a $1.9 billion cash payment. Left behind were $13 billion of bonds at the bank subsidiary and $7 billion of bonds at the holding company, all trading at extremely distressed levels. Also left behind were all of the assets of the holding company, which were lying outside the jurisdiction of the FDIC. The crown jewel was roughly $4 billion of cash at the holding company that was held on deposit at WaMu Bank (and its subsidiary) prior to its failure. This was subsequently assumed by JPM as part of its deal with the FDIC to assume all deposit liabilities. Because WaMu’s consolidated financial statements eliminate this intercompany balance, many investors did not initially realize that this value existed. And even those that did, worried that the Bank or JPM might find a way to latch onto the cash. Other non-cash sources of value include a sizeable tax refund from the IRS, a liquid securities portfolio, several wholly-owned subsidiaries which generate positive net income, and potential proceeds from a number of material lawsuits with third parties.

Owl Creek Asset Management, L.P. •640 Fifth Avenue, 20th Floor • New York NY 10019 • T 212 688-2550 • F 212 753-2760

By locating and studying numerous documents, such as public financials, bankruptcy documents, regulatory filings, monthly operating reports, state filings for the insurance subsidiaries, litigation pleadings, etc., we were able to identify these sources of value and take advantage of unprecedented fear and dislocation in the markets to build a position in holding company senior and subordinated bonds at attractive prices. At the beginning of the case, we took severe haircuts on possible valuation because of the tremendous lack of disclosure. But since that time, with each additional public disclosure, our understanding of each piece of value has become more thorough and granular, and the range of possible outcomes has continued to tighten to the upside. Although the absolute upside is less than it was a few months ago since bond prices are now higher, the primary risks to value erosion have also lessened materially in our minds, and we continue to believe that the overall risk-return is extremely good. As a bonus, in today’s investing environment where predicting a company’s “normalized” earnings and cash flows can oftentimes feel like an exercise in futility, we very much like investments like this one which are market agnostic and have multiple analyzable aspects for us to dig our teeth into. It is worth noting that this investment process has been a team effort from the start, with numerous analysts and portfolio managers pitching in to help understand the various aspects of this case, from the bankruptcy process, to tax implications, to valuation of certain non-bank assets, etc. It is because of this, we believe, that we have largely been able to tune out the “consensus view” of this credit, appreciate it on a bottom-up basis as a unique, highconviction investment opportunity, and size it accordingly.

Williams Companies Williams is a holding company with interests in several businesses relating to natural gas. The E&P business produces natural gas primarily in the Rockies, the midstream segment processes natural gas, and the pipeline business transports natural gas. Williams recently announced that the Board is evaluating structural changes to enhance shareholder value. These structural alternatives may include separating the commodity price sensitive natural gas exploration and production (E&P) business from the more stable pipeline and midstream businesses. We believe the stock market does not properly value Williams, and a big reason for that is due to the different business profiles of the pipes and the E&P assets. While the vertically integrated business model has served to diversify earnings through the years, the equity market valuation gap between Williams and pure play E&P and pipeline companies has grown too wide for Williams’ management to ignore. The pipes business should be highly valued based on the consistent cash flows. On the other hand, the gas assets generate more lumpy cash flows and do not necessarily deserve a high multiple. However, properly capitalized, those cash flows are worth substantially more than what the current stock price is implying. Williams will report the results of its evaluation by the end of the first quarter of 2009, and we expect to hear progress on this separation. In a low oil and natural gas price environment ($45/bbl oil, $4/mcf natural gas) the E&P business generates $1 billion of EBITDA, the midstream business generates $0.7 billion of fixed fee based EBITDA, and the Pipeline business produces $0.95 billion of EBITDA. Given the stable nature of the pipeline EBITDA and the fee based portion of
Owl Creek Asset Management, L.P. •640 Fifth Avenue, 20th Floor • New York NY 10019 • T 212 688-2550 • F 212 753-2760

midstream EBITDA, these businesses should garner a higher valuation. The E&P business should trade for a lower multiple, and as a frame of reference, many comparables are trading at 4-5x EBITDA using higher consensus natural gas prices of $6+/mcf. Using a lower 4x EBITDA multiple for the E&P business at $4/mcf natural gas, the market is presently paying only 6x EBITDA for the pipeline business and a much lower multiple if one assumes $6/mcf natural gas. Comparable pipeline and midstream businesses are trading at 8-12x EBITDA, which, for various reasons, we believe are appropriate multiples. This analysis also ignores the significant growth potential and financial flexibility that Williams has in all three businesses, which provides additional margin of safety. In order to hedge the commodity related nature of this investment, we are short various securities in the event that our estimate of $4 gas proves to be high.

Owl Creek Asset Management, L.P. •640 Fifth Avenue, 20th Floor • New York NY 10019 • T 212 688-2550 • F 212 753-2760

Performance – Debt vs. Equity Attribution
Since Debt Equity Total 2002 * 89% 11% 100% 2003 66% 34% 100% 2004 40% 60% 100% 2005 42% 58% 100% 2006 19% 81% 100% 2007 5% 95% 100% 2008** -69% 169% 100% Inception 42% 58% 100%

* Inception was on February 1, 2002. ** In 2008, there was positive performance from debt and negative performance from equity (as indicated on the Gross Performance chart on the following page). Since Owl Creek’s combined performance (the denominator in calculating attribution) for 2008 was negative, this resulted in the debt attribution to be negative and equity attribution to be positive in the above chart. Note: The above percentages are calculated by geometrically linking monthly performance for debt and equity separately for each period and dividing each by the sum of debt and equity’s combined performance for each respective period. Past performance should not be viewed as indicative of future results. Performance herein is reflected for an investor who was invested in Owl Creek Overseas Fund, Ltd. since inception and is eligible to invest in new issues. This includes the appreciation/depreciation of the fair value of any special investment. Investors who invest with Owl Creek funds in the middle of a particular year, including after the establishment of a special investment, will have different monthly and yearly performance numbers.

Portfolio by Industry Type
Net Exposure

Industry Airlines Automotive Banks & Other Financial Institutions Building Materials & Trade Business Services Consumer Products Electric Utilities & Power Generation Energy Entertainment Government Bonds Healthcare Services Indices Liquidation Manufacturing Media & Entertainment Mining and Metals Other Pharmaceuticals and Medical Devices Real Estate Retail Special Purpose Acquisition Companies Telecom and Technology Tobacco Transportation Travel Services Sub-Total Cash and Short Proceeds Total

As of 12/31/08

3.6% 1.3% 0.6% -0.6% 0.1% -0.3% 0.8% -4.8% 2.7% 0.1% 3.2% -6.6% 8.6% -2.2% -0.8% 4.9% 0.9% 0.6% 2.9% -1.6% 0.3% 5.8% 0.8% 0.1% 0.2% 20.6% 79.4% 100.0%

Owl Creek Asset Management, L.P. •640 Fifth Avenue, 20th Floor • New York NY 10019 • T 212 688-2550 • F 212 753-2760

Gross Performance by Security Type
1st Qtr
2nd Qtr

3rd Qtr

4th Qtr

Total

Since
Inception 112.3% -4.3% -7.0% 5.5% 94.3% -10.8% 281.6% 126.0% 92.0% -10.8% 281.6% 323.5% -12.0% -10.8% 281.6%

2002 * 2003 Gross Performance by Security Type:
Common Stock Short Stock Short Bonds Bank Debt Corporate Bonds Expenses Total Portfolio Net Equity Net Bonds Expenses Total Portfolio Total Gross Long Total Gross Short Total Expenses Total Portfolio
-1.2% 1.9% 1.7% -2.1% 6.9% -1.6% 5.2% 0.8% 6.6% -1.6% 5.2% 2.6% 3.7% -1.6% 5.2% 25.5% -5.3% -10.8% 2.7% 49.7% -1.9% 60.7% 19.2% 37.9% -1.9% 60.7% 91.3% -15.6% -1.9% 60.7%

2004
25.5% -5.0% -2.5% 4.3% 11.3% -1.6% 33.1% 19.8% 13.3% -1.6% 33.1% 44.9% -7.4% -1.6% 33.1%

2005
9.5% -6.2% 1.1% -0.1% 1.4% -1.6% 4.1% 3.3% 2.4% -1.6% 4.1% 10.8% -5.2% -1.6% 4.1%

2006
39.9% -13.1% -1.2% 0.8% 5.8% -1.5% 26.9% 22.5% 5.3% -1.5% 26.9% 48.8% -14.2% -1.5% 26.9%

2007
47.8% -7.1% 1.7% 0.1% 0.4% -1.5% 40.8% 39.9% 2.2% -1.5% 40.8% 48.4% -5.9% -1.5% 40.8%

2008
-10.5% 14.0% 2.0% 0.0% 0.1% -0.4% 4.7% 3.1% 2.0% -0.4% 4.7% -10.5% 16.2% -0.4% 4.7%

2008
6.0% -1.6% -0.4% 0.0% 0.1% -0.4% 5.8% 6.6% -0.3% -0.4% 5.8% 6.1% -2.2% -0.4% 5.8%

2008
-20.8% 3.4% 0.0% -0.1% 0.7% -0.5% -17.6% -17.7% 0.6% -0.5% -17.6% -20.2% 3.4% -0.5% -17.6%

2008
-19.8% 18.8% 1.9% -0.1% 0.4% -0.4% -0.3% -2.0% 2.2% -0.4% -0.3% -19.7% 20.7% -0.4% -0.3%

2008
-39.7% 37.9% 3.5% -0.2% 1.2% -1.7% -8.9% -11.3% 4.6% -1.7% -8.9% -39.2% 41.9% -1.7% -8.9%

* Inception was on February 1, 2002. Note: Performance numbers are calculated by geometrically linking monthly performance for each security type for the relevant period. Past performance should not be viewed as indicative of future results. Performance herein is reflected for an investor who was invested in Owl Creek Overseas Fund, Ltd. since inception and is eligible to invest in new issues. This includes the appreciation/depreciation of the fair value of any special investment. Investors who invest with Owl Creek funds in the middle of a particular year, including after the establishment of a special investment, will have different monthly and yearly performance numbers.

Owl Creek Asset Management, L.P. •640 Fifth Avenue, 20th Floor • New York NY 10019 • T 212 688-2550 • F 212 753-2760

Portfolio by Asset Class
1st Qtr
2nd Qtr

3rd Qtr

4th Qtr

Total

Since
Inception 95% -57% -14% 4% 34% 38% 100% 38% 24% 38% 100% 133% -71% 62% 204%

2002* % of Average Cap by Sec Type:
Common Stock Short Stock Short Bonds Bank Debt Corporate Bonds Cash & Short Proceeds Total Portfolio Net Equity Net Bonds Cash & Short Proceeds Total Portfolio Total Gross Long Total Gross Short Net Long Total Gross
22% -10% -6% 5% 51% 38% 100% 12% 50% 38% 100% 78% -16% 62% 94%

2003
36% -14% -32% 6% 77% 27% 100% 22% 51% 27% 100% 119% -46% 73% 165%

2004
60% -38% -25% 10% 50% 43% 100% 22% 35% 43% 100% 120% -63% 57% 183%

2005
112% -57% -21% 4% 29% 33% 100% 55% 12% 33% 100% 145% -78% 67% 223%

2006
154% -73% -12% 3% 19% 9% 100% 81% 10% 9% 100% 176% -85% 91% 261%

2007
165% -112% -2% 1% 6% 42% 100% 53% 5% 42% 100% 172% -114% 58% 286%

2008
156% -154% 1% 1% 1% 95% 100% 2% 3% 95% 100% 158% -153% 5% 311%

2008
152% -111% 1% 1% 1% 56% 100% 42% 2% 56% 100% 154% -110% 44% 264%

2008
89% -60% 1% 1% 1% 68% 100% 29% 3% 68% 100% 91% -59% 32% 150%

2008
41% -34% 2% 2% 10% 79% 100% 7% 14% 79% 100% 53% -32% 21% 85%

2008
110% -90% 1% 1% 3% 75% 100% 20% 5% 75% 100% 114% -89% 25% 203%

* Inception was on February 1, 2002. Note: Portfolio numbers are calculated by taking the average exposure of the month end exposures.

Owl Creek Asset Management, L.P. •640 Fifth Avenue, 20th Floor • New York NY 10019 • T 212 688-2550 • F 212 753-2760

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