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First Opportunity Fund, Inc. Announces Line Of Credit And Use Of Leverage

First Opportunity Fund, Inc. (OTC: FOFI) (the “Fund”) announced today that it has entered into a committed secured credit facility agreement with BNP Paribas Prime Brokerage, Inc. ("BNP"), which currently has a maximum commitment amount of $30 million (the “Credit Facility”). The Fund will use the Credit Facility as leverage and may seek to increase the commitment amount from time to time, depending on the Fund’s ability to satisfy BNP’s asset coverage requirements. The Credit Facility provides for a secured line of credit for the Fund, whereby Fund assets are pledged against advances made to the Fund. The Credit Facility has a floating rate of interest tied to short-term interest rates.

Summary of Risks Associated with the Credit Facility: The purchase of securities while borrowings are outstanding under the Credit Facility will have the effect of leveraging the Fund. Such leveraging increases the Fund’s exposure to capital risk, and borrowed funds are subject to interest costs that will reduce net income. The use of leverage by a Fund creates an opportunity for greater total return, but, at the same time, creates unique risks. For example, leveraging may exaggerate changes in the net asset value of Fund shares, as well as in the yield on the Fund’s portfolio. The interest rate under the Credit Facility is floating, such that fluctuations in the interest rate environment may have a material impact on the cost of deploying and maintaining the Credit Facility. Although the principal of such borrowings will be fixed, the Fund’s assets may change in value during the time borrowings are outstanding. Borrowings will create interest expenses for the Fund that could exceed the income from the assets purchased with the borrowings. To the extent the income or capital appreciation derived from securities purchased with borrowings exceeds the interest the Fund pays on the borrowings, the Fund’s return will be greater than if leverage had not been used. Conversely, if the income or capital appreciation from the securities purchased with borrowings is not sufficient to cover the cost of borrowing, the return to the Fund will be less than if leverage had not been used and, therefore, any amount otherwise available for distribution to stockholders as dividends will be reduced. In the latter case, the Fund’s advisers, in their best judgment, may nevertheless determine to maintain the Fund’s leveraged position if they expect that the benefits to the Fund’s stockholders of maintaining the leveraged position will outweigh the current reduced return.

Current stockholders and prospective investors should consult their own financial and legal advisors about risks associated with investing in the Fund in light of its intent to deploy leverage.

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