US VIRGIN ISLANDS Law and Practice Contributed by: George H.T. Dudley, G. Hunter Logan, Kurt Petri and Anna Vlasova, Dudley Newman Feuerzeig LLP
3.3 Restrictions and Controls on Foreign Currency Exchange There are no specific USVI laws imposing restrictions, controls or other concerns regarding foreign currency exchange. United States federal laws and regulations apply. 3.4 Restrictions on the Borrower’s Use of Proceeds There are no specific USVI laws restricting the bor- rower’s use of proceeds from loans or debt securities. 3.5 Agent and Trust Concepts Agent and trust concepts are recognised in the USVI. 3.6 Loan Transfer Mechanisms Lenders making residential mortgage loans may take advantage of the Mortgage Electronic Registration System. Lenders may also assign their interests under loan documents to another person or entity. 3.7 Debt Buyback Debt buyback by the borrower or sponsor is permit- ted. 3.8 Public Acquisition Finance Contrary to some European jurisdictions and to Can- ada, there are no “certain funds” provisions in USVI law or practice, which means that, as a general rule, a potential acquirer of an entity is not legally required to have “certain funds” or, in other words, fully com- mitted financing in place at the time it makes a public offer to acquire a company. Nor is there a practice in the USVI of making public filings of any such acquisitions, except when such acquisitions require regulatory approvals or consents in which case public notice in the normal course occurs because of notice of a governmental step or hearing that is a condition precedent of an acquisition. Financings that involve the government of the United States Virgin Islands (GVI) are arguably an exception to the general rule. When the GVI borrows funds, whether by private activity bonds, municipal bonds, or bonds or notes in anticipation of revenues or taxes,
the GVI typically acts through the Virgin Islands Public Finance Authority (PFA), which is the GVI’s finance conduit, and these transactions are approved by the PFA’s Board of Directors, the terms are publicly report- ed and the underlying financings are handled legally in the same manner as municipal bond financings are handled throughout the USA, including standards of disclosure used in the USA such as adherence to the filing requirements of the Municipal Securities Rule- making Board/EMMA website. In certain transactions involving the obtaining of pub- lic regulatory approvals of a GVI agency, the applicant can request “confidential treatment” as to the docu- mentation submitted. By contrast, returning to the issue of standards of documentation used in the USVI as to privately gen- erated acquisition financing, both long-form and short-form documentation are commonly used by the banks financing these transactions, including early-stage documentation such as “indicative term sheets” for more complicated transactions, followed by more commitment letters, with closings on financ- ings scheduled to coincide with the closing on the underlying acquisition. Lenders in the USVI can be international and institutional lenders making a one-off financing or local banks in the USVI, which are often headquartered elsewhere in the Caribbean, typically in Puerto Rico, which is located about 55 miles west of the USVI, or the British Virgin Islands, which is located very close to the USVI. As to the kinds of collateral used to secure acquisi- tion financing in the USVI, the full range of security devices are regularly used depending on the type of collateral, the size of the financing and the creditwor- thiness of the borrower. Real estate collateral is often used, which includes a mortgage recorded with the Recorder of Deeds, a division of the Office of the USVI Lieutenant Governor, along with title insurance pro- vided by recognised underwriters. Other collateral includes asset and inventory pledges, pledges of stock and other securities collateral, per- sonal or corporate guarantees, deposit account con- trol agreements, as well as irrevocable standby letters of credit on occasion.
660 CHAMBERS.COM
Powered by FlippingBook