SINGAPORE Law and Practice Contributed by: Doos Choi, Pierre Dzakpasu, Janelene Chen and Pieter de Ridder, Mayer Brown
3.4 Use of Proceeds and Acquisition Financings There are no such restrictions. We are not aware of any take-private financings in Singapore being provided by a private credit fund, so it remains to be seen whether financial advisers will seek to diligence such funds in the certain funds context in the same way as they would for the equity component being provided by a private equity sponsor bidder. There are no particular challenges applicable to a private credit fund specifically (versus, for example, a bank lender) in providing acquisition financing on a private M&A. 3.5 Debt Buyback This is a matter for negotiation on a case-by- case basis. 3.6 Recent Legal and Commercial Developments Some private credit funds prefer to provide their investment in the form of notes rather than loans, but this tends to be more a matter of form over substance. 3.7 Junior and Hybrid Capital Junior tranches introduced to pre-existing struc - ture are typically holdco loans without any direct recourse to the underlying assets or business, usually because such assets and business have already been secured in favour of the first- ranking senior tranche. As a commercial mat - ter, such senior lenders will rarely consent to second-ranking claims, even if an intercreditor agreement is proposed. If a financing is originated with a multi-tiered financing solution in mind, then whether the junior tranche will benefit from second-ranking guarantees and security will vary on a case-by-
on the nature, type and location of the underly - ing collateral; and any contractual subordination arrangements will take the form of an intercredi - tor or subordination agreement. In the Asia context, where recourse to individual founders or “promoters” may be considered important to the credit, personal guarantees are often sought. Where an important component of the structure is the establishment and operation of controlled bank accounts, there will often be account bank agreements with third-party service providers (typically the agency business of a commercial bank or an independent service provider). “First-Out, Last-Out” or other transactions which require an agreement among lenders are not very common in Asia, but have featured in investments in Australia where unitranche struc - tures are more common. As noted above, the structuring of private credit investments in Asia will be heavily influenced by local laws and regulations, and this will inevitably affect the documentary terms. Within the direct lending context where private credit is being provided to financial sponsors to finance an acquisition, the latest market terms on leveraged and acquisition financings can be expected to influence terms. The Asia market tends to be more conservative in this space than the US or UK/Europe, but global sponsors, in particular, continue to seek equivalent terms wherever they invest in the world. 3.3 Restrictions on Foreign Direct Lenders Foreign lenders are not restricted in any way from providing private credit or taking security.
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