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Acquisition and leveraged finance refers to the legal and financial structures used to facilitate the purchase of companies or significant business assets, often utilizing borrowed funds. In Thailand, these transactions are common in mergers and acquisitions, particularly where a buyer seeks to use the assets or future cash flows of the target company as security for the loan taken to fund the acquisition. This type of finance involves complex structuring, negotiation, and compliance with local banking, securities, and corporate laws.
You may need legal assistance in acquisition and leveraged finance for several reasons:
Acquisition and leveraged finance transactions in Thailand are governed by a combination of laws and regulations, including the Civil and Commercial Code, Securities and Exchange Act, Foreign Business Act, Public Limited Companies Act, and banking regulations overseen by the Bank of Thailand. Key aspects include:
Leveraged finance involves the use of borrowed funds to acquire a company or its assets, with the acquired assets or future revenue streams serving as collateral for the debt. This enables buyers to undertake larger deals with less equity capital upfront.
Yes, a Thai company can provide security such as mortgages or pledges over its assets to support an acquisition loan, subject to certain legal requirements, registration with relevant authorities, and ensuring that the granting of security is permitted under Thai law and the company's constitutive documents.
Yes, the Foreign Business Act imposes restrictions on foreign ownership in specific sectors. Foreign investors may need to structure deals carefully and comply with licenses or approval requirements based on the nature of the business acquired.
Acquisition loans in Thailand are often structured through senior secured loans, mezzanine finance, or a combination of debt and equity. Security is usually taken over the shares of the target company and key assets. The structure must comply with local law and any regulatory constraints.
Financial assistance refers to a target company providing assistance (like guarantees, loans, or security) to help the buyer fund the purchase of its own shares. In Thailand, such assistance is generally restricted to prevent abuse, especially in public companies, so legal advice should be sought before structuring such arrangements.
Comprehensive legal and financial due diligence is essential, covering the target’s corporate structure, regulatory status, financial health, existing liabilities, litigation, and asset ownership, to identify risks that could affect the financing or future operations.
Lenders may enforce security interests through court proceedings. The process depends on the type of asset used as collateral and compliance with procedural requirements under Thai law. Insolvency or bankruptcy of the borrower also affects the enforcement process and creditors’ rights.
Yes, both financing structure and acquisition method carry tax implications such as stamp duty, withholding tax, and value-added tax. Interest deductibility, transfer pricing, and thin capitalisation rules should also be considered in cross-border financings.
Depending on the size and sector, certain transactions may require approval or notification to agencies like the Bank of Thailand, Securities and Exchange Commission, or Trade Competition Commission, especially in regulated industries.
Yes, but such loans are subject to foreign exchange regulations and reporting requirements, especially if repayments will be made from Thai-based revenue. There may be certain restrictions and conditions needing compliance with Bank of Thailand rules.
If you need more information or support related to acquisition or leveraged finance in Thailand, consider consulting these entities:
If you believe acquisition or leveraged finance applies to your business plans in Thailand, it is crucial to take the following steps:
Seeking the advice of an experienced legal professional early in the process can help anticipate and navigate legal complexities, mitigate risks, and maximise the value of your acquisition or investment in Thailand.
