The transaction was structured in two layers. The underlying funds were contributed by a senior lender, an SPV set up by Hong Kong-based private equity firm Gaw Capital Partners ("Gaw Capital") and other junior lenders with PACM acting as a co-investor and as the junior agent. A newly established SPV which is jointly owned by PACM and Gaw, Upper Genius Limited, ("UGL"), acted as the immediate lender to HNA. The loan granted to HNA was supported by a security package including a first-ranking mortgage over a luxury house at the peak in Hong Kong and guarantee from HNA.
In order to balance the interests between the senior and junior lenders, the parties have entered into various bespoke agreements to govern the priority amongst themselves. A third party paying agent and common security agent have been engaged to handle payments between the two layers of loans and other administrative work involving securities granted to UGL to ensure neutrality in administration.
The deal was highly negotiated during this difficult time amidst the COVID-19 pandemic when the market is less certain. This transaction is also unique in its senior-junior structure and the tailored mechanism to govern the lenders' priorities and respective interests.
Lead partner Daniel Lau commented, "It is impressive that this financing is closed at such challenging time, and it will not happen if the parties are not prepared to deploy a creative and bespoke structure, and engage in constructive negotiation to deliver a result that is satisfactory to all parties involved."
The Ashurst team was led by partner Daniel Lau, supported by Sharon Cong, Hayley Hui, Kristy Tang and Ellie Hung.
