ChinaCo take-private placeholder loan first

Author: Ashley Lee | Published: 18 Jul 2013
  • The takeover of Feihe International is the latest in a string of US-listed ChinaCo take-privates;
  • Its Utah incorporation was unusual and required counsel to consider US litigation risk;
  • It was the first take-private to use an onshore placeholder loan;
  • But counsel see take-privates as bespoke deals, and expect to see a wide variety of financing structures.

Feihe International’s recent take-private was the first to include a placeholder loan, and is an example for the growing number of small US-listed ChinaCos going private.

The China-based producer of diary products encountered increased litigation risk because it was incorporated in Utah, which required careful consideration from the company’s special committee.

The deal signifies Asian banks’ increasing comfort with these Chinese take-privates. This was the first take-private to include a placeholder loan for increased financing certainty, which was provided by two Taiwanese banks.

The scope of targetcos that banks and sponsors are...