Lee&Ko successfully advised the mandated lead arrangers and the lender consortium in connection with an acquisition financing transaction pursuant to which a special purpose vehicle established by The Carlyle Group, a global private equity fund (PEF), acquired equity interests in Chung Ho Nais Co., Ltd. and its affiliates, Microfilter Co., Ltd. and MCM Co., Ltd. Under the acquisition financing, Hana Bank, Samsung Securities, Korea Investment & Securities, and Woori Bank acted as mandated lead arrangers and provided loans of up to KRW 803 billion to the borrower for financing (among others) the acquisition consideration.

The transaction incorporated a number of distinctive features from a structuring standpoint, including the facts that the acquisition involved three separate target companies and that a tiered security structure was devised whereby the secured lenders under the acquisition financing were granted first priority security interests followed by the sellers who were granted second priority security interests over the same collateral to secure certain deferred payments under the share purchase agreement. The latter gave rise to a need to clearly document the ranking of security interests and the manner in which any proceeds of enforcement were to be distributed among the secured parties and otherwise required a detailed consideration of the respective rights and obligations of the secured parties extending beyond the financing parties. Accordingly, a sophisticated legal structure was devised which integrated elements of the acquisition agreement, the facility agreement and the security documents in order to protect the lenders’ interests in their capacity as secured lenders while simultaneously ensuring the smooth execution of the transaction as a whole. Furthermore, given that the transaction was a cross-border transaction sponsored by a global private equity fund, it was also critical to coordinate and align the respective interests of the various domestic and international parties involved in the transaction resulting in a relatively complex negotiation process.

From the structuring stage of the transaction through to financial close, Lee&Ko provided comprehensive legal advice and assistance to the mandated lead arrangers and the consortium of lenders including (without limitation) preparation of various financing agreements and related documents, conducting negotiations with the sponsor and their counsel, and preparation and review of closing deliverables. Drawing on its unparalleled experience and expertise built on many years of having advised on numerous cross-border acquisition financings, Lee&Ko devised and executed on an optimal financing structure that balanced the secured lenders’ needs with the sponsor's bespoke requirements; and successfully supported the timely closing of the transaction despite the tight and rapidly evolving transaction timetable.

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