(Cayman) Statutory Mergers - Loan Financing

Privatisations by way of a Cayman Islands statutory merger are often financed by secured loans from banks. The merger process is frequently used to "take private" international Chinese businesses listed in the United States through a Cayman Islands incorporated company. Two "constituent companies" usually feature in a Cayman statutory merger; a newly incorporated Cayman company (the "Merger Sub") that merges with and into an existing, listed Cayman company (the "Target"), with the Target as the "surviving company". The Companies Law (2018 Revision) (as amended)) of the Cayman Islands (the "Companies Law") provides that upon the merger becoming effective (the "Merger Effective Time"), the Merger Sub shall cease to exist and the rights, the property (including choses in action), and the business, undertaking, goodwill, benefits, immunities and privileges of each of the constituent companies, shall immediately vest in the Target and subject to any specific arrangements entered into by the relevant parties, the Target shall be liable for and subject, in the same manner as the constituent companies, to all mortgages, charges or security interests, and all contracts, obligations, claims, debts, and liabilities of each of the constituent companies.

Other Cayman companies will often feature in the structure, for example acting as borrower and/or as holding company guarantor under the finance documents.

The Companies Law sets out the process, approvals and documents required to be followed, obtained and submitted to the Registrar of Companies in the Cayman Islands in order to complete a statutory merger, the specific details of which are outside the scope of this memorandum. For the purposes of this memorandum, we set out below, some of the key issues that lenders should be concerned with.

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CAYMAN ISLANDS
Rob JacksonPartnerT +1 345 914 4281rob.jackson@walkersglobal.com
Philip PaschalidesPartnerT +1 345 814 4675philip.paschalides@walkersglobal.com

DUBAI
Daniel WoodManaging PartnerT +971 4 363 7912daniel.wood@walkersglobal.com

HONG KONG
Andy RandallManaging PartnerT +852 2596 3305andy.randall@walkersglobal.com

LONDON
Jack BoldarinManaging PartnerT +44 (0)20 7220 4995jack.boldarin@walkersglobal.com

SINGAPORE
John RogersManaging PartnerT +65 6595 4673john.rogers@walkersglobal.com

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