⚡️ Part 4: Financing Issues – Key Notes for Legal Due Diligence in Renewable Energy (RE) Projects in Vietnam 🌱

Here are 4 key points to consider:

1. Lender Approvals for Acquisition

When acquiring shares or assets in an RE project, securing lender approval is crucial, particularly if the project’s assets or shares have been pledged as collateral. This process can become even more complex when dealing with parent or corporate guarantees from seller in very early stage (may before signing the SPA). For a more detailed discussion on these challenges, you can refer to my previous post: https://lnkd.in/g6HiEQE5

2. 🛠️ Collateral on Shares and Project Assets

In most RE projects, both shares in the project company and project assets (e.g., land use rights, assets, and receivables) are pledged as collateral to secure financing. Buyers should conduct a thorough review to:
(i) Identify existing collateral arrangements, including lender consents required for share transfers.

(ii) Assess the enforceability of these security interests, particularly if foreign lenders are involved.

(iii) Plan for the release, amendment, or establishment of new collateral post-acquisition, ensuring alignment with the buyer’s financing structure and valuation.

3. 💵 Refinancing Plans Post-Acquisition

If the buyer plans to refinance after completing the acquisition, it’s essential for the seller to communicate this plan to their legal counsel early in the process. Understanding the feasibility and necessary steps in advance can help avoid unexpected disruptions to the buyer's business plan and streamline the refinancing process right after/in parallel with the M&A process.

4. 🌐 Offshore Loan Compliance

For transactions involving offshore loans, compliance with Vietnam’s foreign loan regulations is critical. Missteps in this area can lead to regulatory complications and delays. Legal advisors should carefully review the loan structure to ensure compliance with requirements such as registration, reporting, and permitted purposes of offshore funding.

📖 Stay tuned for the next part of this series!

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