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Published on August 24, 2007

Bank of Ayudhya (BAY) will buy GE Capital Auto Lease, a leasing firm of US giant General Electric, as part of its policy of being a universal bank with GE as a partner.

In a statement filed with the Stock Exchange of Thailand, the bank yesterday said it would buy GE Capital Auto Lease (GECAL) from General Electric Capital Asia Investment (GECAI) for Bt17 billion.

However, BAY said the price was subject to an adjustment mechanism that would reflect changes in the net book value of GECAL at completion but that it should not be more than Bt17.25 billion.

GE is a major shareholder in  the bank and GECAL. GE, via GE Capital International Holdings, owns 33 per cent of BAY.

The bank said it would purchase all GECAL shares from GECAI and other individual shareholders, including the hire-purchase portfolio of Total Service Solution - formerly known as GE Money Retail Bank - which would be transferred to GECAL prior to the acquisition.

The bank has appointed Trinity Advisory 2001 as an independent financial adviser.

The acquisition transaction is also subject to approval from a shareholders' meeting scheduled for September 26.

The transaction agreement stipulates that GE and its affiliates will enable GECAL to continue operating its automobile hire-purchase and leasing operations as a stand-alone business after completion of the acquisition.

In addition, BAY will provide financial support to GECAL. This will include payment of a guarantee fee to General Electric Capital (GECC), due to that company's provision of a guarantee for Bt400 million worth of bonds issued by GECAL, the full guarantee of the loan under which GE and its affiliates will lend to GECAL an amount of not more than Bt31 billion for a period of not more than four years on arms-length terms to be agreed.

The financial support also includes the provision of shareholder loans or obtaining an outside financing loan to GECAL, as appropriate, by the bank up to a maximum of Bt45 billion, in order for GECAL to refinance GECAI and its affiliates.

GE, through GECC and GECAI, owns 99.99 per cent of GECAL.