Newsletter-21

Healthcare PPP Projects: Funders’ Direct Agreements* Att. Ozgur Kocabasoglu, Att. Nezihe Boran Demir Introduction Funders’ Direct Agreements (“FDAs”) are gaining greater recog- nition, especially with the introduction of public-private partnership (“PPP”) models in healthcare projects in Turkey. In PPP projects, FDAs are significant as they are the only agreement wherein both the third party, which is the Ministry of Finance of Turkey (“Administra- tion” or “MoH”) for the purpose of this Newsletter and the lenders are counterparties. Lenders would obtain more protection from the Administration, and would, therefore, be able to overcome certain obstacles through certain mechanisms incorporated under FDAs. In this article, we will analyze the background and significance of FDAs, the nature of FDAs under Turkish legislation, and the structure and content of the provisions of FDAs. We will also discuss certain provisions of the FDAs, such as step in rights. Background and Significance of FDAs The framework of the healthcare PPP projects in Turkey originates from the structure of the private finance initiative method in United Kingdom. Through the introduction of the PPP model in the Turk- ish healthcare sector, the Administration aim to bring private sector techniques and skills into public services. Such models are structured under project agreements so as to attract lenders, and to provide the opportunity to the project company to obtain financing. FDA, which is also referred to as lender’s direct agreement, is a tripartite agreement to be entered into by and between (i) the pro- ject company, which is the special purpose vehicle incorporated by * Article of March 2016