Newsletter-21

100 NEWSLETTER 2016 the successful bidder of the tender for the healthcare PPP project in Turkey, (ii) the lender(s), who will be providing financing for the PPP project, or the agent of the lenders of a syndicated loan, and (iii) the MoH as the administration in healthcare PPP projects in Turkey. The main reason to execute an FDA in a PPP project is to protect the lenders from their losses, when the project company fails to ful- fill its key obligations under the project, or when the termination of the project agreement is threatened. It could be ascertained from the reasoning of the Law on Construction and Renewal of and Obtain- ing Service for Facilities by Public-Private Partnership Models by the MoH and Amendments to Certain Laws and Decrees with the Force of Law 1 (“PPP Law”) that it is one of the intentions of the PPP Law to improve the bankability of PPP projects. In Turkish healthcare PPP projects, the project company grants a full security pack, which particularly comprises mortgage over the usufruct right, transfer of receivables as a security, account pledge, share pledge, etc. , to the lenders of the project. As a matter of Turkish law, there exist certain arguments and discussions amongst scholars regarding the effectiveness of certain securities that have not yet been tested before the courts. Therefore, FDAs gain greater standing in the eyes of the lenders as a more substantial security as compared to those granted within the security pack under the project. Nature of the FDAs under Turkish Legislation With respect to the healthcare PPP projects, although there is no explicit reference to the execution or the nature of FDAs under the PPP Law, it is set forth under the PPP Law that the Administration and the lenders may agree to change the shareholding structure of the project company under certain conditions once the project company defaults. In this sense, the legislator enables execution of an agreement between the Administration and the lenders of the healthcare PPP project and further opens the door for the lenders to agree on step-in rights. In 1 The Law on Construction and Renewal of and Obtaining Service for Facilities with Public-Private Partnership Model by the Administration and Amendments to Certain Laws and Decrees with the Force of Law under Law No. 6428 published in the Official Gazette dated 9 March 2013 and numbered 28582.