An Exclusive Interview with: Zeynep Fencimen Partner, VERDI Law borrowing on the project company’s debt repayment capacity, and proactively identifying potential complications. We then worked to establish a framework that would effectively address these issues. What challenges were encountered during the structuring of the USD 405 million bond issuance? The key challenge was to maintain the rights and priorities of the existing senior creditors on the collateral package unchanged. The existing senior creditors were keen on preserving their senior position on the entire collateral package. This required careful negotiation of collateral sharing arrangements, payment priorities, and balancing the interests of both creditor groups. The senior creditors desired to maintain their whistle blower position when the project company’s payment performance became uncertain. In the end by providing certain piggy-back ride to the bond financing, a fair balance was reached by two separate lender groups. How does this deal set a precedent for future public-private partnerships in Türkiye? Commissioning additional works in existing BOT projects has been a trend in Türkiye lately. This development presents a challenge for the project company, which has already assumed a sizable debt to finance its original undertaking, where it now must take on additional debt to finance the new construction. Seeking a new financing is a challenge because almost all the assets of the project company were provided as collateral in the first financing. Attracting additional financing is not very easy yet the Kilyos Tunnel financing proved that alternative financing is possible. Were there any unique legal considerations for the Third Bridge project bond issuance? Bond financing in an infrastructure project commissioned under BOT Zeynep, can you expand on your role during this project with J.P. Morgan and how you facilitated this financing? VERDI Law had been engaged by the existing lenders of the Northern Marmara Motorway Project back in August 2013, where the project company was commissioned for the Third Bosphorus Bridge and the Odayeri-Paşaköy section of the Northern Marmara Motorway project on a BOT basis. We were engaged as the Turkish legal counsel for the financing of that project where such financing was structured as a conventional bank financing. While the project company’s licensed term for the operation of the Third Bosphorus Bridge and the OdayeriPaşaköy section was continuing, the same company was commissioned for the construction of the Kilyos-Sarıyer Tunnel (“Kilyos Tunnel”) as an additional work to its original undertaking under its existing appointment. The project company sought financing alternatives for the construction of the Kilyos Tunnel and finally, it was determined that the most suitable financing would be the issuance of a project bond for the Kilyos Tunnel. In short, the project company had two separate lender groups comprised of the conventional banks (defined as “senior creditors” in the transaction documents) that provided financing under a conventional bank financing and bond investors represented by JP Morgan. We, as Verdi Law, acted for the senior creditors as their Turkish legal counsel, to advise on the effects of the bond financing over the bank financing. Our role encompassed ensuring the protection of the rights and priorities of the senior creditors, including the allocation of collateral and payment priorities. We focused on balancing the interests of the two creditor groups, assessing the impact of the additional TRANSACTION INTERVIEW 59 We, as Verdi Law, acted for the senior creditors as their Turkish legal counsel, to advise on the effects of the bond financing over the bank financing.
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