The Regulation on Amendments to the Regulation on Debt Assumption by the Undersecretariat of Treasury ("Regulation") has entered into force following its announcement in the Official Gazette dated 25 December 2019.
Prior to the amendments introduced with the Regulation, the amount of debt assumption that could be undertaken by the Ministry of Treasury and Finance (formerly the Undersecretariat of Treasury), depended on whether the project agreement was terminated due to the project company's fault. If the agreement was terminated for any reason other than the company's fault, the entire principal amount of the loan obtained from abroad and the financing costs were assumed; whereas, if the agreement was terminated due to the company's fault, only 85 percent of the principal amount of the loan, plus the entire amount of the financing costs, were assumed.
Following the above-mentioned amendment, this distinction will no longer apply, and any debt assumption can now cover the entire principal amount of the loan amount and financing costs.
Additionally, the Regulation provides that the ratio of equity to total investment amount in projects subject to debt assumption must be no less than 30 percent. This means that the minimum equity ratio required for debt assumption is higher than those required under Law No. 6428 on the Construction, Renovation and Purchase of Services by the Ministry of Health by way of the Public-Private Partnership Model and Amendments to Certain Laws and Decrees with the Force of Law, and Decision No. 2011/1807 of the Council of Ministers on Procedures and Principles of Implementation of the Law No. 3996 on the Procurement of Certain Investments and Services under the Build-Operate-Transfer Model, both being 20 percent.
Pursuant to the provisional articles of the Regulation, the amendments described above will also be applicable to new debt assumption agreements to be executed in relation with projects for which debt assumption has already been undertaken, with the exception of projects that were announced before 1 December 2012.