Overview of Project Finance and As a Security Device 'Subordinated Loans' and Its Reflection in Practice under Turkish Law

Smart buildings, large airports, sports stadiums, power plants or in broad sense energy infrastructures that provide renewable energy; these mega constructions permanently require robust finance due to the enormous risk that the project owner bears the whole time. Not only a single company but widespread participation with various finance/banking corporations along with joint venture/s and mostly States must gather to achieve such projects. The subordinated loan comes into the scene in the form of a useful security device in convincing senior lenders. Nevertheless, subordinated loans are not only serving to a purpose of security, but as a matter of fact, it is called subordinated debt as a method of financing a project. Although the application of subordinated loan does not seek many conditions to meet on the side of the parties, still its unique nature lays out very extinguished ground rules for the parties to comply.Additionally, there can be different pathways for parties to choose in carving out a subordination. For instance, the conclusion of a shareholder loan agreement, inserting a subordination clause or even sometimes a contract itself only to clarify parties' rights and obligations under the new scheme for reimbursement of the senior and junior loan denote to the point illustrate its complexity . Whereas the implementation of such a device is generally dealt in the same manner in the international arena, under Turkish law few diversifications are stemming from the characteristics of the Turkish law. In this respect, we found it quite interesting and valuable to scrutinize the methods that are applied under Turkish law for parties to establish such security in financing a project while providing a broad-and-clear text on the subordinated loans from an international perspective