Power scheme finished at eleventh hour

Three City firms are celebrating winning a race against time to finish a $467m gas power financing project which could have been scuppered by an imminent Turkish Supreme Court decision.

The non-retrospective ruling, which is due in the next few days, could still affect other infrastructure projects, together worth billions of pounds, which City firms and foreign sponsors are working on.

It will come in a Turkish Supreme Court test case that will set a precedent as to whether the Turkish Government can guarantee build operate transfer projects – under which private investors build and operate large infrastructure projects which are eventually transferred to the Government.

The $467m deal was to finance the building and operation of a 450MW power station at Marmara, western Turkey. It involved project company Uni-mar Enerji Yatirimlari, a joint venture between three international sponsors – Japanese trading house Marubeni, Brussels-based trading house Unit International and the UK's National Power.

Their legal adviser was Linklaters & Paines, which supplanted Chicago firm Winston & Strawn in March this year. Since the financing was done entirely under English law, it is believed the sponsors wanted an English firm.

A twin project, Trakaya, to build a power station at a neighbouring site at Marmara, western Turkey, was financed with US money under New York law and used US firms. It was completed this summer.

Clifford Chance partner Geoffrey White, who acted for the Import Export Bank of Japan, which provided an untied loan to the Uni-mar project, said: “There was doubt over whether the Turkish Government could guarantee the project. A decision is pending and we had to complete before the ruling.” He said if the decision had gone the wrong way and the project had not been completed then it would have had to be completely restructured.

Allen & Overy partner Ian Annetts, who acted for the arrangers of the debt, Banque Paribas and Citibank, said his firm was involved in several other big Turkish schemes which could be delayed or even jeopardised if the Supreme Court rules that the Government is not able to guarantee projects.

A&O fielded three other partners in the project- Brian Harrison, Philip Wood and Andrew Joyce – and six assistants.