An agreement has been reached between all relevant parties including Doğan Enerji Yatırımları Sanayi ve Ticaret A.Ş. ("Doğan Enerji"), our direct subsidiary in whose capital we have a share of 100% and Boyabat Elektrik Üretim ve Ticaret A.Ş. ("Boyabat"), the joint venture in whose capital Doğan Enerji holds a share of 33.00%, and the banks on the restructuring of the existing bank loans of Boyabat, and the signatures of the “Loan Amendment Agreement” (“Agreement”) and of the other associated documents have been completed as of today.
In summary as per the Agreement for the “refinancing” specified to have a principal repayment of 2,000,000 USD per year, with a total term of 7 years, with a principal grace period of two years, and within the scope of a cash sweep mechanism in Boyabat after two years, and the annexed documents;
i. Within 11 working days following the date the Agreement has been made, our Company ("Doğan Holding") will make in cash and in a singe payment, the total payment of 8,650,072.58 USD and 2,482,125.06 Euro, which is its own share in its capacity as the guarantor with regards to the loan interests that have accrued for the existing loans, but not have been paid by Boyabat yet. This amount that will be paid also includes the 2,854,523.95 USD and the 819,101.27 Euro which belongs to the share of one of the shareholders, but not have been paid, and which corresponds to Doğan Enerji's share. The Agreement will become effective when the relevant payments are separately made by guarantors Doğan Holding and the Doğuş Group. On the other hand, there is a financial liability of 18,406,000 USD (103,595,000 Turkish Liras) about the existing loan payments in our Company’s consolidated financial statements of March 31, 2019, disclosed to the public most recently, and such liability will also be lifted as a result of the abovementioned Agreement having been signed.
ii. On the other hand, as per the Letter of Guarantee signed as per the abovementioned Agreement, a “guarantee upper limit” that each Guarantor will individually be responsible for has been set, and such amount has been limited to 33,000,000 USD for our Company ("Doğan Holding"). Within the scope of the guarantee, if in case there is an amount that is not met as a result of the payment of “operational expenses”, “public liabilities (DSI – State Hydraulic Works)”, “primary loan and junior loan expenses”, and the “principal of the loan” (“cash sweep”) respectively, out of the cash obtained by Boyabat as a result of its operational activities, such sums will be paid by the Guarantors to the extent of their shares in the capital, and in such a way as to not exceed the “guarantee upper limit” (the amounts associated with the junior loan belong to Boyabat, and are outside the scope of the guarantee mechanism). In case Boyabat can fulfil in a smooth manner the abovementioned interest and obligatory payments on a yearly basis, with the cash it will generate, the guarantee payment amount (33,000,000 USD) will be made in 2025, the last installment of such restructured loan.
iii. Accordingly, it is assessed that as per the abovementioned Agreement, no additional liabilities will arise in the future for our Company (Doğan Holding) and our subsidiary Doğan Enerji with the exception of the abovementioned sums, and our liability has been restricted to such sums.
iv. The shares of Doğan Enerji, our subsidiary, held in Boyabat are still pledged in favor of the creditor banks, and in case it is legally accepted that Boyabat’s liabilities have not been fulfilled following the abovementioned Agreement having been signed, even after the sums guaranteed by the Guarantors are paid, the control of Boyabat's administration may be transferred to the creditor banks. The “cross default” provisions will not be applicable for the Agreement in that case, as far as the provisions of other loan agreements are concerned. Consequently, the financial results of Boyabat, included in the financial statements of our Company via an “equity pick-up method” will be removed from the financial statements as of the relevant date. Even in such a case, such procedure (removal from the financial statements) is not expected to have a “material” effect on our financial statements.