Developers trying to finalize projects funded by clean energy tax credits and multiple loans face challenges proving to the Internal Revenue Service that their debt isn’t significantly linked to prohibited foreign entities. A new rule can disqualify credits if 15 percent or more of a project’s total debt is tied to entities with strong links to foreign governments deemed adversarial by US law.
“The 15 percent debt rule has resulted in a lot of uncertainty,” Bracewell’s Peter Rogers told Law360. “It’s been a constant topic of discussion with clients, borrowers and lenders.”
The primary focus, he said, has been on what documentation is needed to give parties comfort that a borrower is not an ineligible project owner by virtue of having too much of its debt held by a Foreign Entity of Control.
