The major creditors of Turk Telekom have called in their loans and will take control of the company, bringing the saga of the country’s largest default to an end.
All the creditors, including, Borsa Istanbul-listed Akbank, Garanti Bankasi and Is Bankasi, have reached an agreement on restructuring the debts of Ojer Telekom (Otas), the major shareholder of Turk Telekom, provided under the loan agreements, the three listed lenders said on July 6 in separate bourse filings.
Accordingly, a special purpose vehicle set by OTAS’ Turkish creditors will takeover a 55% majority stake in Turk Telekom. The deal is subject to required approvals from related authorities.
Turk Telekom shares rose further by 3.41% d/d to TRY5.77 as of 14:30 local time while benchmark BIST-100 was also up 1.88% to 100,585.
Annual loss on Turk Telekom shares stood at 5.56% versus a 12.68% y/y decline on the BIST.
Turk Telekom shares stood at TRY4.92 on July 3 at closing and they posted sharp increases in the following days on the restructuring news.
Otas’ default currently stands as Turkey’s largest default.
On July 5, Bloomberg reported, citing unnamed sources close to the deal that Turkish banks will call in $4.75bn worth of debt and take control of Turk Telekom.
Two sources close to the matter told Reuters also on July 5 that creditor banks will extend a loan of up to $4bn to the special purpose vehicle that would takeover Turk Telekom stake.
The majority stake in Turk Telekom will be used as collateral for the loan. The ultimate goal of creditors is to be able to sell the stake. The lenders conducted talks with potential buyers Saudi Telecom Company and Qatar-based Ooredoo ORDS.QA but failed to reach agreement, according to Reuters’ sources.
Otas borrowed $4.75bn in 2013 to refinance its acquisition of a 55% stake in Turk Telekom.
Akbank has $1.7bn worth of exposure to Otas’ loan while Garanti has contributed with $1bn and Is Bankasi with $500mn.
Turkey’s corporates have been on a borrowing binge but now the credit environment is becoming less benign they will have to start deleveraging. The total debt being restructured by Turkey’s large companies is estimated to stand at around $20bn but there is no official data available. Several large Turkish conglomerates have already begun the restructuring process.
Last month, local media reports speculated that another Turkish conglomerate Borusan Group has also applied for debt restructuring.
Borusan Yatirim, a bourse-listed Borusan Group subsidiary, denied on May 23 in a bourse filing speculations over debt restructuring plans.
Borusan Group is active in automotive, steel, energy and logistics industries. It posted a turnover of around $4.7bn worth of turnover in 2017.
In May, Yildiz Holding concluded months of discussions with almost a dozen banks to restructure two loans totalling $6.5bn.
Three sources were quoted by Reuters as saying on June 28 that Turkish conglomerate Gama Holding was in talks with Malaysia’s Tenaga Nasional and other potential buyers about a sale of its 50.5% stake in its Gama Enerji energy unit. The disposal would take place as part of a $1bn debt restructuring.
Dogus Holding has neither confirmed nor denied several reports that it is restructuring its own debt, but it has been selling down stakes in some of its top assets, including shrinking its holding in Dogus Restaurant Entertainment and Management (d.ream, the entertainment arm that owns Nusr-et), known for flamboyant international star chef Salt Bae, and other restaurant chains.
The net short FX position of the non-financial firms slightly declined by 0.66% y/y to $221bn at end-April, central bank data showed on July 3.