Vestel Elektronik (VESTL),  a unit of Turkish conglomerate Zorlu Holding, has hired restructuring specialists Houlihan Lokey (New York/HLI) to lead talks with holders of its $500mn eurobond (XS2817919587 - US92548MAA53), Vestel said on July 9.

The paper maturing in May 2029 fell sharply following the announcement, dropping 7 cents on the dollar to trade at a deeply distressed level of 52 cents, Bloomberg reported. The Vestel shares, meanwhile, were up about 3%.

Next coupon on November 13

In May, the company delivered the fourth coupon payment on the paper. The next one is scheduled for November 13.

In May 2024, Vestel sold a $450mn 5-year eurobond (XS2817919587) at a coupon rate of 9.75%. In June 2024, the company sold an additional $50mn of the paper via a tap issue.

The paper was priced at 99.516 in the auction held in May 2024. The price had been hovering in the 66-67s before falling to the 40s after the July 9 announcement.

The paper currently offers a 40-50% yield.

Turkey’s CDS remain in the 220s while the yield on the Turkish government’s 10-year eurobonds is hovering around the 7%-level.

Restructuring at home too

On June 26, the company applied to Turkish financial institutions to restructure its local bank loans under Provisional Article 32 of the Banking Law No. 5411 and relevant legislation.

In February, Reuters quoted unnamed people as saying that Zorlu Holding and Vestel were in debt restructuring talks with banks.

Last year, Bloomberg reported that Omer Yungul, CEO of Vestel Elektronik (VESTL) and Zorlu Holding, told an investor call that Vestel was planning layoffs, but it was not expecting a default.

Chinese competition brings losses

Vestel Elektronik revenues plunged by nearly 50% in 1Q and the series of losses has continued with the company enduring intensifying Chinese competition in Europe.

After posting $71mn in profit in 2023, the company reported $408mn and $761mn net losses for 2024 and 2025, respectively.

Downgraded ratings

On July 1, Fitch Ratings downgraded the company’s credit rating by two notches to CCC-, warning that its current capital structure was “unsustainable” and placing the company on a negative rating watch.

In April, Moody’s Investors Service downgraded the company from Caa1 to Caa2.

Both levels suggested that a default was imminent with little prospect for recovery.

Lira papers

On July 7, Vestel, completed the sale of 94-day domestic bills (TRFVSTLE2630) worth Turkish lira (TRY) 94mn at an annual simple interest rate of 49.5%.

On June 25, the company sold TRY 338mn of a 106-day paper (TRFVSTLE2622) at 49% while redeeming a TRY 35mn 394-day paper (TRSVSTL62616), which paid TLREF+1% in interest, and a TRY 224mn 133-day paper (TRFVSTL62613), which paid 44%.

In May, it paid the third coupon payment of a TRY 40mn 367-day paper (TRSVSTL82614), which pays TLREF+1%, while selling another TRY 94mn 137-day paper (TRFVSTLE2614) at 49% and redeeming two papers, including a TRY 76mn 157-day paper (TRFVSTL52622) at 44.5% and another TRY 47mn 180-day paper (TRFVSTL52614) at 45%.

The company has more lira papers and none of them have defaulted.

On June 25, the company decided to apply to Turkey’s capital markets board (SPK) to have a TRY 2bn limit to sell more domestic papers.

ZOREN’s $1bn paper

In October, Fitch and Moody’s simultaneously downgraded their outlooks on the credit ratings of Zorlu Enerji (ZOREN), another Zorlu Holding unit.

Currently, Zorlu Enerji has a B+/Negative rating, at four notches below investment grade, from Fitch Ratings and a B3/Stable rating, at six notches below investment grade, from Moody’s Investors Service.

Between October 2024 and March 2025, ZOREN raised $1.1bn with a debut eurobond (XS2926261426) sale that was followed by two tap issues.

The paper was priced at par in the auction held in October 2024. Currently, it is in the 70s.

On April 23, the company delivered the third coupon payment on the paper. The fourth coupon payment is scheduled for October 23, 2026.

The paper currently offers a 24% yield.

In February, the company’s CEO said that the enterprise had launched fresh investments. In May, the company said that its operating profit improved in 1Q.