Vestel Elektronik (VESTL),  a unit of Turkish conglomerate Zorlu Holding, has initiated a consent solicitation process with holders of its $500mn eurobond (XS2817919587 - US92548MAA53), Vestel has announced.

As part of the work being carried out to establish a sustainable capital structure, the company envisages that alternatives regarding the potential restructuring of the paper will be discussed with the bondholders.

In July, Vestel hired restructuring specialists Houlihan Lokey (New York/HLI) to lead talks with holders of the paper.

Next coupon on November 13

In May, the company delivered the fourth coupon payment on the paper. The next 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.

Yield hits 83%

The paper was priced at 99.516 in the auction held in May 2024. The price was hovering in the 66-67s before falling to the 40s after the July 9 announcement of the hiring of Houlihan. With the August 21 announcement, it dipped further to the 20s.

The paper currently offers a 83% yield.

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

Restructuring at home too

In June, 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. The series of losses has since continued with the company enduring intensifying Chinese competition in Europe. In 1H, sales were down 48% y/y to Turkish lira (TRY) 47bn and the net loss was down by 42% y/y to TRY 10bn ($213mn).

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. In July, the rating company downgraded Vestel further to Caa3.

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

The company has, meanwhile, not defaulted on its lira 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. In July, Moody’s downgraded ZOREN’s outlook to negative.

Currently, Zorlu Enerji has a B+/Negative rating, at four notches below investment grade, from Fitch Ratings and a B3/Negative 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 23% 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.