Turkish Toll-Road Auction Attracts Loan Requests for at Least $3 Billion

Bidders for the rights to operate Turkish toll roads and bridges have approached banks to raise at least $3 billion of funding, according to three people with knowledge of the requests.

Vinci SA (DG), Europe’s biggest builder, and Rome-based toll specialist Autostrade per l’Italia SpA will bid alongside Turkish contractors for the 25-year rights to operate eight toll roads about 2,000 kilometers (1,200 miles) long and two crossings over the Bosporus.

The government’s sale of toll highways is part of a privatization drive to pull in 12.5 billion liras ($6.8 billion) selling assets including electricity grids and the national lottery next year. Turkey is seeking to sell state-owned businesses to help pay down debt, even as the global financial crisis makes it more difficult for potential buyers to borrow.

“Privatization of highways is attractive for investors because we are talking about a well-operating system with predictable cash inflow over the years as the project seems pretty bankable and doesn’t need much investment,” said Tunc Yildirim, a director at broker Standard Unlu in Istanbul.

The loans being sought from U.S., Japanese and European banks would cover most of the price for the rights, said the people, who didn’t want to be identified because talks are private. The auction is expected to raise at least $3 billion and as much as $6 billion, according to three other people familiar with the government’s plans.

Auction

Four groups of companies are expected to take part in the auction, the people said. The bidders must produce a bid bond of $200 million to take part in the auction, the Ankara-based asset sale agency said on its website. The final bidding deadline is Feb. 16, the people said, with prequalification applications due by Jan. 19.

Vinci, based near Paris, has joined forces with Turkish contractor Limak Holding AS, two of the people said. The group may get other partners, they said.

Maxence Naouri, a spokeman for Vinci, declined to comment. Ebru Ozdemir Kislali, Limak’s deputy chairwoman, declined to comment.

Autostrade is bidding with Turkey’s Akfen Holding AS (AKFEN), Dogus Holding AS and Makyol Insaat Sanayi Turizm & Ticaret AS, Akfen said Nov. 30.

MV Holding AS, Nurol Insaat & Ticaret AS, Fiba Holding AS and Alarko Holding AS (ALARK) are in talks to form a joint venture, Onurhan Homris, chief executive of MV Holding said in a telephone interview.

“We may get a foreign partner in our group and are in talks with one,” he said.

UEM Group Berhad, a Kuala Lumpur-based highway operator owned by Khazanah Nasional Bhd, Koc Holding AS (KCHOL), Turkey’s largest conglomerate, and Gozde Girisim Sermayesi Yatirim Ortakligi AS, an Istanbul-based private equity firm, signed a memorandum of understanding for a possible joint bid, the companies said on Oct. 19.

To contact the reporters on this story: Louise Meeson in London on lmeeson@bloomberg.net and Ercan Ersoy in Istanbul at eersoy@bloomberg.net

To contact the editor responsible for this story: Faris Khan at Fkhan33@bloomberg.net.

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