Yuksel Mulls Restructuring Debt as Bonds Yield Highest in Turkey

Yuksel Insaat AS, the Turkish builder with the nation’s highest-yielding dollar-denominated bonds, is considering restructuring its debt, according to Suleyman Sazak, an owner and company board member.

“Our teams are working on whether we need to restructure it or not,” Sazak said in a telephone interview from Istanbul late yesterday. “We haven’t decided, but if we do, we may do a new loan or a new bond issue.” Sazak didn’t elaborate on the size or timing of any possible restructuring.

Yuksel, the closely held Anakara-based builder owned by the Sazak and Sert families, won’t cover its liquidity requirements in 2013, Moody’s Investors Service said in an e-mailed statement on Jan. 17. Both Moody’s and Fitch Ratings downgraded the company this year on concern it lacks the ability to repay existing debt. Moody’s rates the company at Caa1 and Fitch at CCC, both four levels above default.

The company’s dollar bond includes a covenant that bars it from taking on new liabilities if its ratio of debt-to-earnings before interest, taxes, depreciation and amortization exceeds 4. As of June, the company had $370 million in debt, giving it a ratio of 5.6, according to the latest financial data available in a presentation on its website.

Yuksel reported net income of $12 million on $365 million of revenue in the first half last year. It also had $2.7 billion in orders and a backlog of $1.7 billion, according to the presentation.

Coupon Payment

The builder’s projects include 15 dams in Turkey and Saudi Arabia; 20 road and rail projects in Libya, Dubai, Qatar, Romania, Afghanistan, Iraq and Turkey; 12 ports and more than 75 building projects in eight countries, according to its website. It also does work for the North Atlantic Treaty Organization and built the U.S. embassy in Kabul, Afghanistan.

The company made a coupon payment on May 11 on its $200 million bond, which was issued in 2010 and matures in 2015, according to Sazak. The coupon rate is 9.5 percent, according to data compiled by Bloomberg. Yuksel’s bonds yielded 26 percent on the secondary market yesterday, compared with 15 percent a year ago, according to data compiled by Bloomberg.

Yuksel, part of a six-member consortium led by Italy’s Astaldi SpA that’s building a highway between Istanbul and the western city of Izmir, will require an equity injection of $58 million this year for the $10 billion project, Moody’s said in its statement on Jan. 17. The highway will include a 420-kilometer (260-mile) toll road and a suspension bridge over the Sea of Marmara.

Yuksel Insaat is also planning a housing project on 150 hectares of land it owns on the Cubuklu hills on the Asian side of Istanbul, Sazak said.

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