Runner-Up for Turkish Lottery to Consider Buying If Winner Can’t

A consortium of companies that offered the second-best bid for Turkey’s national lottery says it will consider buying the asset if the winning consortium fails to pay by the deadline Wednesday.

The group, which includes construction company ERG Insaat Makina and Ahlatci Doviz & Kiymetli Madenler, a foreign exchange and gold trader, offered to pay $2.75 billion last July. That offer lost to a consortium of Net Holding AS and Hitay Investments Holding AS, which bid $2.76 billion and won the auction.

“We will start work after we are notified” by the privatization administration that Net Holding-Hitay will fail to pay, Ahmet Emin Ahlatci, chairman of Ahlatci Doviz, said in a telephone interview from Corum on Wednesday. “This is a good project.”

The Turkish lira’s decline is a potential stumbling block for the acquisition, Ahlatci said. The lira has dropped 16 percent against the dollar since the auction was held on July 15, 2014, effectively increasing the offered bid by 1.6 billion liras at the current exchange rate.

Turkey’s privatization law mandates that the asset should be offered to the second-best bidder should the winner fail to pay. Net Holding, which said in a public filing yesterday that the “license agreement could not be signed,” fell as much as 18 percent to 2.97 liras in Istanbul, the most in 10 years.

Finance Minister Mehmet Simsek said in a news conference earlier in the day that the OIB “probably won’t extend the deadline” and that the process will continue with the second-best bidder.

Net-Hitay group, which was in talks with Scientific Games Corp. to possibly sell a minority stake, has been seeking $2 billion from lenders including Deutsche Bank AG, Akbank and Denizbank to help pay for the bid, people with knowledge of the matter said last month.

The government had extended a deadline for the group to pay the fee and sign a final agreement to April 15 from Feb. 26.

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