EON, Sabanci Plan Turkish Power Grid Stake Sale to Reduce Debt

  • Enerjisa Enerji to sell 10-20% of Eedas, Chairman Says
  • Stake sale will reduce grid's 6 billion-lira borrowing

Enerjisa Enerji AS, a joint venture between German utility EON SE and Haci Omer Sabanci Holding AS of Turkey, is planning to sell a stake in a power network unit to reduce bank debt, according to Enerjisa Chairman Mehmet Gocmen.

Enerjisa, Turkey’s biggest private energy company, plans to sell between 10 percent and 20 percent of Enerjisa Elektrik Dagitim AS, or Eedas, which owns electricity distribution and retail units, Gocmen said at a news conference in Istanbul on Tuesday. The businesses, located in the Asian side of Istanbul as well as the regions of Ankara and southern Adana, serve a quarter of Turkey’s 75 million people.

Enerjisa, which has invested $11 billion in Turkey since 2005, is planning the sale to cut the more than 6 billion-lira ($2.1 billion) debt owed by its grid operations business, Gocmen said. The amount is half of Enerjisa’s total borrowing, he said.

“For sustainable financing and debt management of operations at energy production and distribution, we need to find new capital financing resources,” Gocmen said. “This is true for all energy operators in Turkey because the per megawatt-hour sale price of electricity has declined by half to $40 or $50 now from the time of investments five to six years ago.”

Christian Drepper, a spokesman for Dusseldorf-based EON, declined to comment on the stake sale and the planned IPO.

Total Debt

Enerjisa’s total debt of more than 12 billion liras includes a foreign currency portion of 2 billion euros ($2.3 billion), he said. Enerjisa used loans to fund 60 percent of its investments, while the rest came from equity, he said. The Turkish currency has dropped about 12 percent against the euro in the past 12 months.

The utility is in talks with Chinese investors to sell a stake to improve its debt and equity balance, two people with knowledge of the matter said Jan. 18.

EON and Sabanci are preparing an initial public offering of Enerjisa Enerji in late 2017 or early 2018, Gocmen said. “This will be one of the biggest IPOs in Turkey and will help Turkey’s energy sector in general to be more transparent,” he said.

The companies haven’t hired advisers for the IPO, said Gocmen, who declined to say how many shares would be sold.

Enerjisa’s power generation capacity will increase 28 percent from a year earlier to 3,700 megawatts in 2016, with almost half coming from renewable sources. Its total sales are estimated to grow 8 percent from $4 billion in 2015, while earnings before interest, tax, depreciation and amortization will expand as much as 50 percent this year from $1.8 billion, Gocmen said.

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