Casino Operator Hit By Lira to Bid Again for Turkish Lottery

  • Net failed to pay previous bid as lira plunged against dollar
  • Net Holding to make statement Thursday on details of new bid

Net Holding AS, a Turkish operator of hotels and casinos, is planning to bid in the Turkish government’s auction this year to sell national lottery licenses, after the company failed to come up with payment in a previous sale attempt that was derailed by the lira’s depreciation.

The company will make a detailed statement on its plan to participate in the auction for Milli Piyango Idaresi, as the lottery operator is known in Turkish, said Erkan Kaya, head of business development for the Istanbul-based operator of hotels and duty free shops in Turkey and casinos abroad, in a telephone interview on Wednesday. Finance Minister Naci Agbal said earlier on Wednesday that the government’s asset sales agency will announce details of the auction on Friday and set Aug. 5 as the date to collect bids.

Net Holding rose as much as 3.6 percent to 3.19 liras in Istanbul after Kaya’s expression of intent to bid. The shares later pared gains, trading at 3.07 liras at 12:38 p.m., compared with a 2.2 percent drop on the Borsa Istanbul 100 Index.

No Payment

Net Holding and its local partner Hitay Group failed to pay a winning price of $2.76 billion in the previous auction for Ankara-based Milli Piyango held in 2014. That auction was canceled last year after the runner-up group of companies, ERG Insaat and Ahlatci Doviz, also failed to get finances to pay their bidding price of $2.75 billion. Milli Piyango’s first privatization attempt in the late 2000s also failed because investors shunned the operational terms.

The government has eased some of the terms for investors, Agbal said. The winning bidder will be offered the option to make a 20 percent down-payment, instead of 40 percent in the previous auction, to buy the operational rights for 10 years, and may pay in dollars or lira, he said.

The lira dropped 21 percent between July 15, 2014, when the previous auction was held, and April 16, 2015 when Net Holding was denied an extension on the deadline to pay and the asset sales agency looked to the second-best bidder. The currency depreciation increased the bidding cost in lira terms by more than 1.5 billion liras over that time period.

The Council of State, the country’s top administrative court, ruled that the sale is not a concession agreement and would therefore be subject to commercial law, eliminating the need for the winner to seek its approval, according to a government decision on April 1. The decision also allowed the licensed lottery operator to outsource some operations.

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