Turk Telekom Owner Said to Miss Payment on $4.8 Billion Loan

  • Otas said to miss $290m payment installment in September
  • Firm says it’s in talks with stakeholders to agree on solution

The majority owner of Turkey’s biggest telephone company missed a payment in September on a $4.75 billion syndicated loan as the depreciation of the lira against the dollar eroded the dividends it receives in local currency and its parent company struggled in other industries.

Otas, a special purpose vehicle formally known as Ojer Telekomunikasyon AS that owns 55 percent of Turk Telekomunikasyon AS, sought an extension for payment until the end of October from 29 lenders, including international and Turkish banks, according to four people with knowledge of the matter who asked not to be named, citing confidentiality.

The missed payment was $290 million, one of the people said. Otas had repaid about $500 million on the loan until the missed payment, one of the people said.

“We are in discussions with Otas lenders and shareholders to ensure a solution is agreed to the satisfaction of all stakeholders,” Otas said in a text message to Bloomberg on Wednesday.

Lira Woes

Otas missed the payment after a slump in the Turkish lira led to a decline in the dollar value of dividends it receives from Turk Telekom, according to a person familiar with the matter. A coordinating committee of banks to lead negotiations between the company and its lenders will be appointed by the end of this week, the person said.

Turk Telekom this year paid dividends of 841 million liras ($272.4 million), or 93 percent of 2015 profit, down from 1.84 billion liras a year earlier, according to its website. Turkey’s lira lost 5.2 percent against the dollar in the past 12 months, according to Bloomberg data.

Otas, a unit of Dubai-based Oger Telecom, which is owned by Saudi Oger group and Saudi Telecom Co., received the loan with maturities of 5 years to 7.75 years in 2013 to refinance and extend existing debt and pay a dividend, it said. Akbank TAS, Citigroup Inc., JPMorgan Chas & Co., BNP Paribas SA, Deutsche Bank AG and Turkiye Garanti Bankasi AS were bookrunners and lead arrangers in the loan agreement. The cost on the loan’s dollar tranche varies from 425 basis points to 495 basis points over the benchmark, according to data compiled by Bloomberg.

Turk Telekom, about 30 percent owned by the Turkish government, pared earlier gains of as much as 1.6 percent to trade up 0.5 percent at 5.65 liras each on the Borsa Istanbul as of 5:05 p.m. The stock has risen 5.2 percent this year.

Thousands of construction workers for companies including Saudi Oger and Saudi Binladin Group have been left stranded in Saudi Arabia without pay after the government cut spending and delayed payments to contractors as it seeks to cope with a plunge in oil prices. Deputy Deputy Crown Prince Mohammed bin Salman told Bloomberg earlier this year that Oger’s problems were unrelated to the Saudi economy and were a result of the company’s debts.

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