State Banks Extend Relief to Turkish Tech Retailer Swerving Crackdownby and
Bimeks is restructuring its non-bond debt with local lenders
Post-coup business climate hurt sales and consumer confidence
Turkish technology retailer Bimeks is planning to cut costs and restructure most of its debt, after a botched military coup interfered with its ability to raise financing last year.
While the advance of online sales is eating into bricks-and-mortar retailers’ profits the world over, in Turkey they’ve also had to contend with plummeting consumer confidence, a new tax on imported electronics, and the coup attempt that damaged investor perception toward Turkish companies in general, and Bimeks in particular.
The company’s new debt facility has a maturity of six years with a one-year grace period, and will be provided by 18 Turkish banks including state-run lenders.
The inclusion of these banks is key because it’s one indication that there were no grounds to the rumors of government displeasure that have helped knock 50 percent off its share price since the coup, board member Mustafa Selcuk said in an interview on Monday.
“Although our vendors didn’t really believe those rumors, after a certain point they were disquieted by them,” said Selcuk, speaking in his Istanbul office. The inclusion of the state banks in the refinancing arrangement will help Bimeks dispel any “negative perception,” he said.
President Recep Tayyip Erdogan blames the followers of a septuagenarian U.S.-based cleric, Fethullah Gulen for masterminding the failed coup. In the state of emergency that’s persisted since July, 800 companies alleged to have links to Gulen have been seized, while more than 150,000 people have been arrested, fired or suspended from their jobs.
Selcuk expects revenue to have dipped in 2016 -- a period for which the company has not yet released figures -- and then grow by as much as 40 percent in 2017. The company, whose headcount currently stands at 1,200, is aiming to reduce its operational expenditure as a share of sales revenue to single digits from its present 12 percent, finding some of those savings from diminished rental expenses, he said.
Bimeks Bilgi Islem ve Dis Ticaret AS, as the retailer is formally known, will refinance all of its outstanding debt, excluding the bond repayments that are due through 2018, Selcuk said. While he declined to give the amount of the loan, the company had 353 million liras ($93 million) of outstanding debt including bond repayments totaling 95 million liras, according to data compiled by Bloomberg.
The financing deal follows aborted plans to borrow a five-year, $75 million syndicated loan from lenders in the Gulf states. Earlier this month the company also abandoned work toward acquiring a company in Germany. International credit insurance firms have narrowed or cut their lines to many companies that sell equipment to retailers, Selcuk said.
Bimeks plans to pay back a 45-million lira bond due Sept. 15, Selcuk said. It will finance that repayment either by selling a new 55-million lira security, following its approval from the regulator last year, or from its cash flow. “We paid back our bond even in the hardest days of 2016, so there shouldn’t be any worries,” he said.