Saudi Telecom Said to Improve Offer to Resolve Turkey Loan

  • Lenders rejected an earlier offer because of loss on principal
  • Turkey’s Otas missed two $290 million repayments on the loan

Saudi Telecom Co. improved its offer to banks on a $4.75 billion loan for a Turkish unit that failed to pay two installments on the debt, five people with knowledge of the matter said.

STC offered to reduce the loss banks will have to take on the outstanding loan in a transaction that would still see the Saudi firm take a stake in Otas, as the unit is known, the people said, asking not to be identified as the talks are private. Banks are now considering whether to accept the deal, they said, without elaborating on the details of the plan.

Lenders rejected an earlier offer from STC in February because it involved taking a loss of more than $1 billion on the loan’s principal, people said at the time. That plan also envisaged STC lending about $160 million to Otas and buying a direct stake in the business, the people said.

Otas, an Ankara-based special purpose vehicle that owns 55 percent in Turk Telekomunikasyon AS, or Turk Telekom, missed two $290 million repayments on the loan in March and September, people familiar with the matter said last month. 

Owned by the Hariri family’s Oger Telecom Ltd., the company has struggled to make dollar-denominated loan payments after the lira’s slump dented the converted value of Turk Telekom’s local-currency dividends. STC owns a 35 percent share of Oger.

Shares Drop

Oger Telecom and Saudi Telecom declined to comment.

The outstanding principal on the loan -- Turkey’s largest ever syndicated offering -- is $4.6 billion, people familiar with the matter said in April. The loan was originally made by 29 Turkish and international lenders in 2013.

Akbank TAS has about $1.5 billion in exposure to the loan -- the most of any bank -- while Garanti Bankasi AS lent about $1 billion and Turkiye Is Bankasi AS around $500 million, according to public filings of the lenders at the end of the first quarter.

Turk Telekom’s shares fell as much as 1.1 percent and were trading 0.8 percent down at 6.39 liras as of 4:56 p.m. in Istanbul on Tuesday, the lowest on a closing basis since May 24. Akbank fell as much as 1.5 percent, while Garanti dropped 1.4 percent and Is Bankasi slipped as much as 1.3 percent.

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