Sunday, September 23, 2018

Turkey's Gama in Talks About Selling Energy Stake

Posted by June 28, 2018

Photo courtesy of Gama

Turkish conglomerate Gama Holding is in talks with Malaysia's Tenaga Nasional and other potential buyers about a sale of its 50.5 percent stake in its Gama Enerji energy unit, three sources said, as part of a $1 billion debt restructuring.

Gama, which has businesses spanning oil, cement, petrochemicals and natural gas, is the latest Turkish company to attempt to restructure foreign-currency debt amid a sell-off in the lira. It is in talks with nearly 20 banks on restructuring some $1 billion worth of debt, the sources said.

Russia's second-largest bank, VTB, is one of the creditors involved in the restructuring process and is conducting the stake sale talks, they said.

Malaysian power utility Tenaga Nasional, which acquired 30 percent of Gama Enerji in 2015 for $243 million, had shown interest in the stake, although VTB was also continuing talks with other possible buyers, one of the sources said.

Gama was not immediately available for comment. VTB declined to comment. Tenaga Nasional did not respond to a request for comment outside of regular business hours.

"The total debt of the firm is $2 billion but around $800 million is subject to debt restructuring. The Gama Enerji stake sale will be one of the most valuable assets they have to cover part of this debt," one of the sources said, declining to be identified because the information is not public.

"This sale is a partial solution. The remaining amount will be restructured."

The sale is expected to be completed by the end of this year, two of the sources said.

Gama Enerji generates energy from hydroelectricity, wind and natural gas plants, with more than 1,100 MW installed power around Turkey. The International Finance Corporation owns the remaining 19.5 percent in Gama Enerji.

As of April, Turkish companies had $225 billion in long-term overseas loans, almost all of that in dollars or euro, central bank data showed. Turkish firms have been drawn to foreign-currency debt because of lower interest rates, but have now been squeezed by the chronic weakness in the lira.

The lira has a lost a fifth of its value this year.

Yildiz Holding, the owner of global food brands including Godiva chocolate and McVitie's biscuits, last month signed a deal with its banks to refinance $5.5 billion in debt.

Ratings agency Moody's has warned that there could be a spike in problem loans for Turkish banks if the lira weakens further.

President Tayyip Erdogan, who on Sunday won a presidential race, has declared himself an "enemy of interest rates" causing concern about central bank independence and adding to the lira's woes.

By Ebru Tuncay and Orhan Coskun, Additional reporting Katya Golubkova in Moscow, A. Ananthalakshmi in Kuala Lumpur and Birsen Altayli in Istanbul; Writing by Ezgi Erkoyun

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