Turkey's Gama Said in Talks to Restructure $1 Billion Debt

(Bloomberg) -- Gama Holding AS, an Ankara-based investor with interests spanning energy, construction, hospital management and manufacturing, is in talks with lenders to restructure as much as $1 billion of debt owed mainly to large Turkish banks, according to people with knowledge of the matter.

The negotiations don’t cover the borrowings of the holding company’s biggest unit, Gama Enerji AS, which is in separate discussions to refinance about $500 million of a loan it took in 2013 to build a gas-fired power plant, said the people, asking not to be identified because the deliberations are private. Gama Holding declined to comment.

The talks come as a government-backed credit binge started in 2017 loses steam as some of the nation’s biggest conglomerates seek to refinance and restructure about $18 billion in loans. With the lira plunging and the nation’s current-account deficit ballooning, the cost of corporate Turkey’s foreign-currency debt -- equal to about 40 percent of economic output -- is climbing every day, squeezing the nation’s largest companies.

Closely held Gama Holding had 3.1 billion liras ($690 million) of revenue at the end of 2016, according to the latest information on its website. Almost all of the 1.1 billion liras it spent that year on investments went to the energy unit, which runs a number of wind and gas-fired power plants across Turkey as well as a water treatment plant in Jordan.

Overseas Borrowings

Malaysia’s Tenaga Nasional Bhd bought 30 percent of Gama Enerji for $243 million in 2015 from Gama Holding, the International Finance Corp. and the World Bank’s Global Infrastructure Fund. IFC and GIF hold 19.5 percent of Gama Enerji, while Gama Holding owns 50.5 percent of the utility.

Gama Enerji’s finance for the 840 megawatt power plant in Kirikkale in central Turkey was arranged by Turkiye Is Bankasi AS, Turkiye Garanti Bankasi AS, Yapi ve Kredi Bankasi AS, Denizbank AS and Turkiye Sinai Kalkinma Bankasi AS, the company said at the time.

Gama Holding and its partners, local builder and energy company Turkerler Group, and General Electric Co. are building two hospitals, in Izmir and Kocaeli provinces, through a public-private partnership model with a total cost of $1.3 billion. The group will operate the hospitals for 25 years.

The consortium borrowed $250 million from the Overseas Private Investment Corp. and 301 million euros from Industrial and Commercial Bank of China Ltd., the European Bank for Reconstruction and Development, Intesa Sanpaolo SpA and UniCredit SpA for the Izmir hospital project, according to data on Bloomberg. It also secured 314 million euros for the Kocaeli hospital from a group of banks that include those in the Izmir deal, according to data compiled by Bloomberg.

Gama Holding has won several contracts to build power plants, industrial plants and other construction projects in 10 countries including Saudi Arabia, the Netherlands, Ireland and Iraq, according to its website. Its project backlog stood at $4.5 billion in 2016.

©2018 Bloomberg L.P.