Turkey Set to Borrow Around $1.6 Billion for Turk Telekom Buyout
Turkey Set to Borrow Around $1.6 Billion for Turk Telekom Buyout
(Bloomberg) -- Turkey is set to borrow around $1.6 billion from a consortium of banks to finance a planned buyout of the country’s telecom giant Turk Telekom.
The country’s sovereign wealth fund, known as TWF, is in advanced talks with banks, including those that jointly hold a 55% stake in Turk Telekomunikasyon AS to secure the loan, people with direct knowledge of the matter said, asking not to be identified as the talks are private.
The deal may see Turk Telekom pay out accumulated dividends of $200 million, the people said. The stake in question is worth around $1.3 billion based on the current share price, data compiled by Bloomberg show.
The wealth fund and LYY Telekomunikasyon AS, which represents the banks holding the 55% stake, declined to comment.
Turk Telekom rose as much as 3.9% to a session high on the news. The shares were trading 3.1% up as of 5:57 p.m. local time. Akbank shares rose as much as 3.48% while the banking index was up 2.75%.
The terms of the loan are likely to include a two-year payment-free grace period with repayment over the following four years, according to the people. Talks about how to finance the buyout started late last year.
A resolution to the years-long saga surrounding the ownership structure at Turkey’s second-largest operator may cheer investors. The shareholder banks, which mostly include local firms, seized the Turk Telekom stake around three years ago after its previous owner defaulted on a multi-billion dollar loan.
Akbank TAS, Turkiye Garanti Bankasi AS and Turkiye Is Bankasi AS had the largest exposure and are the biggest shareholders in special purpose vehicle company LYY. They will likely provide the lion’s share of the loan to TWF, while state-owned banks and smaller private lenders will also contribute, according to the people.
Turkey’s Treasury and Finance Ministry also owns 25% in Turk Telekom, including a so-called golden share that gives it management control. The wealth fund currently holds 6.7% of the shares and the remainder is publicly traded.
A deal would mark the biggest step yet in the creeping re-nationalization of Turkey’s telecommunications industry after the wealth fund took a majority stake in the country’s biggest mobile phone operator, Turkcell Iletisim Hizmetleri AS, in 2020.
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