Turkish Consortium Is Seeking to Revamp $1.1 Billion of Debt
Turkish Consortium Is Seeking to Revamp $1.1 Billion of Debt
(Bloomberg) -- Two Turkish construction groups in a consortium that includes General Electric Co. started talks to restructure 900 million euros ($1.1 billion) of loans, the latest sign of corporate distress following a plunge in the local currency.
The firms, which used the debt to build hospitals, are negotiating with lenders on the foreign-currency loans, according to two people familiar with the matter, who asked not to be identified as negotiations are private.
The consortium is made up of Gama Holding AS and Turkerler Insaat AS, while Boston-based GE’s stake is around 10%. Gama Holding declined to comment. GE Healthcare referred questions to Turkerler and Gama Holding. A representative for Turkerler wasn’t immediately able to comment.
The lira has weakened more than 60% against the dollar since the loans were signed four years ago. Turkish companies across the country are struggling to repay foreign-currency debt, resulting in tens of billions of dollars in loan restructurings.
Another wave of debt reorganizations was triggered in the wake of coronavirus outbreak, as banks stepped in to help customers caught in the fallout of lockdown measures.
Lenders to the consortium include the European Bank for Reconstruction and Development, U.S. Overseas Private Investment Corp., ICBC London Plc, Intesa Sanpaolo SpA, and Unicredit SpA, according to data compiled by Bloomberg.
The Turkish government has been building 17 hospitals since 2015 for as much as $10 billion to double the number of beds in the country to 95,000, using a public-private-partnership (PPP) model.
Restructuring Deal
Under the program, the private-sector builds and supplies non-medical equipment, services and staff. The Health Ministry pays them an annual fee over 25 years, provide medical staff and assume loan guarantees.
The group secured 18-year loans of 301 million euros and $250 million for the Bayrakli hospital in Izmir in the west of the country. It also got 314 million euros for Kocaeli hospital in Izmit in the north-west of Turkey.
Both hospitals have total investment value of nearly 1.2 billion euros, according to Gama Holding’s website.
Turkerler and its international partner in another hospital project in Ankara’s Etlik district reached a restructuring deal with lenders for 878 million euros of debt last month, the people said.
Etlik hospital will have around 3,600 beds when completed, and is one of the largest of hospitals constructed under the PPP model. The 18-year loan was signed in 2015.
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