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Abu Dhabi, UAEFriday 14 December 2018

Lazard helps banks over biggest Turkey default of $4.75bn

Negotiations with Saudi Telecom, Otas and the Turkish Treasury over loan to Turk Telekomunikasyon’s major shareholder

The business and financial district of Levent in Istanbul. Lazard and others are advising stakeholders over Turkey's biggest default. Osman Orsal/Reuters
The business and financial district of Levent in Istanbul. Lazard and others are advising stakeholders over Turkey's biggest default. Osman Orsal/Reuters

Lazard is advising banks that provided a US$4.75 billion loan to Turk Telekomunikasyon’s major shareholder as they seek to resolve Turkey’s biggest default, according to three people with knowledge of the matter.

Lenders hired the US investment bank and Raiffeisen Investment to advise on negotiations with Saudi Telecom, Ojer Telekomunikasyon, or Otas, and the Turkish Treasury, the people said, asking not to be identified.

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The banks and Saudi Telecom, which has an indirect stake in Otas, have been locked in debt talks for almost a year after Otas failed to pay a September 2016 instalment on the loan, the country’s biggest-ever syndicated facility. Otas, which holds 55 per cent of Turk Telekom, struggled to make the dollar-denominated loan repayments after the lira’s slump dented the converted value of the company’s local-currency dividends.

The lenders have until early October to consider an offer from Saudi Telecom to inject $750 million into Otas and restructure the remaining $4bn in two new loans. Turkey’s Treasury, which has a 25 per cent in the operator, gave Otas 60 days from early August to find a solution for the debt talks before it may take control of the company’s management, people familiar with the matter said at the time.

Turk Telekom and Otas declined to comment. Lazard and Raiffeisen didn’t immediately respond to emailed questions seeking comment.

Otas has missed two instalments of $290m each on the loan it took in 2013 from 29 Turkish and international banks. Akbank has about $1.5bn in exposure to the loan, Turkiye Garanti Bankasi about $1bn and Turkiye Is Bankasi about $500m, according to their public filings.