Turkish regulator asks Hariri-linked firm’s creditors to not classify debt as non-performing

ISTANBUL

Turkey’s banking regulator has assured creditors of Oger Telecom, which is the main shareholder in Türk Telekom, that a $4.75 billion syndicated loan will not go to default and they don’t have to re-classify it as “non-performing,” its head told Reuters on Nov. 16. The move will likely help Oger Telecom avoid costly write-downs.

“We told banks not to classify the debt as non-performing. Either the Treasury will acquire it or it will sell it to Saudi Telecom or others. The loan will not go into default,” Banking Regulatory and Supervision Agency (BDDK) head Mehmet Ali Akben said on the sidelines of an event in Istanbul.

The BDDK’s request marks an attempt to stem the fall-out from Dubai-based Oger’s Telecom’s widening debt problem. Oger, which owns 55 percent of fixed-line operator Türk Telekom and owned by the family of Lebanese Prime Minister Saad Hariri, has struggled to repay the loan as a tumbling lira currency has driven up the cost of servicing its debt. Last month, Reuters reported Oger missed a third payment due on the loan.

Türk Telekom, the main actor in Turkey’s telecommunication sector, was privatized in 2005, as Ojer Telecommunications (Otaş) — a subsidiary of Oger Telecom, acquired a controlling 55 percent stake.

Saudi Telecom Company (STC) owns 35 percent of Oger, making it an indirect shareholder in Türk Telekom. The Turkish government owns nearly 30 percent of Türk Telekom.

Creditors include Turkey’s Akbank and Garanti as well as İş Bank, Turkey’s largest listed lender.

Reuters reported last month that Turkey’s Treasury opted not to a grant a request from STC to extend a deadline in the debt talks.

It also reported in August that STC was in the lead to buy Oger’s 55 percent holding in Türk Telekom.

Sources have previously said the government could itself acquire the Oger stake if talks on STC’s bid fall through.