Oger lenders move to acquire stake in Türk Telekom

Erdal Sağlam - ANKARA

The three largest creditors of Otaş, a company that was set up by Oger Telecom to acquire a 55 percent stake in Türk Telekom in 2005, have reached an agreement with the Turkish Transport Ministry to acquire a majority stake in the company as they cannot charge their loan receivables, sources have told daily Hürriyet, adding that the lenders and authorities were now working on the legal aspects of the deal.

The three big banks had offered loans to Otaş but have not taken any repayment over the last one-and-a-half years.

Now these three large creditors have reached an agreement with the Transport Ministry, which conducts discussions on behalf of the government, people familiar with the matter said.

The whole process is just at its initial stage, according to the sources. But they admitted that having reached an agreement for a settlement is still a progress. Talks with a number of other banks that offered loans to Otaş have also been launched, they said.

At the end of the process, either Otaş will be declared bankrupt and its assets will be transferred to a company that will be then taken over by the creditor banks, or in case of a deal between the bank and the company, the creditors will take control of Otaş.

“The banks hold Türk Telekom shares as collateral against the loan, but taking control of Otaş, which took on the loan, is seen as the best way of resolving the dispute without causing any problems for Türk Telekom,” the source told daily Hürriyet.

In line with this approach, the process was launched last week, they added.

Three largest creditors

Otaş, which is owned by Oger Telekom, holds a 55 percent stake in Türk Telekom.

Back in 2013, Otaş took on a $4.7 billion syndicated loan from 29 banks. Akbank has the largest share in the loan with $1.5 billion, followed by Garanti Bank with some $1 billion, and İş Bank with $500 million. The remaining $1.7 billion is owed to the remaining 26 banks.

Otaş was supposed to repay the debt in $290 million installments starting from 2016, but it failed to do so. In other words, the banks could not have been able to collect any money, including the interest, from the debtor for more than one year. Garanti Bank reclassified Oger’s debt as “closely watched” as of the end of 2017, keeping the troubled loan in its books after Oger repeatedly failed to make payments.

İş Bank also classified Oger Telecom’s loan as “closely watched” at the end of last year, according to sources.

Akbank also said it classified its loan to Oger as “closely watched” in a stock exchange filing early in January.

$3 billion transferred abroad

The default by Otaş is attributed to the problems the Hariri family, the owner of Oger Telecom, is facing. The Turkish government also stepped in to help to find a solution to the debt problem but efforts yielded no result. The group is known to have transferred more than $3 billion abroad in the form of dividend shares until 2016. 

Third parties, including Saudi Telecom, were also interested in buying Otaş’s Türk Telekom shares but potential buyers demanded that some part of the debt, interests and fines on default, be written off.

Negotiations failed due to one bank’s foot-dragging and the impasse continued into the start of this year.