PHOTO
* Oger in talks to renegotiate, or sell shares to pay debt
* Company has $4.75 bln syndicated loan
* Turk Telekom was flagship privatisation for Turkey
(Recasts, adds source quotes, context, background)
By Orhan Coskun and Tom Arnold
ANKARA/DUBAI, Oct 31 (Reuters) - The top shareholder in Turkish fixed-line operator and internet provider Turk Telekom is in talks with creditors to renegotiate debt before its next repayment on a $4.75 billion loan in March, two people familiar with the matter said on Monday.
Dubai-based Oger Telecom is also in talks with one of its shareholders, Saudi Telecom
7010.SE
, about the Saudi firm taking a bigger stake in Oger to help it pay down the debt, one of the people and a third source said.
Oger's Turkish unit, which owns 55 percent of the formerly state-run Turk Telekom, missed an interest payment of almost $300 million at the end of September, banking and other sources have said, sparking concern about its ability to pay down the $4.75 billion syndicated loan.
"Meetings with banks are being carried out now. Efforts are underway to facilitate the restructuring and paying of future debts," said one of the people, who declined to be identified because the information has not been made public.
On talks between Oger and Saudi Telecom about a potential share sale, the person said: "Meetings are being carried out for this."
Oger Telecom did not respond to requests for comment. Saudi Telecom did not comment when contacted by Reuters.
Turk Telekom said this month it did not expect reports about financial difficulties related to one of its shareholders to have any impact on its daily operations, commitments or liabilities. It also said its financial agreements did not include cross default provisions in relation to shareholders missing debt repayments.
Oger's Turkish unit secured the $4.75 billion syndicated loan in 2013 from a consortium of domestic and international banks to reschedule and refinance debt and pay a dividend, it said at the time.
Oger's debt problems are not limited to Turkey. The firm's ultimate parent, Saudi construction giant Saudi Oger, is facing the prospect of a multi-billion-dollar debt restructuring to stave off collapse, Reuters reported in September.
Owned by the family of former Lebanese Prime Minister Saad Hariri, Saudi Oger has been hit as the decline in oil prices led to sharp state spending cuts in the kingdom, weighing on big contractors.
PRIVATISATION DRIVE
For Turkey, the problems at Oger Telecom represent a blemish on its vaunted privatisation drive. The $6.55 billion sale of the majority stake in Turk Telekom in 2005 was the biggest privatisation deal in Turkey's history at the time.
Turkey is still looking to sell off other state-owned assets, including the national lottery.
The government retains a 30 percent stake in Turk Telekom, and is keen to see that keep its value, a source in President Tayyip Erdogan's office said.
"Turk Telekom is a private company and needs to solve this problem on its own. There is no state intervention at the moment, but it is also important for the Treasury's stake not to lose value. We are of course following developments closely because of this," the source said.
Shares in Turk Telekom have fallen nearly 6 percent in the last three months, underperforming a 4 percent rise in the benchmark BIST 100 index
"We believe recent shareholder uncertainty created by parent Saudi Oger's financial difficulties overshadows (Turk Telekom's) strong operating performance," Credit Suisse said in a note to clients last week.
Credit Suisse said Saudi Oger's financial difficulties may lead to a potential ownership and management change at Turk Telekom, although it did not believe such a development would impact the business model or company fundamentals.
'PERMANENT' SOLUTION
Underscoring the potential for a change in ownership, Prime Minister Binali Yildirim told Reuters on Saturday that efforts were underway to resolve the debt problems, including a formula to "permanently" solve the difficulties.
"There are efforts to overcome this problem," Yildirim said. "Aside from restructuring the debt, a different formula is also in the works. Permanently overcoming the company's debt problem is also being worked on," he said, without elaborating further.
That would likely be welcome news for the banks involved.
Turkey's Akbank and Garanti Bank, France's BNP Paribas, Germany's Deutsche Bank, and U.S. banks J.P. Morgan and Citigroup were mandated lead arrangers and coordinating bookrunners on the loan.
Shares of Turk Telekom ended down 1.6 percent on Monday, underperforming the BIST 100 index, which edged up.
(Additional reporting by David French, Katie Paul and Reem Shamseddine in Dubai; Akin Aytekin, Ceyda Caglayan and Can Sezer in Istanbul; Writing by David Dolan; Editing by Giles Elgood) ((david.dolan@tr.com; +90 212 350 7046; Reuters Messaging: david.dolan.thomsonreuters.com@reuters.net))
* Company has $4.75 bln syndicated loan
* Turk Telekom was flagship privatisation for Turkey
(Recasts, adds source quotes, context, background)
By Orhan Coskun and Tom Arnold
ANKARA/DUBAI, Oct 31 (Reuters) - The top shareholder in Turkish fixed-line operator and internet provider Turk Telekom is in talks with creditors to renegotiate debt before its next repayment on a $4.75 billion loan in March, two people familiar with the matter said on Monday.
Dubai-based Oger Telecom is also in talks with one of its shareholders, Saudi Telecom
Oger's Turkish unit, which owns 55 percent of the formerly state-run Turk Telekom, missed an interest payment of almost $300 million at the end of September, banking and other sources have said, sparking concern about its ability to pay down the $4.75 billion syndicated loan.
"Meetings with banks are being carried out now. Efforts are underway to facilitate the restructuring and paying of future debts," said one of the people, who declined to be identified because the information has not been made public.
On talks between Oger and Saudi Telecom about a potential share sale, the person said: "Meetings are being carried out for this."
Oger Telecom did not respond to requests for comment. Saudi Telecom did not comment when contacted by Reuters.
Turk Telekom said this month it did not expect reports about financial difficulties related to one of its shareholders to have any impact on its daily operations, commitments or liabilities. It also said its financial agreements did not include cross default provisions in relation to shareholders missing debt repayments.
Oger's Turkish unit secured the $4.75 billion syndicated loan in 2013 from a consortium of domestic and international banks to reschedule and refinance debt and pay a dividend, it said at the time.
Oger's debt problems are not limited to Turkey. The firm's ultimate parent, Saudi construction giant Saudi Oger, is facing the prospect of a multi-billion-dollar debt restructuring to stave off collapse, Reuters reported in September.
Owned by the family of former Lebanese Prime Minister Saad Hariri, Saudi Oger has been hit as the decline in oil prices led to sharp state spending cuts in the kingdom, weighing on big contractors.
PRIVATISATION DRIVE
For Turkey, the problems at Oger Telecom represent a blemish on its vaunted privatisation drive. The $6.55 billion sale of the majority stake in Turk Telekom in 2005 was the biggest privatisation deal in Turkey's history at the time.
Turkey is still looking to sell off other state-owned assets, including the national lottery.
The government retains a 30 percent stake in Turk Telekom, and is keen to see that keep its value, a source in President Tayyip Erdogan's office said.
"Turk Telekom is a private company and needs to solve this problem on its own. There is no state intervention at the moment, but it is also important for the Treasury's stake not to lose value. We are of course following developments closely because of this," the source said.
Shares in Turk Telekom have fallen nearly 6 percent in the last three months, underperforming a 4 percent rise in the benchmark BIST 100 index
"We believe recent shareholder uncertainty created by parent Saudi Oger's financial difficulties overshadows (Turk Telekom's) strong operating performance," Credit Suisse said in a note to clients last week.
Credit Suisse said Saudi Oger's financial difficulties may lead to a potential ownership and management change at Turk Telekom, although it did not believe such a development would impact the business model or company fundamentals.
'PERMANENT' SOLUTION
Underscoring the potential for a change in ownership, Prime Minister Binali Yildirim told Reuters on Saturday that efforts were underway to resolve the debt problems, including a formula to "permanently" solve the difficulties.
"There are efforts to overcome this problem," Yildirim said. "Aside from restructuring the debt, a different formula is also in the works. Permanently overcoming the company's debt problem is also being worked on," he said, without elaborating further.
That would likely be welcome news for the banks involved.
Turkey's Akbank and Garanti Bank, France's BNP Paribas, Germany's Deutsche Bank, and U.S. banks J.P. Morgan and Citigroup were mandated lead arrangers and coordinating bookrunners on the loan.
Shares of Turk Telekom ended down 1.6 percent on Monday, underperforming the BIST 100 index, which edged up.
(Additional reporting by David French, Katie Paul and Reem Shamseddine in Dubai; Akin Aytekin, Ceyda Caglayan and Can Sezer in Istanbul; Writing by David Dolan; Editing by Giles Elgood) ((david.dolan@tr.com; +90 212 350 7046; Reuters Messaging: david.dolan.thomsonreuters.com@reuters.net))
