OTAS creditors to form five-bank ad hoc committee imminently - Debtwire

OTAS creditors to form five-bank ad hoc committee imminently

30 October 2017 - 12:00 am

Creditors of Ojer Telekomunikasyon A.S. (OTAS) will imminently form an ad hoc committee to negotiate the restructuring of a USD 4.75bn syndicated loan, according to three sources close to the situation.


The five-bank-strong committee will comprise three Turkish banks: Akbank, Garantibank and Isbank. There will also be two international banks, said two of the sources, one of which will be Deutsche Bank. The final international bank has yet to be decided, although BNP Paribas and ING have both been suggested as candidates, said the sources.


OTAS, which owns a 55% stake in Turk Telekom, has been in default on the syndicated loan since September 2016, when it first missed an amortisation payment. The loan is secured against the stake in Turk Telekom. OTAS has struggled to service the hard-currency loan, signed in May 2013, as the Turkish lira nosedived in recent years.


A restructuring proposal was tabled in mid-August by Saudi Telecom Company (STC), which indirectly holds around a 35% stake in OTAS. Under the terms of the deal, STC would inject USD 750m into the company in exchange for taking over OTAS.


Under the proposed deal, USD 4bn of debt would be reinstated across two tranches, both with 10-year maturities, according to a fourth source close to the situation. There would be a senior tranche sized between USD 3bn to USD 3.25bn and a junior piece sized between USD 750m and USD 1bn.


The junior tranche would only pay out should certain stringent EBITDA thresholds be passed, according to the first and fourth source. A number of international lenders were not happy with the proposal, particularly with the junior tranche on offer, the fourth source said, noting it would be effectively subordinated to equity.


The dissatisfied international lenders want “a credible restructuring rather than having a fictional ugly piece of [junior] debt on their balance sheets that will never trade, just to hide the blushes of local banks that don’t want to take a writedown,” according to a fifth source close to the situation.


While a number of creditors were not happy with the previous proposal, STC will still potentially form part of the solution to the restructuring, according to the first and second sources close.


The creditor group appointed Lazard as financial adviser in late August, as reported, and have been working with Allen & Overy as legal adviser for some time. Meanwhile, OTAS appointed Houlihan Lokey as financial adviser and Clifford Chance as legal adviser earlier this year.


The original deal


The USD 4.75bn loan was divided into five tranches: a USD 228m five-year amortising term loan; a EUR 212m five-year amortising term loan; a USD 3bn 7.5-year amortising term loan; a USD 250m 7.5-year revolving credit facility; and a USD 1bn 7.75-year bullet tranche.


Bookrunners and mandated lead arrangers on the deal were: Akbank, BNP Paribas, BNP Paribas Fortis, Citi, Deutsche Bank, JPMorgan, and Garanti Bank.


Mandated lead arrangers were: Bank of America, BankMed, Byblos Bank, Denizbank, HSBC, ING Bank, Natixis, Nedbank, Qatar National Bank, Sberbank, Halkbank, Isbank, Vakifbank, and UniCredit.


Lead arrangers on the deal were: Banque Libano-Française, Netherland-based Demir-Halk Bank, Netherlands-based GarantiBank International, Odea Bank, Societe Generale, and YapiKredi.


Arrangers were: Anadolubank, Finansbank, and TSKB.


by Elias Lambrianos and David Graves