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CEE & Turkey

CASE STUDY: Kazancı Holding Electrifies Local Loan Market with US$800mn Loan

Kazancı Holding secured a dual-currency US$800mn 10-year loan against a backdrop of severe volatility in the local market and growing uncertainty around the macroeconomic environment more broadly.

Feb 9, 2017 // 6:26PM

Background

Kazancı Holding entered the energy sector as a generator manufacturer in the 1960s. Since its establishment, the company has focused solely on the energy business.

The Group recently expanded its operations across its core segments of the electricity and natural gas business, leading Kazanci to assess new spending initiatives.

The company’s main objective in seeking out the US$800mn loan was to finance new natural gas operations and distribution activities, and to refinance existing debt.

Transaction Breakdown

On 2 August 2016, Kazancı Holding and Aksa Doğal Gaz Dağıtım A.Ş. entered into an US$800mn loan agreement with a consortium of lenders led by Türkiye İş Bankası A.Ş. and Türkiye Garanti Bankası A.Ş., which also included T.C. Ziraat Bankası A.Ş., Türkiye Halk Bankası A.Ş., Türkiye Vakıflar Bankası T.A.O., Odea Bank A.Ş. and Türkiye Sınai Kalkınma Bankası A.Ş.

The US$800mn 10-year loan included a US dollar-denominated US$500mn tranche and a lira tranche equivalent to US$300mn. The proceeds from the loan were multipurpose, and were wholly used for the operation and financing needs of Kazancı Group companies, mainly by Aksa Doğal Gaz Dağıtım A.Ş., as well as to finance new investments and repay existing project finance facilities and commercial loans.

Throughout the syndicated facility’s negotiation period with the seven banks and two law firms, there were concerns over global economic indicators. Volatility in the local market had pushed up borrowing prices across the board, while uncertainty around the US election later that year, and the interest rate outlook, made markets skittish.

Nevertheless, the facility was successfully signed despite bearish attitudes toward the broader macroeconomic environment.

The deal, which was participated by both state-owned and private sector lenders, was able to attract the attention of the largest banks in Turkey, while the tenor and multicurrency aspects of the loan demonstrated these banks’ confidence in the company and allowed it to mitigate any currency mismatch.

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