(Bloomberg) -- Turkish tycoon Ferit Sahenk’s Dogus Holding AS is in talks to potentially transfer part of his stake in an Istanbul port and shopping mall company to lenders over a €1.02 billion ($1.1 billion) unpaid loan.
The discussions are centered around a plan that could enable the lenders to take over less than half of the port operator that’s formally known as Galataport Istanbul Liman Isletmeciligi & Yatirimlari AS, according to people with knowledge of the matter. The businessman would have the option to get the shares back if the debt is repaid, the people said, asking not to be named as talks are confidential.
Talks are ongoing and no final decisions have been made. The conglomerate received the loan in 2016 to build a cruise port and shopping mall complex in central Istanbul.
Dogus and six domestic lenders are in talks to sign an accord that’s dubbed a contract of loyalty. If the conglomerate fails to generate funds within a specified time period, the lenders would potentially raise their stake to 51%, the people said. That would give banks a controlling holding, potentially paving the way for them to bring in new investors.
“We are very close to signing an agreement with the six lenders in the loan consortium,” Dogus Holding Chief Executive Husnu Akhan said in a telephone interview, declining to discuss details. “We will likely have a deal in November. It will be a favorable agreement not only for the lenders but also for Dogus.”
The Galataport project failed to achieve projected revenues and cash flow since opening in 2021. The original loan of €1.02 billion has grown to around €1.5 billion due to accrued interest, two people said.
Yapi Kredi Bankasi AS and Turkiye Garanti Bankasi AS are among the banks with the largest exposures, according to data compiled by Bloomberg. Yapi Kredi and Garanti declined to comment.
Separately, BLG Capital - which has a minority interest in Galataport - said in a Tuesday statement that it had sold its stake in Galataport and the Peninsula Hotel, which is located there, to Dogus Group.
The overall Galataport project was valued at $2.2 billion, according to BLG. The port, on the Bosphorus, has a 1.2 kilometer coastline and was projected to average 25 million visitors and 1.5 million passengers a year. However, delays in the construction and an economic slowdown in Turkey hampered its efforts to meet revenue projections, while Sahenk’s efforts to sell a stake didn’t materialize.
Sahenk, once Turkey’s richest man, spent heavily on hotels, marinas and restaurants after selling his stake in Garanti Bankasi to Spain’s BBVA for about $5 billion. For the past few years, Dogus which also owns the renowned Salt Bae steak restaurants, has been trying to raise cash and deliver on pledges it made to banks as part of a 2019 debt restructuring deal.
In April, the company and its partner Qatar Investment Authority sold their combined 42% stake in a high-end shopping mall in Istanbul for $500 million.
--With assistance from Patrick Sykes.
©2024 Bloomberg L.P.