Turkish companies said to seek debt restructuring as virus hits

The Turkish economy has shrunk by nearly 10 percent in the second quarter of this year due to the COVID-19 lockdown. (Reuters)
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Updated 16 September 2020

Turkish companies said to seek debt restructuring as virus hits

  • Pandemic lockdown has piled on troubles for businesses already struggling after the 2018 currency crisis

ISTANBUL: Debt-laden Turkish companies are seeking more time to repay bank loans after the coronavirus pandemic upended plans to sell assets, according to four sources with direct knowledge of the matter.

Even before the virus hit Turkey in March, firms were seeking lower rates from banks after an aggressive monetary easing campaign and since then, large and small companies are looking for further revisions to nearly all of the restructurings agreed in the past two years, according to one source.

Conglomerate Dogus was among the companies preparing for talks, according to the source, who requested anonymity.

In response to a query from Reuters, Dogus said: “Our regular and usual negotiations with banks are, as always, underway within the framework of good relations.”

Other restructuring talks involving major companies are already happening, the source said.

Businesses in Turkey, as in other parts of the world, have been hit hard by lockdowns aiming to stop the spread of the virus, with the economy shrinking nearly 10 percent in the second quarter.

But Turkish companies were already weakened by a 2018 currency crisis and some, including Dogus, Yildiz and several energy firms,  signed billions of dollars worth of restructuring deals.

Asset sales were a key part of some of those restructuring agreements but the impact of the coronavirus crisis has deterred some would-be buyers, the sources said.

Turkish conglomerate and food giant Yildiz last month announced a revision in which it paid off $600 million for its syndication credit and extended the maturity to 2030.

The company declined to comment for this story.

In February, Reuters reported some conglomerates, including Dogus and Yildiz, were in talks for cheaper loans after the central bank cut rates from 24 percent in mid-2019. The policy rate is now 8.25 percent but hikes could be in store given high inflation and a record low lira. 

While M&A activity has largely stalled this year, some deals were struck including Zynga’s purchase of Turkish mobile-game maker Peak for $1.8 billion in June. 

SABIC posts net profit of SR1.09 billion in third quarter

Updated 25 October 2020

SABIC posts net profit of SR1.09 billion in third quarter

  • SABIC’s ongoing fight to help the world overcome the pandemic continued playing a central role this quarter as part of the company’s global CSR program

RIYADH: Saudi Basic Industries Corp. (SABIC) on Sunday reported a 19 percent increase in its third quarter earnings as compared to the previous quarter.

The company’s revenue for the third quarter of the current fiscal year reached SR29.3 billion ($7.81 billion). SABIC recorded a net profit of SR1.09 billion.

Earnings before interest, taxes, depreciation and amortization (EBITDA) at SR5.67 billion also represented a 62 percent increase quarter over quarter and a 26 percent decrease as compared to Q3 of the previous year.

Income from operations amounted to SR2.1 billion, which was reportedly higher than the loss from operations of SR1.26 billion in the previous quarter and lower than the profit from operations in the third quarter of 2019.

However, the revenues plunged by 11 percent year-on-year due to the coronavirus disease (COVID-19) pandemic.

Yousef Al-Banyan, SABIC vice chairman and CEO, said: “The third quarter of 2020 benefited from an improvement in economic activity and an increase in oil price, which translated into higher product prices. During this time, the strength of our global supply chain continued to allow us to meet the challenges facing the global economy, while our business and operational performance continued to demonstrate resilience. This reflected in higher sales volumes and improved margins in the third quarter of 2020.”

He said faced with the pandemic, the whole world had to adapt to a "new normal."

“We recognize the important role that the chemical industry plays in the recovery of the global economy and our role within that. As the road to recovery continues, we will remain focused on protecting the health and welfare of our employees, supporting the business requirements of our customers, and collaborating with governments and health authorities around the world,” the CEO said.

The third quarter also saw SABIC commence the implementation phase of its alignment as the chemical arm of Saudi Aramco, positioning it well to achieve long-term growth and to create and deliver value for its stakeholders.

Al Benyan said: “The portfolios of SABIC and Saudi Aramco complement one another, and we are both global organizations with a deep understanding of the worldwide marketplace. Together, we have embarked on a new journey based on shared values. We share the responsibility of defining the path of both companies and realize the vital importance of creating and delivering value for our shareholders.”

The reporting period witnessed numerous examples of SABIC’s ongoing collaboration with its partners to deliver sustainable solutions.

In September, Aramco, SABIC and the Institute of Energy Economics, Japan, demonstrated the successful production of blue ammonia and the world’s first shipment of the product from Saudi Arabia to Japan. Another major milestone was reached through a groundbreaking initiative with Spanish energy leader Iberdrola to transform its polycarbonate facility in Cartagena, Spain, into the world’s first large-scale chemical production site to run entirely on renewable power.

During the same month, SABIC partnered with a leading UK supermarket chain, Tesco, to conduct a trial proving that soft plastic — that would typically go to waste — can be recycled multiple times into new food grade plastic as part of a closed loop recycling system.

SABIC’s ongoing fight to help the world overcome the pandemic continued playing a central role this quarter as part of the company’s global CSR program. To date, the company has delivered 191 global programs in 22 countries, aimed at reaching over 32 million beneficiaries.

In Saudi Arabia, SABIC’s NUSANED initiative has supported local industry development and SABIC’s localization agenda. It also signed a SR37 million JV deal to manufacture sustainable wood plastic composites.