Six Turkish banks have signed a debt restructuring agreement with Galataport Istanbul Liman Isletmeciligi (formerly Salipazari Liman Isletmeciligi) and Dogus Galataport Gayrimenkul Yatirimlari, the lenders said on December 17.

The restructuring deal was executed in accordance with the Regulation on Restructuring of Debts to the Financial Sector, which was introduced following the 2018 currency crisis in Turkey.

For the sake of “collecting a portion of the loans” that they extended to the companies in question, the banks will by end-2024 take over a combined 49% stake in Galataport, a 400,000-square-metre (4,300,000-sq0ft) mixed-use development in the touristic Istanbul neighbourhood of Karakoy, near the historic Galata district on the Bosporus strait, in proximity to the Golden Horn. It includes the city's cruise ship terminal, around 250 shops and restaurants, The Peninsula Hotel and the Istanbul Modern art museum,.

The lenders will share the stake based on their contributions to the loan. Dogus Galataport, meanwhile, will hold a three-year buyback option regarding the stakes in question.

Yapi Kredi Bank (YKBNK), a unit of Turkish conglomerate Koc Holding (KCHOL), expects to acquire a 13.2% stake, while Garanti BBVA (GARAN), a unit of BBVA (Madrid/BBVA), is to take over 12.28% and Isbank (ISCTR) is to hold 7.18%.

Industrial Development Bank of Turkey (TSKB) will take over a 5.23% stake and QNB Turkey (QNBFB, formerly QNB Finansbank, a unit of Qatar National Bank (QNB)) will own 4.8%.

The sixth and the last lender that participated in the loan, namely government-run Ziraat Bank, is not listed on Borsa Istanbul and has not filed a statement regarding the stake it will buy.

However, it looks like a 6.31% stake remains for Ziraat.

Billion-euro loan

In 2016, Dogus Holding, owned by Ferit Sahenk, obtained the €1bn in question for the Galataport project. It came with a maturity of 14 years and a grace period of 3.5 years.

The debt stood at €1.5bn with the accrued interest, Bloomberg reported in November.

Based on a contract of loyalty, if Dogus fails to generate a certain amount of funds within an agreed period of time, the lenders will have the option to up their stake to 51% in the company, according to the news service.

Sold to Dogus

In November, BLG Capital, the real estate private equity arm of Bilgili Holding (owned by Serdar Bilgili), sold its stake in Galataport and The Peninsula Hotel to Dogus.

Cancelled tender

In 2005, the Royal Caribbean consortium, formed by Israeli businessman Sami Ofer and Turkish businessman Mehmet Kutman, won the first tender held for the Galataport project with a bid of $3.5bn. However, Turkey’s council of state cancelled the tender, citing problems regarding the zoning plans.

In 2013, Dogus placed the highest bid of $702mn in a privatisation tender held for the operating rights of the port area for a period of 30 years.

In 2014, BLG acquired 19% of the shares in the company that was formed to develop the project, leaving the remaining 81% with Dogus.

The project included the construction of a new cruise terminal and a luxury hotel.

The consortium aimed to invest €1.4bn and complete the project in 4Q18. It targeted an annual 25mn visitors and 1.5mn passengers.

In 2016, Dogus launched a 50-50 JV with Hong Kong-based The Peninsula Hotels for the hotel project. Peninsula Group was to invest a total of Turkish lira (TRY) 500mn in the hotel project.

Restructuring

In 2019, following the 2018 currency crisis in Turkey, Dogus Holding signed a restructuring deal with 12 local lenders, including two banks owned by international lenders, for its €2.3bn of loans.

The restructured loan arrangement had a six-year maturity.

Also in 2019, the Galataport venture was holding talks with the six lenders in question to start principal repayments on the €1.02bn loan taken out in 2016 in 2022 instead of 2020. The maturity of the 14-year facility would not change from 2030 with the Galataport investment to pay back in 16 years.

"Re-restructuring"

In 2020, Bloomberg reported that Dogus Holding was holding talks to delay repayments on the €2.3bn loan that was restructured in 2019, because of impacts caused by the coronavirus (COVID-19) pandemic.

In 2021, Galataport opened.