July 13, 2017 / 12:40 PM / 6 months ago

UPDATE 1-Oger creditor banks in talks on sale of $3.3 bln Turk Telekom stake -sources

(Adds details, background, shares)

By Ebru Tuncay and Orhan Coskun

ISTANBUL/ANKARA, July 13 (Reuters) - Some creditor banks of Dubai-based Oger Telecom are in talks about a possible sale of its 55 percent stake in fixed-line operator Turk Telekom , after Oger failed to make interest payments on a $4.7 billion loan, four sources said.

Oger, Turk Telekom’s top shareholder, missed debt repayments of $290 million in both September and March. Oger is a unit of Saudi Arabian construction giant Saudi Oger, which itself is facing a multi-billion dollar debt restructuring.

The Turkish government has stepped in and asked some banks to find prospective buyers for the stake, the sources said, declining to be identified because the information is not public. The government, which owns 30 percent of Turk Telekom, wants the operator of the national telecoms grid to be owned by a financially stable company, the sources said.

Two overseas investors have expressed interest in the stake, which is worth about $3.3 billion, and the sale could be completed by end-September, the sources said. A representative for Oger’s Turkish unit declined to comment, as did the Turkish Treasury and Turk Telekom.

Although the government has the final word on changes in Turk Telekom’s ownership, Oger’s creditors also have a say in any potential sale, as it pledged the Telekom shares as collateral when it took the loan as part of a 2013 debt refinancing.

There are around 30 creditor banks, including Turkey’s Akbank, with $1.5 billion of exposure, and Garanti with $951 million of exposure, according to bank filings. Isbank, Turkey’s largest listed lender, has 1.9 billion lira ($532 million) worth of exposure.

Owned by the family of Lebanese Prime Minister Saad Hariri, Saudi Oger has been hit as the decline in oil prices led to sharp state spending cuts in the kingdom, weighing on big contractors.

No one was immediately available for comment at Hariri’s office.

Shares of Turk Telekom were up 2.4 percent at 6.36 lira in afternoon trade, outpacing a 0.77 percent rise in Istanbul’s BIST 100 stock index. ($1 = 3.5721 liras) (Additional reporting by Reem Shamseddine in Al-Khobar; Writing by David Dolan; Editing by Daren Butler and Dominic Evans)

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