Yildiz Holding, owner of companies including Godiva Chocolates and United Biscuits, requested the largest loan ever from Turkish banks, citing difficulties with an existing finance structure that needs it to make monthly mortgage payments which can reach more than $1 billion.
In a letter to 10 banks aged Jan. 29, Yildiz requested them to create a consortium, syndication or joint finance group to consolidate their loans to Yildiz. The letter, which was viewed by Bloomberg and verified by two individuals with direct knowledge of its contents, was signed by Yildiz Holding Chief Financial Officer Mustafa Tercan and Ali Ulker, deputy chairman of the board.
The request shows previously unknown funding challenges at among Turkey’s largest conglomerates, a company that earns about $12 billion in annual revenue and employs over 60,000 people around the globe. Yildiz’s letter stated it had been burning $10 million to $30 million per day, or $500 million to $600 million per month, to repay its mostly short-term spot loans. The repayments exceed $1 billion, it said.
Yildiz requested that the banks consolidate their respective loans into one credit with a maturity of nine decades, and requested they grant it a three-year grace period before repayment begins. It stated payments must start with payments beginning in year , in the fourth year. Representatives from the company and the lenders met on Tuesday in Istanbul to discuss the proposal, according to people with direct knowledge of the matter.
In a separate letter to employees sent on Friday, Chairman Murat Ulker reported that the company had agreed to a long-term loan of $1 billion on the terms that it requested, without providing additional information. Yildiz and Akbank TAS, Turkey’s second-largest private lender, made a deal, according to two people with direct knowledge of the matter, who asked not to be named since the talks are private.
Representatives for Yildiz and Akbank declined to comment to Bloomberg.
The letter to the banks stated Yildiz was in talks about sales and initial public offerings which may raise hundreds of millions of dollars. It said the majority of the earnings from asset and company sales, IPOs and land projects goes toward repaying the loan, which would be Turkey’s largest, exceeding the approximately $5 billion expanded to contractors of Istanbul’s airport in 2015 and $4.8 billion to the buyer of Turkish landline telephone monopoly Turk Telekom at 2013.
Yildiz executives sentenced to the bankers’ patriotic ideas, saying a fresh loan of $6 billion to $7 billion in banks in Turkey would “reveal our people and the planet how powerful our nation, our banks and Turkish companies are. ”
The banks include Yapi & Kredi Bankasi AS, Akbank, TC Ziraat Bankasi AS, Turkiye Halk Bankasi AS, Turkiye Garanti Bankasi AS, Turkiye Is Bankasi AS, Turkiye Vakiflar Bankasi TAO, HSBC Bank AS, Denizbank AS and QNB Finansbank AS.
Yapi Kredi, owned by local conglomerate Koc Holding AS and Italian lender UniCredit SpA, has the largest exposure to Yildiz and is leading the negotiations on behalf of the banks. It declined to comment.
Ulker has been Turkey’s wealthiest guy because 2015, according to Forbes, that estimated his fortune at $3.7 billion. He had been embroiled in controversy this past year after pro-government media enticed his company of funding the movement blamed for a 2016 coup attempt against President Recep Tayyip Erdogan. The allegations were denied by Ulker.
Yildiz has been consolidating its confection holdings, which also include DeMet’s Candies, Ulker Biskuvi and McVitie’s, under a U.K.-based vehicle named Pladis Global. Yildiz plans to maintain an IPO at Pladis at London at 2019 or later, Tercan, the CFO, stated in August last year.
In Turkey, Yildiz owns dozens of companies including private-equity company Gozde Girisim, the nation’s largest, and discount retailer Sok Marketler.