On July 20, 2004, Yapi Kredi and Çukurova Group have agreed on the amendment to the Financial Restructuring Agreement dated December 31, 2002.
The supplementary agreement mainly focuses on;
Sale of some non-core assets to Çukurova, and Earlier payment of outstanding loans of Çukurova.
The total amount received by Yapi Kredi will be US$ 2.1 billion by monthly installments starting from August 31, 2004 till March 31, 2006.
The important impacts of the agreement can be summarized as follows:
Highlights 1. Sale of non-core assets: Çukurova agreed to buy 13% of Turkcell, 73% of Digiturk, 80% of Superonline and 72% of Fintur shares currently owned directly and indirectly by Yapi Kredi. The values of the shares will be market value for Turkcell and appraisal value for Digiturk, Superonline and Fintur, which are estimated around US $ 1 billion. (Please see "details of the deal" for further information)
2. Repayment of Çukurova loans: After the proceeds from the sale of non-core assets are finalized, Çukurova Group will start to repay its exposure to Yapi Kredi. The total outstanding is agreed as $1,775 millions according to a present value calculation, which is linked to the yield of Eurobond maturing on June 15, 2009. In order to eliminate interest rate risk for the bank on the installment dates, changes in the yield of the indexed Eurobond and libor rate will be reflected to the outstanding balance (Please see attached examples)
The installments of loan repayment will be finalized as of March 31, 2006 and will sum up to US$1.06 billion. The remaining portion of the debt amounting around 700 million will be paid from the proceeds of prospective sale of Yapi Kredi shares currently owned by Çukurova Group (Please refer to announcement of BRSA for further details).
September 2004 Payments will start to purchase equity participations
October 2004 An investment bank will be appointed by Çukurova Group to conduct the sale of the Bank
December 2004 Annual interest will be paid
April 2005 The purchase of equity participations will be completed and redemption of the debt will start
October 2005 Due date for Çukurova to sell the Bank, if not, the sale will be conducted by SDIF
December 2005 Annual interest will be paid
March 2006 Final installment will be made according to the payment plan
June 2006 Due date for the remaining debt to be paid
Details of the deal 1. Sale of non-core assets: As also agreed in the initial agreement made between Çukurova Group and BRSA, Turkcell, Digiturk and Superonline shares owned by Yapi Kredi will be sold in cash to Çukurova Group.
a. Sale of Turkcell and Turkcell Holding shares: The whole shares, which corresponds to 13% of Turkcell directly and indirectly, will be sold on the basis of 30 days average listed value. The payments will be made at the end of each month starting from August 2004 amounting to US$ 115 million. The amount of Turkcell shares to be sold at every installment will be calculated according to prevailing 30 days average listed value.
b. Sale of Digiturk, Superonline and Fintur Technologies shares: In the initial agreement dated 31/01/2003 made between Çukurova Group and BRSA, it was stated that Çukurova Group had the option to acquire Digiturk, Superonline and Fintur Techonologies shares at the book value of Yapi Kredi, provided that they have made the offer until January 31, 2004. Since the option is expired, it is now agreed that the shares of Digiturk (72.55%), Superonline (79.94%) and Fintur Technologies (72.36%) will be sold in cash according to the value of an independent appraisal study, which has to be finalized until the end of 2004. Çukurova Group will select the valuation firm among three companies nominated by Yapi Kredi.
Subsequent to Turkcell shares acquisition by Çukurova, Digitürk, Superonline and Fintur shares will also be purchased from Bank based on the pre-determined conditions. (This transaction is highly likely to be completed in one single payment -one month-)
Yapi Kredi's loan exposure of these companies will be secured by subordinated pledge of Genel Sigorta A.Ş. (an insurance company fully owned by Çukurova Group and one of the existing shareholders of Yapi Kredi).
2. Repayment of Çukurova loan: The parties have confirmed that the original outstanding exposure of Çukurova Group to Yapi Kredi is US$ 1,986 million, collateralized by 16.5% of Turkcell shares.
Upon the application of Çukurova Group for early payment of their debt, it is now agreed that present value of total amount of the loan and the accrued interest (calculated on the basis of Libor +3.5%: 5%) which should have been paid until December 31, 2011 according to initial restructuring agreement is calculated as US$ 1,775 million. The discount factor of future principal and interest payments is set to be the yield of Eurobond maturing on June 15, 2009 which is 7.5% at the agreement date.
In order to protect the Bank from market price movements, the changes in the yield of the Eurobond and/or Libor rate will be calculated at every installment and will be reflected to the remaining exposure at the end of each year during the term of the revised payment plan. Please note the examples below:
L: Libor rate according to the initial agreement 2.5%
E: Eurobond yield at the agreement date 7.5%
PV: (PV of original plan's future payments @ 7.5%) $1,774.4 million
Assumption E is decreased to 6.5%
Revised PV: (@ 6.5%) $1,856.8 million
Difference in the PV's $82.4 million
Difference in % (82.4 /1,774.4) 4,65%
Payment made $100 million
Amount to be added to remaining exposure ($100 million x 4.65%) $4.65 million
L: Libor rate according to the initial agreement 2.5%
E: Eurobond yield at the agreement date 7.5%
PV: (PV of original plan's future payments @ 7.5%) $1,774.4 million
Assumption E is decreased to 8.5%
Revised PV: (@ 8.5%) $1,696.9 million
Difference in the PV's $77.5 million
Difference in % (77.5 /1,774.4) -4,37%
Payment made $100 million
Amount to be deducted from the remaining exposure ($100 million x 4.37%) $4.37 million The principal payments according to revised plan will start one month after the sale of assets are finalized. The monthly payments will range between $45 million and US$ 135 million until March 31, 2006. The total amount of loan repayments will be US$ 1,057 million. The group will resume interest payments at libor +3.5% on the principal on a yearly basis.
The collateralized Turkcell shares will be released at every revised installment made taking into original plan's debt to collateral ratio to be applied for the remaining exposure. When the final payment is made, the remaining portion collateralized Turkcell shares will be released.
The remaining outstanding, which is to be estimated as US$760 million (which maybe differ based on the market movements) will be paid from the sale of Yapi Kredi shares of Çukurova Group in 2005 or 2006. In order to secure the final proceeds, 39% of Yapi Kredi shares belonging to Çukurova Group is given as subordinated pledge to the Bank.
Yapı Kredi / 08 Aug 2004