Osmangazi Elektrik Dagitim A.S.

Distressed

Failure

In 2009, Yildizlar Holding[Turkey] won the concession of Osmangazi Elektrik Dagitim A.S. (OEDAS) under the BROT scheme at the bidding price of US$485 million, as the highest bidder at the tender, beating off the competition with other eleven rivals. In June 2010, it reached financial close by securing US$375 million loan from Akbank. In 2009, Yildizlar Holding[Turkey] won the concession of Osmangazi Elektrik Dagitim A.S. from the Turkish Privatization Administration (Ozellestirme Idaresi Baskanligi or OIB). Osmangazi Elektrik Dagitim A.S. was granted a 30 year electricity distribution concession in 2006 in Eskisehir, Afyon, Bilecik, Kütahya, and Usak. The company had 1.276 million customers, including 1.045 million residential customers by December 2008. Yildizlar Holding won the tender for the block sale of 100% of Osmangazi Elektrik Dagitim A.S. concession organized by OIB, offering the highest price for the concession (US$485 million) and beating off the competition with 11 other bidders. The Higher Privatization Council gave the final approval to the transaction in May 2010. The project reached contractual closure on May 31, 2010 with the signature of sale and transfer agreements by the winning bidder and the Turkish government. In June 2010, it reached financial close by securing US$375 million loan from Akbank. The private bidder that won the project has the right to operate the distribution company for the remaining of its concession period until 2036. The concession was part of a government program to introduce private operation of, and investment in, the 20 regional electricity distribution companies owned by the state-owned Turkiye Elektrik Dagitim A.S. (TEDAS). The program followed a Transfer of Operating Rights and Share Sale model ('TSS model'). In this model, the private investor became the sole owner of the distribution companies' equity and the unique licensee for distributing electricity in each region for a period of 30 years. However, TEDAS retained ownership of the distribution network assets and of certain other items essential for operating the distribution assets. The private investor was obliged to undertake the necessary network investments, recoverable through the tariffs. These investments were embedded in the tariffs during the first tariff implementation period (2006-2010). After 2010, the private investor was to submit an investment plan annually to the Electrity Market Regulatory Authority (EPDK) for its approval. In August 2013, the Turkish energy market regulatory authority (EPDK) took control of OEDAS over their failure to fulfill service obligations. The company failed to pay back a USD 450 million loan it obtained from state-owned lender Halkbank. In Oct 2013, Turkish energy group Zorlu Enerji submitted an offer to take over OEDAS and the offer was being assessed with other bids but no other update as of July 2013.

Energy

World Bank Group

Project

Government, Power Generation (CCGT), Residential, Commercial