Sakarya Elektrik Dagitim A.S. (SEDAS)

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In February 2009, AkCez Enerji A.S., a joint venture of Akenerji Elektrik Uretim [Turkey] (45%), CEZ Group [Czech Republic] (27.5%), and Akkok Group [Turkey] (27.5%), assumed operational control of Sakarya Elektrik Dagitim A.S. (SEDAS) and acquired 100% of its share capital. Akenerji itself was jointly owned by Akkok Group (62.64%) and CEZ (37.26%). At the time the concession was granted, SEDAS distributed electricity to 1.3 million customers in the Sakarya distribution region to the east of Istanbul. 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. AkCez won a competitive tender for the block sale of 100% of SEDAS organized by Turkey’s Privatization Administration (OIB) on July 1, 2008. AkCez submitted the highest bid of US$600 million and was hence declared the winner. The four other bidders for SEDAS were Alsim Alarko Sanayi Tesisleri ve Ticaret, Sabanci-Verbund-Enerjisa consortium, Unit Investment-Dogus Holding-Dogan Holding-Anadolu Endustri (UDDA) consortium, and Park Holding. The award was formally approved by Turkey’s Competition Board in August 2008 and by the Privatization High Council (OYK) in September 2008. The project reached financial closure on February 11, 2009, when AkCez signed the Share Sale Agreement with the Privatization Administration (OIB). The joint venture was to pay half of the US$600 million purchase price in cash. The remaining sum was be paid in two years in equal installments with an interest rate of Libor +2.5%, for which AkCez was to receive a letter of guarantee from local banks for US$300 million. In 2010, the EBRD and IFC provided a US$100 million and US$75 million loan respectively, with UniCredit providing a US$150 million loan, totalling US$325 million. SEDAS is a wholly-owned subsidiary of Akcez, a joint stock company owned 27.5% by CEZ of the Czech Republic, 27.5% the Akkök Group and 45% Akenerji Elektrik Üretimi AS of Turkey.