Zorlu Osmangazi bond

Location:

Turkey

Project number:

49764

Business sector:

Power and energy

Notice type:

Private

Environmental category:

B

Target board date:

28 Nov 2017

Status:

Signed

PSD disclosed:

20 Dec 2017

Project Description

The Bank has subscribed TRY 70 million (EUR 15 million) in Zorlu Osmangazi Enerji Sanayi ve Ticaret A.S.'s ("Zorlu Osmangazi") TRY 175 million (EUR 38 million) local currency bond issuance.

This issue is part of the company's TRY 500 million (EUR 107 million) bond programme as approved by the Capital Markets Board of Turkey.

Project Objectives

Successful placement of the TRLIBOR-linked 3-year bond supports Zorlu Osmangazi to finance capital expenditure investments to upgrade and expand the electricity distribution network of the Osmangazi region in Turkey. The Bank's participation is expected to assist in increasing the average tenor of bond issuances in the corporate bond market and mobilise investor interest for future bonds.

Transition Impact

The Project falls under the TRY Corporate Bond Framework and will contribute to the Framework's objectives. The Framework supports the expansion and deepening of the local currency corporate bond market in Turkey, and encourages wider international investor participation in the market by raising the standards of bond issued by corporate investors in terms of transparency, disclosure and rating. Transition impact originates from enhanced financial resilience in Turkey through issuance of local currency bonds with longer average tenor, as well as better governance due to improved disclosure standards.

Client Information

ZORLU OSMANGAZI ENERJI SANAYI VE TICARET AS

Zorlu Osmangazi was founded in 2016 by Zorlu Holding A.S. as a 100% subsidiary of Zorlu Enerji Elektrik Uretimi A.S. in order to acquire 100% of the shares of Osmangazi Elektrik Dagitim A.S.  ("OEDAS") and Osmangazi Elektrik Perakende Satis A.S. ("OEPSAS"), the incumbent electricity distribution and retail companies for the Osmangazi region.

Zorlu Enerji is one of the largest independent power producers in Turkey, with more than 1,000MW installed capacity, of which c. 750MW is located in Turkey. Zorlu Holding, which has 84.5% total interest in Zorlu Enerji, was founded in 1968 by Mehmet Zorlu as a textile producer and has grown into one of the largest conglomerates of Turkey. The holding operates under the following business segments: textiles, electronics and white goods, energy, real estate and mining.

EBRD Finance Summary

TRY 70,000,000.00

Total Project Cost

TRY 300,000,000.00

Environmental and Social Summary

Categorised B (2014 ESP): Independent consultants have been engaged to carry out a comprehensive environmental and social appraisal of OEDAS. This included a review of the Company's current Environment Health and Safety ("EHS") and labour management systems and an assessment of its operations against EBRD Performance Requirements. A number of issues were identified but these can be addressed through the actions set out in the Environmental and Social Action Plan ("ESAP") agreed with the Company and which will apply for the Bond. The acquisition of the Company by Zorlu also provides an opportunity to improve OEDAS' environmental and social performance.

OEDAS distributes electricity to 2.7 million people in 194 towns and 1596 villages. The investment programme will involve upgrading and expanding the existing network and modernising customer metering. This will reduce losses and outages. The new owners are committed to improving EHS management in line with the International Organization for Standardization ("ISO") 14001 and Occupational Health and Safety Assessment Series ("OHSAS") standards. Due diligence identified priority issues including poor waste management practices and gaps in occupational and community safety systems. Actions to address these issues have been included in the ESAP, along with measures to improve land acquisition and stakeholder engagement in line with EBRD Performance Requirements. ESD will be monitoring implementation of the ESAP through annual reports provided by the client.

Technical Cooperation

None.

Company Contact Information

Elif Yener
elif.derekoylu@zorlu.com
+90 212 422 00 99
Levent 199, Büyükdere Cad. No:199, Postcode 34394, #i#li/#stanbul

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

Project Complaint Mechanism (PCM)

The Project Complaint Mechanism (PCM) is the EBRD's accountability mechanism. It provides an opportunity for an independent review of complaints from individuals and organisations concerning EBRD-financed projects which are alleged to have caused, or are likely to cause, environmental and/or social harm.

Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (pcm@ebrd.com) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.