Alternative funding options

SUPPLEMENT - TURKEY - June 01, 2009

Turkish Companies are facing difficulties in tapping into sources of credit as the global financial crisis gets deeper. Banks have begun to feel threatened by the increase of non-performing loans and have adopted a more cautious approach in funding companies. On a parallel scale, opportunities for raising capital through stock offerings have reduced. The Istanbul Stock Exchange has experienced serious losses as a result of the global economic meltdown and accordingly almost half of the listed companies are traded below par value. A recent initial public offering (IPO) initiative was cancelled during the book building process due to lack of investor interest and upcoming IPOs are postponed for an indefinite period.

In addition, shareholders have shown strong reluctance to participate in rights issues of listed corporations, particularly of those traded below par value. Private placements to controlling shareholders seem to be a way out for companies seeking cash contribution. However,...



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