Negotiations are going well on a one-year extension of DM 100 million ($65 million) from a DM 150 million ($98 million) syndication contracted by Garanti Bankasi in late 1993, say bankers. Garanti approached the original participants in the deal for the optional extension in mid-October (MEED 4:11:94).
Garanti has finally pitched for an all-in rate of around 147 basis points over the London interbank offered rate (Libor). This compares with an all-in rate of about 90 basis points in the original syndication.
The institution expected to close the extension deal on 21 or 22 November, retaining around 24 of the original 31 participants. All the lead managers have retained their stakes – WestLB Group, Bank of America International, Dai-Ichi Kangyo Bank, Bayerische Vereinsbank, Bank of New York, DG Bank and Gulf International Bank. Some banks were prepared to increase their original shares to compensate for the lost participants, but Garanti decided against this. It will repay the part of the original facility not extended on 30 November.
The original base interest rate of 65 basis points over Libor will be retained. However, on top of this was a participation fee of 25 basis points. An extension fee of 32.5 basis points has been added to the total. Garanti effectively will incorporate a further 22-25 basis points by making up-front interest payments rather than at the end of the year’s extension.
Bankers say they hope the deal will rescue Turkish risk from the embarrassing failure earlier in the autumn of an attempted syndication by Daiwa Europe for Turk Eximbank (MEED 28:10:94).