Milbank has advised Limak İskenderun Uluslararası Liman İşletmeciliği A.Ş. ("LimakPort") in connection with its inaugural Rule 144A/Reg S project bond maturing in 2036. One of the first-ever project bonds issued out of Turkey, Limak’s 15-year amortizing dollar bond issuance raised US$370 million and closed on May 18, 2021.
LimakPort is a Turkish provider of port services that operates İskenderun Port, one of the most substantial and innovative container terminals in the Eastern Mediterranean with an annual handling capacity of 1 million TEU. Located in southeastern Turkey, the port primarily imports raw materials and exports finished and semi-finished goods to the European Union, Middle East and North Africa.
UBS and Bank of America acted as joint bookrunners for the transaction. LimakPort will use the funds raised by the bond issuance to refinance an existing loan. The security package includes a pledge over all of the share capital of LimakPort, a pledge of all movable assets of the company, excluding assets required to satisfy the minimum port capacity under the concession agreement and a security interest in offshore and onshore accounts. Investors will benefit from a six-month Debt Service Reserve Account, a three-month Operation and Maintenance and an 18-month capital expenditure reserve account. Distributions will be subject to a minimum debt service coverage ratio, as defined under the terms of the notes, of 1.25x. In addition, notes have a step-up coupon based on environmental, social, and governance key performance indicators, the first Turkish securities instrument to have such a feature.
The Hong Kong-based Milbank team was led by Global Capital Markets partner James Grandolfo with associates York Wu, Cheyne Cudby and Abir Varma assisting.
“We’re thrilled to break new ground in Turkey with LimakPort through the issuance of this project bond” said James Grandolfo. “We are delighted to have supported the Limak Group with this very important refinancing. We believe the structure of the transaction, including the bond’s novel step-up coupon feature will set a precedent for future project bond issuances in Turkey.”
