Three Turkish brands announced debt restructuring last week: Brand association
Three deep-rooted Turkish companies announced debt restructuring in the last one week, the United Brands Association of Turkey (BMD) has said, warning of further negative impacts of the rising foreign currency rates over the retail industry.
In a written statement on Sept. 10, BMD said the branded and organized retail industry faced turbulences in the last couple of years, Reuters reported.
The rent costs which have been skyrocketing as they are indexed on foreign currencies are now seriously threatening the resilience of many companies, it added.
Saying that the turbulence became steeper in the last couple of weeks, BMD added: “The main problem of the sector has been resulted from the significant rise in foreign currency indexed rent costs… Amid difficulties, three deep-rooted brands filed concordats.”
Various media outlets reported over the last week that shoemaker Hotiç, jewelry chain Gilan and underwear maker Menpa filed concordat.
A concordat aims to protect both the debtors in poor financial standing as well as their creditors. In the event that a debtor and a creditor agree on a concordat, the debtor clears its debts by paying the debt in line with the agreement stipulated under the concordat. Therefore, a concordat may be defined as a “reconstruction agreement between the debtor and its creditors.”
Many of the new malls were financed with dollar or euro loans, and their owners, who have seen their debt burden rise as the lira fell, charge rent in hard currency to offset the risk.
The association also asked the end of the foreign currency indexed rents at malls to ease conditions for the sector.
The Turkish Lira has collapsed by nearly 40 percent this year, driven by a rift between Turkey and the U.S. over a U.S. pastor who is tried in Turkey and various economic concerns.