Zorlu Enerji Elektrik Üretim A.Ş., a Turkish electricity generator, recently appointed financial advisors Houlihan Lokey and Servo Capital to evaluate potential financing opportunities and strategic options for its capital structure. This move comes after the company reported a net loss of 6 billion Turkish Lira (approximately $184 million USD) and a 25% drop in revenue during the first six months of 2026. Houlihan Lokey, a Los Angeles-based independent investment bank, is known as the world's largest global merger and acquisition advisor by transaction volume, with over 2,700 employees globally and BlackRock and Vanguard as its largest shareholders. Servo Capital, a Turkish firm established in 2009, has been involved in $5.7 billion worth of financing and restructuring transactions over the past three years.
The company's financial health has drawn attention from credit rating agencies. JCR Eurasia downgraded Zorlu Enerji’s long-term national credit rating to BBB+ (tr) from A- (tr) with a stable outlook, citing weakened earnings, high leverage, liquidity pressures, and balance sheet risks, including significant related-party receivables. Fitch Ratings, on the other hand, rates Zorlu at B+ (speculative grade) with a negative outlook, highlighting concerns about the company's capital intensity and debt load. Despite these concerns, approximately 83% of Zorlu's EBITDA is derived from regulated and contracted activities, providing a degree of revenue stability.
Zorlu Enerji faces significant currency risk due to its $1.1 billion in 11% senior guaranteed sustainability-linked notes, which are dollar-denominated. A weakening Turkish Lira would make servicing this debt more expensive in local currency terms, potentially straining the company's ability to manage its local bonds. Zorlu Enerji's stock has a market capitalization ranging from 11.7 billion to 12.7 billion Turkish Lira. While the company's floating-rate corporate bond tied to TLREF (Turkey's overnight reference rate) has offered a high annualized yield of 44.4%, analysts remain cautious, with some preferring to wait for a clearer economic environment, particularly regarding the stability of the Turkish Lira, before investing.
