US$300,000,000 Syndicated Murabaha Facility arranged by Citi for Tьrkiye Finans Katilim Bankasi A.S.

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US300,000,000 Syndicated Murabaha Facility
arranged by Citi for Türkiye Finans Katilim
Bankasi A.S.

• Mohammed Paracha
• Head of Islamic Finance Middle East Africa
• Ahmet Kalafat
• Associate, Banking and Islamic Finance
• Norton Rose (Middle East) LLP

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Norton Rose - Turkey

• Commitment to building business in Turkey
• Our core practice areas in Turkey
• Islamic Finance
• Energy Projects (hydro-electric, coal-fired, wind
  farm)
• Project Finance (steel plant, ECA facilities,
  mining, Blue Stream Pipeline, Dalaman Airport,
  Motorway, privitisation)
• Debt Capital Markets (bonds/sukuks)
• Corporate Finance (e.g. energy/projects)
• Retail and brands
• Transport (UN Ro Ro, aircraft, shipping)
• Technology (IsTTM, TelSim, Turkcell, Mobilera)
• Dispute Resolution
• Case Study 300,000,000 Syndicated Murabaha
  arranged by Citi

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Our Islamic Finance Practice

• Murabaha (Asset based or Commodity based)
• Ijara
• Istisnaa
• Istisnaa with Ijara Mawsufah Fi Al Dhima
  (forward ijara)
• Musharakah or diminishing musharaka (with an
  ijara)
• Musawama (export credit)
• Treasury Products (profit rate swaps, tahawwut or
  wad)
• Invoice discounting

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Our international practice
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Deal Awards

• International Innovative Technologies on GBP 6.1m
  Sukuk Musharakah, European deal of the year,
  2010, Islamic Finance News
• Kuveyt Turk Participation Bank US100 million
  Sukuk, Deal of the Year and Sukuk Deal of the
  Year, Islamic Finance News

Awards in 2010 and 2011

• Firm of the Year in Islamic Finance in the UAE,
  2010, Asian Counsel
• Best Islamic Finance Law Firm, 2010, Asset Triple
  A Awards
• Best Legal Advisory Firm, 2011, Euromoney Islamic
  Finance Awards
• Best International Law Firm, 2011, International
  Takaful Summit Awards
• Takaful Law Firm of the Year, 2010, International
  Takaful Summit Awards
• Best Law Firm in Islamic Finance, 2011, Islamic
  Finance News
• Outstanding contribution by a Law Firm to
  Islamic Finance Services, 2011, Sukuk Summit
  Awards
• Law Firm of the Year, 2011, The Lawyer Awards
• Best commodity/trade finance law firm, 2011,
  Trade Finance
• Best Trade Finance Law Firm in Asia, 2011, Trade
  Finance

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Commercial Drivers for Islamic Finance in Turkey

• Driven by increasing volume of export in recent
  years
• Medium sized family companies which export most
  of their products are the main users
• Accessing alternative funding sources (ME Islamic
  Banks, Conventional Banks with Islamic Windows)
• Islam is a way of life for most users of Islamic
  finance products in Turkey A Halal choice

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Commodity murabaha structure Turkiye Finans
Syndication
Broker 1
Broker 2
Step 3 Title to Commodities. Investment Agent
on-sells Commodities on behalf of Purchaser
Step 1 Title to Commodities
100 spot
100 spot (i.e. drawdown amount)
Purchaser obliged to pay deferred sale price of
110 in instalments
Turkiye Finans
Investment Agent
Participants
Step 2 Title to Commodities
Investment Agency Agreement
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Dual Tranche Syndicated Murabaha Facility

• US Dollar Tranche 176,000,000
• Euro Tranche 85,000,000
• Structured as a commodity murabaha
• Revolving facility at six monthly intervals
• Floating rate
• One-year facility
• Participants
• In total 20 banks participated in the
  syndication
• 13 of them participated in the Dollar tranche
• 7 of them participated in the Euro tranche

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Jurisdiction of participants

• In total, 20 banks participated in the facility
• Saudi Arabia
• The National Commercial Bank, Islamic
  Development Bank, Al Rajhi Banking Investment
  Corporation
• Brunei
• Bank of Islam Brunei Darussalam Berhad
• UK
• Standard Chartered Bank, Deutsche Bank, British
  Arab Commercial Bank plc, Citibank
• Qatar
• Doha Bank Q.S.C., Qatar Islamic Bank
• UAE
• Noor Islamic Bank
• Albania
• Banka Kombertare Tregtare

• Austria
• Oberbank
• France
• Union de Banques Arabes et
• Francaises S.A.
• Malaysia
• Malayan Banking Berhad
• Kuwait
• Al Ahli Bank of Kuwait
• Turkey
• Türkiye Halk Bankasi, Garanti
• Bankasi (Netherlands branch),
• Ziraat Bank (Germany branch),
• Vakif Bank (Austria branch)

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Issues Encountered

• Conventional Bank vs Islamic Banks
• Assignment at par or market value
• For Islamic banks, only on the transaction dates
• Islamic Bank vs. Islamic Banks
• Different views on revolving commodity murabaha
  transactions strict approach of Saudi banks
• IDB, a multilateral organisation refused to
  submit to municipal courts agreed to the
  jurisdiction of DIFC arbitration centre
• Late payment amount
• Cost of funding?
• Actual costs and expenses?
• Saudi banks no deduction of actual costs and
  expenses all must be donated to charity

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Tax considerations in financings to Turkey

• Applicable Taxes
• Withholding tax 15 over interest or profit
  payable. Reduced to 0 for foreign financings
• Stamp duty Reduced to 0 for foreign financings
• Resource utilisation support fund (RUSF 3 for
  Turkish corporates utilising foreign financing)
• 0 for Turkish financial institution utilising
  foreign financing
• 0 in either case above where tenure is longer
  than a year
• Banking and insurance transactions tax (BITT) 5
  over interest, profit or commission charged, Not
  applicable to foreign financings

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Mohammed Paracha Head of Islamic Finance Middle
East Africa Norton Rose (Middle East) LLP 971
4 3696 311 mohammed.paracha_at_nortonrose.com
Mohammed is a banking partner based in Dubai and
is also the Head of our Islamic finance practice
for the Middle East and Africa. He specialises in
Islamic financial and banking transactions and
has a broad range of transactional
experience. Mohammed trained and qualified with
Norton Rose Group and gained international
recognition for his work as the sole legal member
of the Bank of Englands committee on Islamic
finance where he assisted the UK Government in
establishing London as an international Islamic
finance hub. His main area of expertise is with
cross-border transactions where he advises
clients across a broad range of asset classes and
industry sectors. His transactions are
predominantly asset related involving real
estate, ships, aircraft and project assets or
complex structured transactions in new markets
where tax, legal and Shariah principles need to
be navigated in order to deliver optimum returns
to Islamic investors. Clients value his ability
to provide solutions to complex problems
involving Shariah structuring issues within an
international legal framework. Mohammed is a
regular speaker at conferences and has appeared
on various news media talking about Islamic
finance and related topical issues. The IFLR
describe Mohammed as a talented lawyer, PLC
have commented that he is known internationally
for his Islamic finance experience and Mohammed
has also appeared in the The Lawyers Hot 100
List. Mohammed is fluent in Urdu and Punjabi.
.
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Ahmet Kalafat Associate Norton Rose (Middle East)
LLP 971 4 3696 326 ahmet.kalafat_at_nortonrose.com
Ahmet is an Islamic finance associate based in
Dubai. He has a wide-ranging banking practice
specializing in Shariah-compliant financing
structures, real estate, telecoms, export credit
agency financings and restructurings. Ahmet has
advised global investment banks as well as
sovereigns, quasi-sovereigns and
corporates. Ahmet joined Norton Rose in 2007,
prior to which he worked in the legal department
of the Islamic Development Bank Group in Jeddah,
Saudi Arabia. Ahmet received his Graduate Diploma
in Law from BPP Law School in London and Diploma
in Legal Practice from Oxford Institute of Legal
Practice in Oxford. Ahmet also holds a law degree
with high honours from Ankara University, Faculty
of Law in Turkey.
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Our experience in Turkey
Wind power Advising various international wind
developers on the development of wind projects in
Turkey. Diler Holding A.S. Advising Diler
Holding A.S. in respect of the project financing
of a 600MW coal-fired thermal power plant in the
Sariseki Organised Industrial Zone in Iskenderun,
Hatay, Turkey. ING Bank N.V. Advising ING Bank
on financing for a Turkish power
project. StroyGazMontazh Advising
StroyGazMontazh, one of the leading Russian
companies engaged in construction in the oil and
gas sector, in relation to the construction of
the sea section of the Dzhubga-Lazrevskoe-Sochi
gas pipeline, which will connect to the active
Russia-Turkey intercontinental gas
pipeline. Torbapak Advising the lenders on a
UA25 million facility provided to Torbapak
Madencilik Sanayi ve Ticaret A.S. to finance
cross border purchases of coal.

• Energy Projects
• Akenerji IPP
• Advising the lenders on a 900MW CCGT Egemer power
  project in Turkey.
• Boyabat
• Advising the sponsors and the project company on
  the development and project financing of a 513MW
  hydro-electric power plant in the Black Sea
  region of Turkey.
• SEDAS power distribution
• Advising a purchaser on the financing by
  international (including the IFC) and domestic
  lenders for the acquisition of 100percent of the
  share capital of SEDAS power distribution
  company.
• Atlas Enerji
• Advising the project company in relation to the
  US500 million project financing of a merchant
  coal-fired thermal power plant in Turkey.
• Intepe-Canakkale Wind Farm
• Advising Orix Corporate Finance Limited in
  respect of a 30MW Intepe-Canakkale wind farm in
  Turkey.

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Our experience in Turkey (cont.)

• Erdemir Group
• Advising Corus, including as regards the energy
  aspects, on its due diligence on the Erdemir
  Group in Turkey.
• ICC Arbitral Tribunal
• A senior partner in our Canadian practice is
  presiding as Chairman of an ICC Arbitral Tribunal
  in London relating to a claim arising under two
  separate agreements in respect of the operation
  of an oil pipeline in Turkey.
• Project finance
• MMK Atakas
• Advising MMK Atakas Metalurji Sanayi on the long
  term financing of a steel plant by international
  and domestic banks, including a 384 million SACE
  backed export credit facility and a US450
  million facility arranged by local Turkish banks.
• Teknik Alüminyum Sanayi A.S.
• Advising HSBC Bank plc as lead arranger, under
  cover of HERMES and SACE guarantees, on the
  73,346,266 multi-sourced financing of Teknik
  Alüminyum Sanayi A.S.s expansion plant in Corlu,
  Turkey.

IS-TIM Advising IsTIM, the mobile
telecommunications operator, as borrower in
respect of loan finance and refinance
transactions with a combined value of US860
million. Çaldag Nickel and Cobalt Mine Advising
the lenders in relation to the US300 million
financing of a nickel laterite mine in
Turkey. Blue Stream Pipeline Advising SACE, JBIC
and EID/MITI on the US2 billion multi-sourced
financing for the Blue Stream Pipeline from
ussia to Turkey, part of which runs under the
Black Sea. Boru Hatlari Ile Petrol Tasima
Pipeline Advising the lenders in relation to the
financing of part of the pipeline. Foreign
Investment Advisory Service Advising the Foreign
Investment Advisory Service, an agency of the
World Bank, in relation to the development of a
new legal framework for foreign direct
investments in Turkey, in line with EU law.
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Our experience in Turkey (cont.)

• Sabiha Gokchen Airport
• Advising Akbank in relation to its financing for
  the operations of Sabiha Gokchen airport, in
  Istanbul. The sponsors behind the operations are
  Limak, GMR Infrastructure and Malaysia Airports
  Holdings.
• Dalaman Airport
• Advising HypoVereinsbank AG as lead arranger on
  the financing of the US105 million new
  international terminal project at Dalaman Airport
  in Turkey.
• Turkish Highways
• Advising a UK bank in relation to a series of
  ECGD and SACE backed loans to the Turkish
  Directorate of Housing Development in respect of
  a highway construction in Turkey.
• Turkish Motorway
• Advising an Islamic bank in respect of the
  financing of a motorway project for the
  Government of the Republic of Turkey.
• Petkimi Petroklmya Holdings
• Advising the Privatization Administration of
  Turkey in relation to the privatization of Petkim
  Petrokimya Holdings A.S.

Lukoil Advising Lukoil Downstream S.A. on the
acquisition of a fuel bunkering company operating
in the port of Istanbul from the Turkish
State. Ankara Metro Advising the Export
Development Corporation (EDC) of Canada on all
aspects of the US431 million financing of the
Ankara Metro, which was originally on a build,
operate and transfer basis, and the terms of the
Export Development Corporation guarantee. Izmit
Bay Crossing Advising the lead arrangers in
relation to the construction of a bridge and
motorway for the Izmit Bay Crossing at Izmit Bay
in Turkey. Turkiye Halk Bankasi A.S. (Halkbank)
IPO Advising the Privatisation Administration of
the Republic of Turkey on the TRY 2.5 billion
(USD1.85 million) IPO of ordinary shares of
Turkiye Halk Bankasi A.S. (Halkbank) for listing
on the Istanbul Stock Exchange. Turkish Steel
Mill Advising one of the joint venture partners
in a steel mill project in Turkey, which involved
negotiations with the International Finance
Corporation in Washington.
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Our experience in Turkey (cont.)
Foreign Investment Advisory Service
(FIAS) Advising the FIAS, an agency of the World
Bank, in relation to the development of a new
legal framework for foreign direct investments in
Turkey that is consistent with EU law. The
Privatisation Administration of the Republic of
Turkey Advising on the US1.85 billion IPO of
ordinary shares of Türkiye Halk Bankasi A.S.
(Halkbank), one of the largest privatisations of
its kind yet seen in the Turkish market. The
shares are listed on the Istanbul Stock Exchange.
Halkbank is Turkeys seventh largest bank in
terms of assets and fifth biggest by branch
network. Bank Islam Advising Bank Islam on the
proposed US600 million Islamic Private Debt
Securities Issuance Programme. Beko
A.S. Advising, together with Citigroup, Beko A.S.
on a proposed joint venture and on certain UK law
aspects of its recent International Finance
Corporation (IFC) financing. Citibank Advising
Citibank in relation to numerous murabaha
transactions

• Torunlar G.Y.O.
• Advising Torunlar G.Y.O., one of the leading
  shopping mall developers in Turkey, in connection
  with international aspects of its TL 410 million
  IPO and listing on the Istanbul Stock Exchange.
  Is Yatirim Menkul Degerler A.S. was the
  bookrunner.
• Financial institutions
• HSBC Bank
• Advising HSBC bank in relation to numerous
  murabaha transactions.
• Advising HSBC as Global Coordinator and
  International Bookrunner on the US400 million
  IPO of Sinpas REIC, a Turkish real estate
  company.
• ABN AMRO
• Advising ABN AMRO on the disposal of its Turkish
  brokerage business, ABN AMRO Yatirim Menkul
  Degerler A.S.
• Islamic Development Bank
• Advising Islamic Development Bank (IDB) in
  relation to the restructuring of a Purchase-Lease
  Back Islamic facility to TEBA, a leading
  industrial and consumer products manufacturer in
  Turkey, in default of its payment obligations.

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Our experience in Turkey (cont.)

• Akbank
• Advising Akbank in relation to a US50 million
  murabaha facility to Ak Gida
• Standard Bank
• Advising Standard Bank on a US25 million gold
  prepayment facility to Anagold Madencilik, the
  Turkish subsidiary of the Canadian mining company
  Anatolia Minerals Development Ltd. This deal will
  see the bank provide a rolling credit facility to
  Anagold which will be repaid through the delivery
  of gold and silver bullion from the soon to be
  operational Copler gold mine in Turkey.
• Kuveyt Türk
• Advising Kuveyt Türk Katilim Bankasi, a
  subsidiary of Kuwait Finance House in connection
  with the issuance of Kuveyt Türk's US100 million
  Sukuk, the first ever Sukuk from Turkey and the
  first bank Sukuk originating from Europe. The
  lead managers on the transaction were Citigroup
  Global Markets Ltd. and Liquidity Management
  House. The deal won Deal of the Year, Sukuk Deal
  of the Year and Turkey Deal of the Year at the
  Islamic Finance News Awards 2010.
• Citigroup Global Markets Limited
• Advising Citigroup on a proposed privatisation.

Bank Sofia Advising Bank Sofia, a Russian
commercial bank, on its sale to Türkiye ðs
Bankasi (Isbank), a leading Turkish financial
institution, for an amount of up to US40
million. International Finance
Corporation Counsel to IFC, a member of the World
Bank Group, in connection with its investments in
mining company Eurasian Minerals Inc., one of
Turkeys largest exploration land
holders. Finansbank A.S. Advising Finansbank on
a US61 million facility provided to a trading
company to finance the acquisition of a dry bulk
carrier. Retail and brands Gloria Jean's
Coffees Advising this international coffee
manufacturer and cafe retailer with respect to
its entry into the Turkish market and the sale of
the master franchise rights to a local partner,
including market due diligence, acting on the
sale of the master franchise rights, modifying
standard suite of contracts to comply with local
laws and trademark protection advice.
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Our experience in Turkey (cont.)

• Pack and Send
• Advising this international courier business in
  relation to possible entry into the market,
  including trade mark protection advice and local
  market due diligence.
• Transport
• U.N. Ro-Ro
• Advising on the largest private equity
  acquisition to date in Turkey (following three
  major IPOs). The team advised a majority of the
  shareholders of U.N. Ro-Ro, the roll-on roll-off
  lorry freight company, on the sale of their
  shares in the company and its subsidiaries to the
  private equity firm Kohlberg Kravis and Roberts
  Co, and its related funds. The U.N. Ro-Ro Group
  is the number one freight operator in the
  Mediterranean, operating between Istanbul and
  Trieste, and one of the top seven freight
  operators in the world, currently operating nine
  roll-on, roll-off freight transport vessels as
  part of its combined transportation business.
• Fiat
• Advising Fiat in the sale of the aluminium car
  component business of its subsidiary Teksid to US
  investment fund Questor,obtaining clearance from
  the European Commission and coordinating several
  multinational merger filings (including US,
  Brazil, Poland and Turkey).

Kreditanstalt fur Wiederaufbau Advising
Kreditanstalt fur Wiederaufbau on the subleasing
of A320-200 by SALE to THY Turkish Airlines. BNP
Paribas (Suisse) S.A Advising BNP Paribas in
relation to the acquisition of Banque Cantonale
Vaudoises shipping portfolio by BNP Paribas
(Suisse) S.A.. This included the conducting of
due diligence and transfer of procedures. Technol
ogy Efes Breweries International N.V. Advising
Efes Breweries International N.V. (EBI) in
relation to the recommended cash offer by Anadolu
Efes (EBIs majority shareholder) for those EBI
shares not already held by it. The EBI group is
one of the leading brewing groups in Russia,
Moldova, Kazakhstan and Georgia. The offer values
the entire issued and to be issued share capital
of EBI at approximately US469 million. The offer
is the first shared jurisdiction bid under the
Takeover Directive that has been announced in the
UK, with the UK Panel on Takeovers and Mergers
regulating in conjunction with the Dutch AFM.
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Our experience in Turkey (cont.)
Telsim Mobil Telekomunikasyon Hizmetleri
(TelSim) Advising Emaar PJSC on its bid to
acquire the US4.5 billion Turkish telecoms firm,
TelSim, in a competitive bid process administered
by the Government of Turkey. Turkcell iletisim
Hizmetleri A.S. Advising Turkcell, the largest
telecommunications company in Turkey, in respect
of the refinancing of their investment in GSM
networks in the Ukraine (Astelit) - in addition
to various inter group refinancing transactions,
including ECA financings transactions. The
aggregate value of the transactions is
approximately US1 billion. Mobilera Advising
Mobilera, a leading Turkish digital mobile
marketing business, on a 50 per cent private
equity investment by Gryphon Holdings plc and
Quifel Holdings.

• Telecom Italia Mobile SpA
• Advising Telecom Italia Mobile SpAs Turkish
  joint venture, IsTIM, in connection with the
  merger between IsTIM and Aycell, the GSM operator
  entirely held by state-owned Turk Telekom. TIM
  and Turk Telekom each own 40 per cent of the
  Newco and IsBank Group, which had a 51 per cent
  stake in IsTIM, hold 20 per cent. It is expected
  that the Newco will be refinanced on a project
  finance basis. The merged company aims to become
  the leading Turkish mobile operator.
• Detecon GmbH
• Advising Detecon GmbH (of the Deutsche Telekom
  Group) with respect to its participation in
  Telsim, one of the two Turkish mobile phone
  network providers.
• Beko Elektronik A.S.
• Advising Beko Elektronik A.S. in respect of a
  potential dispute with a joint venture partner.

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  points of law discussed.
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