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

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


1
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

2
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

3
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


4
Our international practice
5
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

6
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

7
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
8
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

9
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)

10
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

11
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

12
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.
.
13
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.
14
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.

15
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.
16
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.
17
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.

18
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.
19
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.
20
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.

21
  • Disclaimer
  • The purpose of this presentation is to provide
    information as to developments in the law. It
    does not contain a full analysis of the law nor
    does it constitute an opinion of insert name of
    Norton Rose Group Contracting Party on the
    points of law discussed.
  • No individual who is a member, partner,
    shareholder, director, employee or consultant of,
    in or to any constituent part of Norton Rose
    Group (whether or not such individual is
    described as a partner) accepts or assumes
    responsibility, or has any liability, to any
    person in respect of this presentation. Any
    reference to a partner or director is to a
    member, employee or consultant with equivalent
    standing and qualifications of, as the case may
    be, Norton Rose LLP or Norton Rose Australia or
    Norton Rose OR LLP or Norton Rose South Africa
    (incorporated as Deneys Reitz Inc) or of one of
    their respective affiliates.
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