Turkish Airlines Share Sale Seen In 2012

March 25, 2011

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Turkey is most likely to sell down its stake in 49.1 percent-owned carrier Turkish Airlines next year as privatisation work has yet to start, sources close to the deal said.

"No method has been chosen for the Turkish Airlines share sale yet," a senior government official said on Friday.

"Considering the length of the work and market conditions this privatisation could take place in December at the earliest. Under normal conditions, this privatisation process possibly will start at the beginning of 2012," he said.

It was unclear how much of its stake Turkey wants to sell or how it will sell the shares, particularly as Turkish law requires a domestic carrier be majority Turkish owned.

A secondary public offering was the more likely scenario and has been putting pressure on the shares, analysts said.

Turkish Airlines shares are down a quarter in value from a January high since Turkey's Privatisation Administration (OIB) opened a tender to find an advisor for the sale, a process that saw the work given to TSKB, UniCredit, UniCredit Menkul Degerler Yapi, and Kredi Menkul Degerler.

"If the six-month results are used, a secondary public offering could take place at the earliest in December, but it is more likely to take place in 2012 with 2011 results," another source said.

"The method is not certain yet. A secondary public offering and/or a block sale will be adopted for up to 49 percent."

The same source said various methods could be used, such as a sale of a 25 percent stake and postponing the sale of the rest of the shares, a secondary public offering, a secondary offering and a block sale, or a strategic partnership.

Government officials have said in the past they were considering an additional public offering in the airline, but this has not been finalised. The government's stake is worth USD$1.38 billion at current prices.