Zorlu Energy Risks Default on $55 Million as It Seeks Bond Payment Extension

Zorlu Energy, one of Turkey's largest power generation and distribution companies operating under the Zorlu Holding umbrella, missed a coupon payment of approximately $55 million that was due Friday, and simultaneously initiated a formal process seeking bondholder approval for a six-month payment deferral until April 2027.

The approval request published by the company revealed that its projected cash flows through March 2027 will not be sufficient to cover scheduled payments, noting that it is simultaneously seeking to formulate a comprehensive solution for its capital structure. The proposal will be put to a vote on November 23, and its passage requires approval from bondholders representing no less than 75 percent of the nominal principal value of those attending the meeting.

The company sold its stake in Electrip Global Limited to Wren House Infrastructure and the Kuwait Investment Authority for $147.62 million; of which $82.62 million is allocated for debt repayment, while the remaining $65 million is directed toward tax obligations and mandatory investments.

The company's bonds are trading at mid-50s levels on the price index, indicating that investors are pricing in severe losses. Fitch Ratings had downgraded Zorlu Energy to B- in September and kept it under negative watch, citing deteriorating liquidity conditions and growing reliance on short-term debt recycling.

The crisis emerges at a highly sensitive moment: sister company Vestel Electronics within the same group is undergoing parallel restructuring procedures, intensifying scrutiny on the entire group. The company had appointed Houlihan Lokey and Cervo Capital as financial advisers to study its options approximately a month ago.