Vestel Engages Houlihan Lokey to Restructure Its Bonds

Vestel Elektronik (VESTL), a subsidiary of the Turkish conglomerate Zorlu Holding, has retained the restructuring specialists at Houlihan Lokey to assist with negotiations with the holders of its $500 million Eurobond. The company announced this on July 9.

The bond, which matures in May 2029, came under heavy pressure following the announcement. According to Bloomberg, its price fell by about seven cents to approximately 52 cents per dollar. Vestel’s stock, on the other hand, rose by about 3%.

Next coupon payment in November

The fourth coupon payment was made in May. The next interest payment is scheduled for November 13.

Vestel initially issued the five-year Eurobond in May 2024 with a volume of $450 million and a coupon rate of 9.75%. In June 2024, the issue was increased by an additional $50 million.

The bond was issued at 99.516% of par value upon placement. Before the restructuring plans were announced, it was still trading in the range of 66 to 67 cents, before temporarily plummeting to around 40 cents. The current yield is around 40 to 50%.

Turkey’s credit default swaps (CDS) continue to hover around 220 basis points, while ten-year Turkish government bonds denominated in euros currently yield about 7%.

Bank loans are also being restructured

As early as June 26, Vestel had filed an application with Turkish banks to restructure its domestic bank liabilities in accordance with Article 32 of the Provisional Banking Law No. 5411.

Back in February, Reuters reported, citing informed sources, that Zorlu Holding and Vestel were negotiating debt restructuring with banks.

Bloomberg also reported last year that Vestel and Zorlu CEO Ömer Yüngül had told investors that while the company was planning job cuts, it did not expect to default on payments.

Intense Competitive Pressure from China

Vestel is increasingly suffering from strong competition from Chinese manufacturers in the European market. In the first quarter, revenue plummeted by nearly half, while the string of losses continued.

After posting a net profit of $71 million in 2023, the company recorded a net loss of $408 million in 2024. In 2025, this loss widened to $761 million.

Rating Agencies Sound the Alarm

On July 1, Fitch Ratings downgraded the company by two notches to CCC- and warned that its current capital structure was unsustainable. At the same time, Fitch placed Vestel on the watchlist for a further possible downgrade.

Moody’s Investors Service had already lowered the rating from Caa1 to Caa2 in April.

Both ratings signal a very high risk of default and only a slim chance of full repayment.

Vestel Remains Active in the Lira Bond Market

Despite its financial difficulties, Vestel continues to raise funds on the domestic capital market.

On July 7, the company issued 94-day bonds totaling 94 million Turkish lira at an annual interest rate of 49.5%.

As early as June 25, Vestel had issued a 106-day bond worth 338 million lira at 49% and simultaneously redeemed several maturing bonds. New lira bonds were also issued in May, and existing liabilities were serviced as scheduled.

To date, none of the domestic securities have defaulted.

At the end of June, Vestel also filed an application with the Turkish Capital Markets Board (SPK) for an issuance program totaling an additional 2 billion Turkish lira.

Zorlu Enerji Is Also Under Scrutiny

Not only Vestel, but also its sister company Zorlu Enerji (ZOREN) has recently come under pressure.

In October 2025, Fitch and Moody’s downgraded their credit ratings for the energy company. Zorlu Enerji currently has a rating of B+ (Negative) from Fitch and B3 (Stable) from Moody’s.

Between October 2024 and March 2025, Zorlu Enerji issued a Eurobond with a total volume of 1.1 billion U.S. dollars, which was increased several times. The bond is now trading at around 70% of its face value and currently offers a yield of about 24%.

In February, management stated that investment activities would continue. In May, the company also reported an improvement in its operating profit for the first quarter.