Chef Nusret Gokce

Barely 4 months after Temasek invested millions in Turkish restaurant chain, its parent conglomerate is facing severe debt restructuring woes

Earlier in April, it was reported that Temasek Holdings – together with Britain’s Metric Capital – had invested $200 million for a 17% stake in Turkey’s Dogus Restaurant Entertainment and Management (D.ream).

The D.ream group had 42 restaurants under its name, most notable was the Nusr-Et steakhouse. The steakhouse gained online attention after chef Nusret Gokce (better known as “Salt Bae”) posted videos of himself salting meat in a unique cobra-like manoeuver.

Despite having more than 12 million followers on Instagram, his social media success did not bode well for the quality of his food. The extent to which his food critics was so harsh that even TIME magazine wrote an article about it.

Steve Cuozzo from the New York Post even went to the extent of calling it “Public Rip-off No. 1” given the exorbitant prices for a “shoe-leather-tough bone-in ribeye, which, for extra fun, was loaded with gruesome globs of fat”.

Agreeing, Eater magazines’ Robert Sietsema said that the steak was “rubbery and low on flavor” and said that he and his companion went home hungry even though they had spent $320 (S$435) on the bill.

D.ream’s parent company Dogus facing severe debt restructuring woes as it faces massive losses

The D.ream group of restaurants is owned by Turkey’s Dogus conglomerate, which has diverse businesses interests in industries spanning construction to tourism to real estate to energy to automobiles.

Nasdaq reported earlier this month (9 Jul) that Dogus is facing disagreements with its creditors over how $2 billion Euros (S$3.19 billion) of its maturing loans should be paid.

Even though their 2017 sales rose 16% to 20.4 billion lira (S$5.69 billion), they reported a loss of 2.3 billion lira (S$0.64 billion) after a 2 billion lira (S$0.56 billion) loss in 2016.

Besides the losses, the balance sheet also does not look pretty. The $2 billion represents only half of the conglomerate’s debt woes; Its combined outstanding loans stood at 23.5 billion lira (S$6.55 billion) at the end 2017, an increase of 11% as compared to the year before.

According to unnamed sources by Reuters, the talks were being led by lenders Yapi Kredi and Isbank.  However, rival Akbank – Turkey’s third-largest listed bank by assets – wants the debt to be collected as soon as possible.

“There is a disagreement over the maturity. Akbank does not agree with the loan maturity offered by Yapi Kredi and Isbank” said another unnamed source to Reuters.

16% decline Turkish lira causing distress for Turkish Businesses

The Dogus conglomerate is not the only large Turkish business to face debt problems.

The lira has fallen 16% this year, causing business difficulties in paying off foreign-currency debt as the repayment becomes more expensive. It is estimated that Turkish firms have as much as $225 billion in long-term overseas loans as of April.

Conglomerate Gama Holding is in talks to sell some of its assets as part of a $1 billion (S$1.36 billion) debt restructuring while Yildiz Holding, owner of global food brands such as Godiva chocolate, signed a deal with its banks to refinance $5.5 billion (S$7.5 billion) in debt in May.

So, given that the business environment in Turkey is not positive while the parent company of D.ream is facing a debt crisis, what do you think of Temasek’s decision to invest in D.ream?