Kohlberg Kravis to Divest Turkish Ferry Wing to Actera-Esas

Zacks

Kohlberg Kravis Roberts & Co. (KKR) finalized the sale of its Turkish ferry unit – U.N. Ro-Ro Isletmeleri AS – to the local investment firms Esas Holding AS and Actera Partners LP. However, the terms and conditions of the agreement were not specified.

According to people familiar with the matter, the sale of the ferry business – Kohlberg Kravis’s only endeavor in Turkey – will fetch around 700 million euros ($936 million). Kohlberg Kravis will obtain 50 million euros in excess of its net debt despite the general expectations of a loss from the sale.

Moreover, the deal is awaiting antitrust clearance from the Ankara-based competition panel. Also, Actera and Esas hired Morgan Stanley (MS) as their financial adviser in this partnership purchase.

Auction Details

Last year, Kohlberg Kravis proposed to sell its 97.6% investment in the Istanbul-based carrier through a private auction. For this purpose, the company hired services of the Goldman Sachs Group Inc. (GS).

Many companies showed interest to bid for the auction. Among these were DFDS Group A/S – the Copenhagen-based ferry and logistics company, local infrastructure firm Global Yatirim Holding AS and International Transporters Association of Turkey. However, the Actera and Esas partnership was better positioned to win from the very onset.

Kohlberg Kravis planned to exit the shipping space when there was a rise in private equity investment in the shipping space. Another company in the same space, Apollo Global Management, LLC (APO), entered into a joint venture with German freight line - Rickmers Group last year.

About the Turkish U.N. Ro-Ro Unit

Kohlberg Kravis had acquired the Turkish ferry operator, which provides roll-on and roll-off services, for approximately 910 million euros ($1.22 billion) in 2007. This was considered the biggest investment by a private equity firm in Turkey at that time.

Kohlberg Kravis had given the shipping line an additional 25 million euros in 2010. Moreover, the Turkish company’s debt load amounts to $800 million.

U.N. Ro-Ro is well established in the Mediterranean routes connecting Turkey with Italy’s Trieste, Toulon in France, and Damietta in Egypt by running 12 vessels. This long journey undertaken by the Turkish company’s fleet permits truck drivers to take a detour from the hilly Balkan region where highways are still to be properly developed.

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