JCR Eurasia Rating has evaluated the consolidated structure of Odaş Elektrik Üretim Sanayi Ticaret A.Ş. and assigned an investment grade credit rating of BBB-(Trk)/Stable on the Long Term National Scale and BBB-/Stable on the Long Term International Forei

JCR Eurasia Rating has evaluated Odaş Elektrik Üretim Sanayi Ticaret A.Ş.’s credit rating and ended up with “BBB- (Trk)” on the Long Term National Scale with ‘Stable’ outlook. Long Term International Foreign and Local Currency ratings are assigned as ‘BBB-/Stable’ and their details are given in the table below:

Long Term International Foreign Currency


BBB- / (Stable outlook)

Long Term International Local Currency


BBB- /( Stable outlook)

Long Term National Local Rating


BBB- (Trk) / (Stable outlook)

Short Term International Foreign Currency


A-3 / (Stable outlook)

Short Term International Local Currency


A-3 / (Stable outlook)

Short Term National Local Rating


A-3 (Trk) / (Stable outlook)

Sponsor Support



Stand Alone



Founded in 2010, Odaş Elektrik Üretim Sanayi Ticaret A.Ş (Odaş Enerji) operates in energy generation and distribution sectors. The company has started its operations with a natural gas power plant with 54 MW of installed capacity, whose capacity is increased to 140 MW via subsequent investments. The company employs a vertical integration strategy; operating in mining, energy production and distribution via several companies. In addition to currently operational power plants, namely NGPP in Şanlıurfa and 8.2 MW HEPP in Trabzon, Odaş Enerji is developing lignite fueled power plant with 330 MW capacity in Çanakkale province. The shares of Odaş Enerji are publicly traded on Borsa Istanbul, having realized an IPO in 2013 and completing a restricted rights issue in 2015.

Owing to seasonally increasing electricity demand in Şanlıurfa province where Odas’s NGPP is located, Odaş Enerji enjoys a higher margin over the spot market prices. Additionally, hydroelectric power plant in Trabzon is able to sell electricity at more favorable terms than other HEPPs through subsidized prices within the scope of government purchasing guarantee due to use of locally produced equipment in the power plant. Consequently, Odaş Enerji enjoys respectable operating profit margins. The operational profitability of the Group’s energy distribution segment, managed under the Voytron brand serving approximately 19 thousand electrometers, is expected to increase following the reduction of the private contract threshold limits and reallocation of the Group’s customer base favoring retail customers instead of large scale corporate consumers.

Odaş Enerji owns coal mine licenses in Çan region of Çanakkale where the ongoing 330 MW lignite fueled power plant investment is located. According to studies commissioned by the Group, the aforementioned reserves possess above average calorific values indicating high expected production efficiency for the thermal power plant and the ability to directly sell the reserves to the market. The Group finalized the funding of the project, estimated to cost EUR 145mn, in early 2015 via EUR 115mn 8 year maturity project finance loan with 3 years grace period. The physical progress of the investment is closely supervised by the Group. While the aforementioned credit facility heavily leveraged the Company, the income streams to be derived from the power plant which is planned to be operational in 2017 are expected to cover the financing cash outflows. However, delays in construction progress or hindrances to the energy generation along with significant depreciation of TRY might result in financing expenses pressurizing Odaş Enerji. The uninterrupted continuation of the Group’s activities and ongoing investments are considered to be closely related with the sustainability of the funding channels through the financial institutions.

Local electricity demand displays a constantly rising trend, attracting new power plant investments which generates a supply side pressure. Increasing competition and the mounting financing costs derived from predominantly foreign currency denominated loans forces the players of electricity sector to focus on bottom line profitability and efficiency. The short and long term profitability of the energy sector is expected to be heavily dependent on the economic growth and trend of per capita energy consumption figures.

The satisfactory existing and potential operational profitability and cash flow generation capacity of the Group’s currently installed and ongoing thermal power plant investment, respectively, diversified energy generation portfolio, revenue balancing benefits of the energy distribution segment targeting retail customers, high internal rate of return of the ongoing investments owing to the lower than sector average investment costs, positive performance in the corporate governance areas; along with high leverage level, the ratio of ongoing investments to the existing asset base, the expectations concerning the energy sector and the pressurized global and domestic economic outlook are the primary foundations of Odaş Enerji’s Long Term National Rating of “BBB- (Trk)” and “Stable” outlook. On the other hand, the physical completion process of the ongoing investments, the accuracy of the cash flow estimations, debt service capacity, the typically high leverage level due to the nature of the project and the funding structure will be monitored closely in the following periods.

Considering the current size of the ongoing investments and growth potential of the Group, the shareholders of Odaş Enerji, both Özal and Altay Families and the public shareholders are thought to have the willingness ensure financial and operational support to the Group. On the other hand, accounting for the previously completed rights issue in 2015 and the fact that more than one third of the shares are publicly held, further fund raising via the money markets might be limited. Therefore, Odaş Enerji’s Sponsor Support Grade has been assigned as (3), which indicates adequate level. The company’s Stand Alone Rating is determined as (B) that corresponds to sufficient level of capacity to generate resources internally without depending its shareholders or any other external party.

For more information related with the rating results you may visit our internet site http://www.jcrer.com.tr or contact our analyst Mr. Özgür Fuad Engin and Mr. Utku Karagülle.


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