Turkey's Soma B coal-fired plant files for bankruptcy over 20 billion lira coal debt

The board of the company operating Turkey's Soma B coal-fired power plant has applied to the Konya Commercial Court of First Instance for its own bankruptcy, stating that the company is insolvent because its liabilities exceed its assets. The filing came shortly before a second forced-sale auction of the plant, which enforcement officers had put up for sale over unpaid coal bills of more than 20 billion Turkish lira owed to state producer Türkiye Kömür İşletmeleri (TKİ), kisadalga.net reported, citing the ANKA news agency.

From a $685.5 million purchase to insolvency

Soma B, in the Soma coal basin in western Turkey, is controlled by Konya Şeker, the sugar producer behind the TORKU brand. Konya Şeker acquired the plant and its associated real estate in 2015 for $685.5 million, according to ANKA. The plant's balance between revenue and costs deteriorated sharply in the years that followed, and its debts rose quickly.

Two creditors dominate the balance sheet. Debt to TKİ, which supplies the coal the plant burns to generate electricity, passed 20 billion lira, while a further 1.5 billion lira is owed to the private mining company İmbat Madencilik. Long talks between the Ministry of Energy and Natural Resources and Konya Şeker's management on repayment produced no result, after which TKİ launched enforcement proceedings to collect.

Two auctions, no bids so far

A panel of court-appointed experts valued Soma B and its real estate at 13.8 billion lira, excluding VAT. The first auction was held on 7 September and attracted no offers; the second was scheduled for the day the report was published. Sources quoted by kisadalga.net said the price could fall as low as 7-8 billion lira.

• Purchase price in 2015: $685.5 million for the plant and real estate
• Expert valuation set for the auction: 13.8 billion lira, excluding VAT
• Debt to TKİ: more than 20 billion lira; to İmbat Madencilik: about 1.5 billion lira
• Clearing range considered possible by sources: 7-8 billion lira

The same sources said four companies — IC Holding, Limak, Çelikler and Akçadağ — are expected to form a partnership that could take part in the auction. No bid by such a grouping has been confirmed.

What the filing means for creditors and coal demand

In a 25 September letter to Turkey's Capital Markets Board (SPK), the Soma B board said it had examined the company's full financial statements in detail, including the balance sheet, income statement and trial balance, along with independent audit reports, and had assessed the business on the basis of its real commercial activity. Attempts to secure commercial sustainability, restructure the debts and find new shareholders for the company's shares produced no positive outcome, the letter said. On that basis the board determined that the company was insolvent under the Turkish Commercial Code and the Enforcement and Bankruptcy Law, and decided to request direct bankruptcy from the competent court while notifying the relevant institutions.

The sequence leaves TKİ as the largest exposed creditor, holding a claim above 20 billion lira against an asset valued at 13.8 billion lira before any auction discount. A bankruptcy ruling would move the disposal into court-supervised insolvency rather than leaving it with the enforcement office alone, lengthening the time creditors need to recover anything. For the Soma basin, the plant is the anchor customer for locally mined coal: a prolonged halt in generation removes the main outlet for that output, while a transfer to new owners would preserve both the generating capacity and the fuel demand attached to it.