UK court hears final arguments in Turkcell shareholder row

ISTANBUL, March 4 Mon Mar 4, 2013 12:19pm EST

ISTANBUL, March 4 (Reuters) - A British court heard final arguments from Turkey's Cukurova Holding and Russian partner Altimo on Monday over a disputed controlling stake in Turkey's largest mobile phone operator Turkcell, with a verdict expected in the coming weeks.

Altimo appropriated the 13.8 percent Turkcell stake, which carries controlling rights, after Cukurova defaulted on a $1.35 billion loan in 2005. Cukurova had put the stake up as collateral for the loan.

The shareholder row has left Turkcell unable to agree the composition of its board, distribute dividends or pursue a coherent growth strategy for several years.

Britain's Privy Council ruled on January 30 that while Altimo had been entitled to take over the stake, Cukurova also had the right to recover it if it paid the outstanding loan plus interest and costs.

At the hearing on Monday, Cukurova argued the interest rate on the loan should be U.S. Libor +1 percent, while Altimo said Cukurova should pay a default rate of at least Libor +8 percent.

Sources familiar with the proceedings said they expect the final figure to be somewhere between $1.6-$3.0 billion and for a decision to be announced within the next three weeks.

The Privy Council, the highest court of appeal for many Commonwealth countries, is hearing the case because the holding companies involved are registered in the British Virgin Islands.

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