UPDATE 2-UK court tells Cukurova to pay $1.6 bln for Turkcell shares
* Court ruling heralds end to long-running dispute
* Cukurova must pay $1.57 bln to Altimo to recover stake
* Dispute had paralysed decision-making at Turkcell
* Analyst expects Cukurova to raise funds for purchase
* Turkcell shares up on hopes for end to dispute
By Estelle Shirbon and Seda Sezer
LONDON/ISTANBUL, July 9 (Reuters) - A British court has set the terms for Turkish conglomerate Cukurova Group to buy back a stake in telecoms group Turkcell, opening the way to ending an eight-year dispute which has paralysed decision-making at the company.
The ruling relates to a quarrel over a 13.8 percent stake in Turkcell which had been held by Cukurova and which is a controlling stake due to the company's shareholder structure.
Russian group Altimo had seized the shares when Cukurova defaulted on a $1.35 billion loan, but the British court has now ruled Cukurova must pay $1.57 billion - a sum which includes interest payments - to Altimo within 60 days if it wants to recover the stake.
The ruling turns the spotlight on Cukurova - holding company of Turkish tycoon Mehmet Ali Karamehmet - and its ability to pay the sum, given it has just suffered the seizure of some of its assets by a state fund.
But some analysts said they expected the group to make the purchase, clarifying Turkcell's future.
"Our initial reaction is that the Turkish shareholder can secure the funding within the stated date, meaning that they can regain control of Turkcell," said analyst Alper Ozdemir at brokerage Oyak Securities.
"Considering the Turkish authorities' evident support to Cukurova Group, it should be expected the board to call a general assembly to seek approval of 2010-11-12 financials and dividends as soon as the share issue is resolved," Ozdemir said, adding he saw the ruling as positive.
Shares in Turkcell, Turkey's biggest mobile phone operator, rose 3 percent after the announcement of the figure, which includes interest accrued over the years since the dispute began.
The long-running dispute has hamstrung Turkcell since 2010, forcing the cancellation of annual shareholders meetings, leaving it unable to agree the composition of its board and preventing the approval of its accounts and the payment of dividends.
The British Privy Council had already ruled in January that Altimo was entitled to appropriate the shares, but also said Cukurova should have an opportunity to recover them "on appropriate conditions".
Cukurova declined to comment on Tuesday's ruling.
Altimo Vice President Evgeny Dumalkin said in a statement: "This decision specifies the time limit to finally clarify shareholders' status in Turkcell."
Sources told Reuters in February that Cukurova was determined to recover the disputed Turkcell stake and had sought a loan of up to $2 billion.
Russian billionaire Mikhail Fridman's Altimo separately owns 13.2 percent of Turkcell.
Cukurova is registered in the British Virgin Islands, which is why the case is being dealt with by Britain's Privy Council, the final court of appeal for some countries in the Commonwealth, a grouping of countries which are mostly former territories of the British Empire.
Tuesday's judgement is the final ruling in the case.
Altimo owns 49 percent and Cukurova 51 percent of the holding company behind the listed Turkcell business. Nordic telecoms group TeliaSonera is Turkcell's biggest shareholder with 38 percent.
The court decision comes after state agency the Savings Deposit Insurance Fund (TMSF) in May seized control of dozens of companies belonging to the group in connection with losses at a Turkish bank, raising concern about the group's ability to find the necessary funds for any Turkcell purchase.
Yet Turkish conglomerate Ciner Group last month agreed to buy one of the seized assets - television channel Show TV - from Cukurova for $402 million. Cukurova's pay-TV operator Digiturk is also up for sale, in a deal seen worth up to $1 billion.
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