* Cukurova seeks to recover Turkcell stake from Altimo
* Faces Sept. 9 deadline to raise $1.57 billion
* Says needs more time to fight adverse rulings in U.S.
* UK court to rule on extending deadline this week
By Estelle Shirbon
LONDON, July 23 Turkey's Cukurova on Tuesday
accused Russian investment firm Altimo of mounting a cynical
legal campaign in New York to try to stop it from recovering a
controlling stake in mobile phone operator Turkcell
under the terms set by Britain's Privy Council court.
Cukurova is applying to the Privy Council for more time to
pay $1.57 billion to Altimo to recover the stake. Altimo opposes
the extension of the deadline, currently set for Sept. 9.
Altimo is the telecoms arm of Russian billionaire Mikhail
Fridman's Alfa Group, while Cukurova is owned by one of Turkey's
richest men, Mehmet Emin Karamehmet.
It is the latest chapter in a six-year dispute between
Turkcell's major shareholders that has left Turkey's biggest
mobile phone operator unable to agree the composition of its
board, pay dividends or pursue a coherent growth strategy.
The dispute began in 2007 when Altimo appropriated
Cukurova's Turkcell stake alleging that the Turkish firm had
defaulted on a loan. After years of litigation, the Privy
Council ruled on Jan. 30 that Cukurova should be given an
opportunity to pay back the loan and recover the shares. It then
set the detailed terms for that to happen on July 9.
Lawyers for Cukurova told the Privy Council on Tuesday the
firm needed more time because it was appealing against an
injunction obtained on April 18 by Altimo from a New York
District Court prohibiting Cukurova from putting up the Turkcell
stake as collateral in any new loan.
Cukurova is also appealing against another injunction,
obtained by Altimo from the New York court on July 12, barring
Altimo's own bank, Deutsche Bank, from accepting any payment
from Cukurova in relation to the recovery of the Turkcell stake.
Cukurova's appeals are due to be heard by the Second Circuit
of the U.S. Court of Appeal on Aug. 22 and judgment will come at
a later date. The Turkish firm wants the Privy Council to extend
the deadline for producing the $1.57 billion to 60 days after
that U.S. appeal judgment, whenever it comes.
The Privy Council said it expected to hand down its judgment
on whether to extend the deadline by the end of this week.
TALKS WITH BANKS
Lawyers for Altimo denied that the New York legal action had
been designed to stop Cukurova from recovering the disputed
Turkcell stake and argued that in any case Cukurova could not
raise $1.57 billion.
"It is completely unrealistic to suppose that they will be
able to pay when the time comes," said Iain Milligan, counsel
for Alfa Telecom Turkey which is the unit of Altimo involved in
the Turkcell dispute, in his submissions to the Privy Council.
Cukurova lawyers contradicted this.
"Cukurova had discussions with a number of potential
lenders, a 'lead arranger' for a syndicated loan was appointed
and a number of major banks expressed a willingness to
participate in the syndicate," they wrote in a skeleton argument
presented to the Privy Council for Tuesday's hearing.
They said that Altimo's legal moves in New York were "a
transparent and cynical attempt" to stymie Cukurova's efforts to
raise the funds.
Milligan denied this, telling the Privy Council that the New
York legal action was part of a related but separate dispute
involving another key Turkcell shareholder, Nordic telecoms
TeliaSonera is trying to force Cukurova to comply with a
2011 ruling by a Swiss arbitration tribunal under which Cukurova
was ordered to pay TeliaSonera $932 million in damages for
reneging on a deal to sell the Nordic group its Turkcell stake.
Under a Joint Venture Agreement between TeliaSonera and
Alfa, the Russian group has power of attorney to act on
TeliaSonera's behalf in trying to enforce the Swiss ruling.
Milligan said the firm's recent moves in the New York court were
in pursuit of that goal.