(Recasts, adds details, background)
ISTANBUL Nov 30 Cukurova Holding on Wednesday
accused its rival shareholder in Turkcell of
violating an arbitration ruling by failing to buy out its stake,
the latest salvo in a decade-long struggle for Turkey's top
Turkcell has been hampered by protracted feuding between
three of its shareholders: Cukurova, owned by Turkcell founder
Mehmet Emin Karamehmet, Russian billionaire Mikhail Fridman and
Sweden's Telia Company.
For years the bitter feud even halted dividend payouts as
the board was unable to call shareholder meetings.
Under a London arbitration court decision handed down in
August, Fridman's LetterOne Technology won the right to buy out
Cukurova this month after Cukurova failed to exercise its option
to buy out Fridman.
But on Tuesday, LetterOne said its Turkish affiliate Alfa
Telecom Turkey was unable to buy the stake due to an earlier
court injunction in the British Virgin Islands that barred
Cukurova from transferring its Turkcell shares.
"By not fulfilling this obligation, Alfa has clearly
violated the London tribunal ruling," Cukurova said in a
statement. It was not immediately clear if it would look to
pursue legal action against the Russian investor.
A spokesman for LetterOne was not immediately available to
comment. Shares in Turkcell fell by more than 3 percent on
Tuesday and Wednesday, reflecting investor disappointment that
the feud had not been settled.
The legal battle has generated its own lengthy Wikipedia
entry and been compared by one legal observer to a low-budget
horror movie for its seemingly "inexhaustible supply of
The injunction that barred LetterOne from buying the stake
was granted on behalf of Telia after Cukurova refused to pay an
outstanding debt to the Swedish company. Including interest, the
debt is now worth $1.1 billion, according to LetterOne.
LetterOne indirectly holds 13.2 percent of Turkcell, while
Karamehmet's Cukurova indirectly holds a 13.8 percent stake.
Telia owns 37 percent.
The dispute between Fridman and Karamehmet became public
knowledge when Fridman's Alfa seized Karamehmet's stake, saying
Cukurova had defaulted on a 2005 loan agreement for which the
shares were pledged as collateral.
(Reporting by Humeyra Pamuk; editing by David Dolan and David