(Adds Cukurova statement, context, background)
ISTANBUL, July 31 Cukurova Holding said on
Thursday it paid Russia's Alfa Group $1.6 billion to recover a
disputed stake in Turkcell, taking a major step
towards regaining control of Turkey's biggest mobile phone
operator after a seven-year battle.
Istanbul-based Cukurova signed a loan agreement with
state-run lender Ziraat Bank in connection with the Alfa Group
payment, the company said in a statement to the Istanbul Stock
A source at Altimo, the telecoms investment arm of Russia's
Alfa Group, said last week that Cukurova would secure the
financing from Ziraat Bank and that a payment was expected on
"Our Group has signed a loan agreement with Ziraat Bank in
relation to recovering the Turkcell shares held by Alfa Group
and by using loans from the agreement, about $1.6 billion owed
to Alfa Group as per the Privy Council decision has been paid to
Alfa Group's bank account," Cukurova said.
"Therefore, the block in favour of Alfa Group has been
removed and a block, on the same shares, have been restored in
favour of Ziraat Bank," it said in the statement.
A British court that has been arbitrating in the dispute
said last week that Cukurova and Alfa had agreed terms under
which Cukurova could finance the recovery of the stake.
Altimo appropriated the 13.8 percent stake, a controlling
position due to Turkcell's complex ownership structure, when
Cukurova defaulted on a $1.35 billion loan.
The Privy Council ruled a year ago that Cukurova, owned by
one of Turkey's richest man, Mehmet Emin Karamehmet, must pay
$1.6 billion, which includes interest payments, to Altimo in 60
days if it wanted to recover the stake.
The Turkish government has been keen for Turkcell, the
country's biggest mobile phone operator, to remain in Turkish
hands and for Cukurova to secure financing from a local partner.
Cukurova is registered in the British Virgin Islands, which
is why the case is being handled by the Privy Council, the final
court of appeal for some countries in the Commonwealth.
The Commonwealth is a group of mostly former territories of
the British Empire.
(Reporting by Humeyra Pamuk; Editing by Toni Reinhold)