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Turkey's Cukurova set to recover disputed $1.6 billion Turkcell stake
July 25, 2014 / 3:10 PM / in 3 years

Turkey's Cukurova set to recover disputed $1.6 billion Turkcell stake

ISTANBUL (Reuters) - Turkey’s Cukurova is close to recovering a controlling stake in telecoms firm Turkcell (TCELL.IS) after a British court said it had agreed financing terms and its rival in the dispute said it expected payment next week.

Cukurova has been battling Altimo, the telecoms investment arm of Russia’s Alfa Group, for seven years for control of Turkey’s biggest mobile phone operator, choking decision-making at the firm and preventing the payment of dividends.

A source at Altimo told Reuters Cukurova would secure financing to recover the stake, for which it has been ordered to pay $1.6 billion, from Turkish state-owned lender Ziraat Bank and that it was expected to make the payment next week.

A second source close to the deal said the payment would be made on July 31.

Cukurova declined to comment, while Ziraat Bank declined to make any immediate statement when contacted by Reuters.

A British court which has been arbitrating in the dispute said earlier that Cukurova and Alfa had agreed terms under which Cukurova could finance the recovery of the stake.

Shares in Turkcell extended gains to trade up 4.2 percent after the announcement by the UK Privy Council. The Istanbul stock market had closed before news of the financing arrangement with Ziraat Bank emerged.

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 men, Mehmet Emin Karamehmet, must pay $1.6 billion - a sum which includes interest payments - to Altimo within 60 days if it wants to recover the stake.

The Turkish government is 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 dealt with by the Privy Council - which is the final court of appeal for some nations in the Commonwealth, a grouping of mostly former territories of the British Empire.

Additional reporting by Ece Toksabay; Writing by Nick Tattersall; editing by Jason Neely

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