April 25, 2014 / 4:40 PM / in 4 years

U.S. appeals court ruling frees Cukurova to pursue Turkcell buyback

NEW YORK, April 25 (Reuters) - A U.S. appeals court on Friday threw out a ruling that froze the assets of Turkey’s Cukurova Holding AS, clearing the way for the company to try to buy back a controlling stake in Turkey’s biggest mobile phone operator Turkcell.

The decision is the latest development in a longstanding dispute over the ownership of Turkcell among its major shareholders.

Nordic telecom company TeliaSonera AB had secured an order from U.S. District Court Judge Denise Cote last year freezing Cukurova’s assets until it paid a $932 million arbitration award it owes to TeliaSonera, stemming from a disputed Turkcell share sale.

But in the decision on Friday, the 2nd U.S. Circuit Court of Appeals in New York ruled the district court in New York did not have jurisdiction over the case, since Cukurova lacks sufficient connections to the state, and vacated Cote’s order.

A lawyer for TeliaSonera, Pieter Van Hol, declined to comment.

The decision is expected to trigger a two-month deadline for Cukurova to pay $1.6 billion needed to recover the disputed controlling stake in Turkcell.

The Privy Council, a British court, said in February it would give Cukurova 60 days after the 2nd Circuit’s decision to pay the funds to Russia’s Altimo in an effort to regain its shares.

Altimo is a unit of oligarch Mikhail Fridman’s Alfa Group, which appropriated the stake when Cukurova defaulted on a $1.35 billion loan.

“Cukurova will be able to proceed to arrange financing to retrieve its interest in Turkcell,” said Richard Holwell, a lawyer for Cukurova.

Cukurova, headed by one of Turkey’s richest men, Mehmet Karamehmet, and Alfa have been fighting for years over control of Turkcell, with TeliaSonera cooperating with Alfa. As a result of the dispute, Turkcell has been unable to agree to the makeup of its board or pay dividends.

Cukurova is registered in the British Virgin Islands, which is why the case was heard by Britain’s Privy Council, the final court of appeal for some countries in the Commonwealth, a group of mostly former territories of the British Empire.

Separately, Turkcell posted an increase in core earnings in the first quarter on Friday, sending its shares up slightly.

The cases are Sonera Holding B.V. v. Cukurova Holding A.S., U.S. District Court for the Southern District of New York, Nos. 12-4280, 13-73 and 13-1880. (Editing by Jeffrey Benkoe)

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