UK Privy Council gives Cukurova chance to redeem Turkcell stake
30 January 2013 |
The UK Privy Council ruled today that Russia’s Altimo was entitled to appropriate shares in Turkcell from a defaulted loan by Cukurova but said that Cukurova should be given the opportunity to redeem the shares in appropriate conditions.
The judges asked the parties involved for a list of points to be clarified before a final decision was made regarding the terms of such a deal on an unspecified date
Cukurova, a holding company of one of Turkey’s richest men, Mehmet Keremehmet, took a loan from Altimo in 2005 using his 13.8% Turkcell stake as collateral.
The two have been engaged in a dispute over whether Cukurova defaulted on its loan and should therefore hand over its Turkcell stake to Altimo.
As Cukurova is registered in the British Virgin Islands its case was dealt with by the Privy Council, the final court of appeal in Commonwealth registered countries.
Cukurova’s argument that it had not defaulted on the $1.35 billion loan from Altimo was rejected by the court, which said a default had taken place.
The court said that Altimo had been entitled to accelerate the loan and appropriate Turkcell shares but said relief against forfeiture should be available to Cukurova on appropriate conditions.
Yesterday Turkey’s telecoms regulator said that any share transfer would require its approval regardless of the court’s decision.
Altimo owns a 13.2% stake Turkcell with its ally TeliaSonera holding 37%, the remaining 34% of the company is mostly free float.
Before the ruling was released Altimo issued a statement saying the court had upheld its appropriation of the Turkcell stake. This was later withdrawn because it was issued in error.
Cukurova said the ruling was in its favour as it meant it should be given the opportunity to repay its loan and recover the shares.
"In reaching its decision, the Privy Council confirmed that Alfa (Altimo) had entered into the transaction with the aim of obtaining control of Turkcell and had deliberately taken steps to prevent Cukurova repaying the loan to try to ensure that its goal was achieved," the company said in a statement.
The dispute has left Turkcell largely paralysed and unable to pursue a growth strategy, according to market watchers, who suggested yesterday that whichever side won it would be good for the company.