Turkey’s Cukurova Holding reportedly aims to secure a long-term loan of about US$1.6bn to recover a 13.8% stake in Turkcell from Russian investment firm Altimo.
If successful, Turkcell might finally be able to distribute dividends to its shareholders,…
Turkey’s Cukurova Holding reportedly aims to secure a long-term loan of about US$1.6bn to recover a 13.8% stake in Turkcell from Russian investment firm Altimo.
If successful, Turkcell might finally be able to distribute dividends to its shareholders, held back since 2010.
Cukurova, controlled by Turkish businessman Mehmet Emin Karamehmet, intends to use the stake in the mobile operator, and perhaps also oil company assets, as collateral for the loan, Bloomberg cited two people with knowledge of the matter as saying.
The UK’s Privy Council has given Cukurova until the end of June to pay US$1.6bn to Altimo, part of oligarch Mikhail Fridman’s Alfa Group, to recover the stake. Altimo seized the stake when it claimed Cukurova defaulted on a 2005 loan agreement, for which the shares had been pledged as collateral.
Cukurova lost a separate Privy Council case this week, requiring it to pay about US$1bn in damages to Swedish telco TeliaSonera, another of Turkcell’s feuding major shareholders, for failing to execute a 2005 agreement to sell a controlling stake in Turkcell.
The decision has raised questions about whether Cukurova will be able to make the payment to Altimo on time. If it does not recover the stake, Altimo will be Turkcell’s largest shareholder.
The dispute between Turkcell’s three major shareholders has prevented it from holding an AGM and paying dividends since 2010. The 2014 AGM is set for 29 May.
Halil Ibrahim Kahve, an analyst at Garanti Securities in Istanbul, said a timely payment to Altimo would remove uncertainties over the ownership of the 13.8% stake, eliminating the need to block general meetings. It would also “unlock” the long-awaited distribution of dividends, he added.
However, Kahve noted that the Turkish government and regulator ICTA’s stance on Turkcell’s ownership is crucial. ICTA said in January that an agreement between itself and Turkcell means share transfers and changes of control at the operator are subject to its approval. The regulator said the January Privy Council ruling entitling Cukurova to recover the 13.8% stake if it pays the necessary sum to Altimo is also subject to its approval.
Alper Ozdemir, an analyst with Oyak Yatirim Research, also in Istanbul, noted that a timely payment to Altimo would only solve “the ownership puzzle” and not the corporate governance issues arising from the shareholders’ dispute.
