The UK’s Privy Council has decided Turkey’s Cukurova Telecom Holdings should be allowed to recover Turkcell shares appropriated by Russia’s Altimo if it pays US$1.56bn plus interest.
Today’s decision settles the final terms of a 30 January…
The UK’s Privy Council has decided Turkey’s Cukurova Telecom Holdings should be allowed to recover Turkcell shares appropriated by Russia’s Altimo if it pays US$1.56bn plus interest.
Today’s decision settles the final terms of a 30 January judgement, when the court decided that Altimo, part of Russian oligarch Mikhail Fridman’s Alfra Group, was entitled to appropriate the shares when Cukurova failed to pay back a US$1.5bn loan in 2007, for which they had been put up as collateral.
However, the court stated that Cukurova, controlled by Turkish tycoon Mehmet Emin, could recover the shares – equal to a 13.8% stake – on terms to be decided at a subsequent hearing.
Cukurova and Altimo disagreed on how much interest the former should have to pay to recover the shares. Cukurova argued that the provisions of the loan contract ceased to apply when Altimo appropriated the shares, meaning the court should set out the terms by which they could be recovered. Conversely, Turkcell argued that Cukorova should pay interest in line with the loan contract, which provided for an annual rate of 8% over Libor and a default rate of 11.5% of Libor.
The Privy Council, which dealt with the case because Cukurova is registered in the British Virgin Islands, decided that the Turkish holding must pay the US$1.56bn to Altimo within 60 days, plus interest accruing between the judgement date (9 July) and the payment date. Cukorova must also pay Altimo’s further costs in relation to the matter, but this is not a condition of the shares’ recovery.
The court noted that Cukurova tendered a sum in May 2007 which both parties agreed at the time equalled the amount owing, but Altimo refused to accept. Still, Cukurova kept US$1.5bn in an interest-accruing escrow account until May 2010. The court said the tender and escrow account prevent interest from being charged between May 2007 to May 2010.
The case marks the latest development in a long-running ownership battle over the Turkish mobile operator.
Turkcell’s other major shareholder, Nordic telecoms group TeliaSonera, is also embroiled in the dispute. In late June, the mobile operator’s scheduled annual general meeting failed once again to take place as the requisite 51% quorum was not reached.
