Turkey’s Cukurova Group has announced that it has paid Russia’s Alfa Group the US$1.6bn required to recover a disputed stake in Turkcell.
The move paves the way for Cukurova to regain control of the mobile operator.
The group, controlled by Turkish…
Turkey’s Cukurova Group has announced that it has paid Russia’s Alfa Group the US$1.6bn required to recover a disputed stake in Turkcell.
The move paves the way for Cukurova to regain control of the mobile operator.
The group, controlled by Turkish businessman Mehmet Emin Karamehmet, confirmed in an Istanbul bourse filing that it secured a loan with Turkish state-controlled Ziraat Bank to fund the payment.
Cukurova added that the block on Turkcell shares in favour of the Alfa Group, which owns its shares in the Turkish operator via its telecoms investment arm Altimo, has been lifted and “restored in favour of Ziraat Bank”.
The UK’s Privy Council recently approved an agreement between Cukurova, which is registered in the British Virgin Islands, and Altimo setting out the terms by which the former could recover a 13.8% indirect stake in Turkcell.
Altimo seized the stake in 2007 when Cukurova defaulted on a US$1.35bn loan for which the shares had been pledged as collateral. The UK court decided last July that Cukurova could get the stake back if it paid Altimo the US$1.6bn, which includes interest. The initial payment deadline was extended several times to the end of July 2014.
The Turkish government has indicated that it would like Turkcell to remain in Turkish hands and was reportedly eager for Cukurova to secure financing with a local company.
A dispute between Turkcell’s three major shareholders, which also include Sweden’s TeliaSonera, has prevented the Turkish operator from holding an AGM and paying dividends since 2010.
Analysts have anticipated that Turkcell may be able to resume paying dividends if Cukurova is successful in recovering the stake. However this would not necessarily resolve corporate governance issues.
Cukurova is caught up in another court battle with TeliaSonera concerning a failed sale of Turkcell shares dating back to 2005.
Turkcell reported revenues of TL2.92bn (US$1.36bn) for Q2 2014, up 2.4% year-on-year. EBITDA stood at TL907m (US$422.38m) and net debt totalled TL3.46bn (US$1.6bn) as of 30 June.