By Emre Peker and Charles Duxbury
ISTANBUL--Turkcell Iletisim Hizmetleri AS (TCELL.IS), Turkey's
largest carrier, is likely to keep its current ownership structure
after a U.K. court of appeals ruled in favor of controlling
stakeholder Cukurova Holding AS.
In its decision on Wednesday the Privy Council in London said
Russia's Alfa Group, which had sought to control Turkcell by
forestalling repayment on a defaulted debt by Cukurova, would be
"obliged to permit them to redeem the charged shares" if the
Turkish conglomerate "came up with the appropriate sum by way of
principal and interest."
The ruling on the six-year-old trial is a blow to Alfa Group's
telecommunication investment arm, Altimo, which had received a 14%
stake from Cukurova as collateral for a 2005 loan. The Russian firm
claimed that an event of default entitled it to the shares, which
would in effect make Alfa Group's Altimo the controlling party in
Turkcell.
Cukurova owes Alfa $1.352 billion of debt and interest,
according to the U.K. court's decision. The judges "will give a
further decision, which will deal with the terms upon which relief
from forfeiture will be accorded" to Cukurova, the ruling
shows.
Altimo said is a statement after the decision that the court
upheld its appropriation of Cukurova's stake and "the unique nature
of the collateral" has led the arbitrator to grant the Turkish
conglomerate relief from forfeiture.
Cukurova welcomed the decision to be able to redeem its shares
from Altimo. The Turkish firm said the court found that the Russian
stakeholder "was primarily concerned with the shares not as
security for its loan but for the control over Turkcell that they
would provide," according to a statement from White & Case LLP,
which represented Cukurova in the case.
Write to Emre Peker at emre.peker@dowjones.com and Charles
Duxbury at charles.duxburry@dowjones.com
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