Turkcell's Cukurova Faces "Do-or-Die" $1.57 bln Payment

Among the seized companies were three TV stations and a defense manufacturer, Çukurova’s top profit-making branches. The TMSF insisted in May that Çukurova’s shares in Turkcell be used toward the payment of the debt.

One possibility for paying its debt is for Çukurova to find a Turkish partner in Turkcell, however, its Russian and Scandinavian partners will immediately oppose this, observers argued on Tuesday. Another option is for Çukurova to sell stakes in Genel Energy plc, an Anglo-Turkish company co-owned by billionaires Karamehmet and Mehmet Sepil as well as British investors. Genel has ongoing projects in northern Iraqi oil fields.

Shares in Turkcell, Turkey’s biggest mobile phone operator, rose 3 percent on Tuesday after the announcement of the billion dollar payment. The announcement follows a British Privy Council ruling in January that Altimo had been entitled to appropriate the shares but that Çukurova should have an opportunity to recover them “on appropriate conditions.” The long-running shareholder dispute forced the cancelation of Turkcell’s annual general meeting last month, leaving it unable to agree on the composition of its board and preventing the approval of accounts and distribution of dividends. An intervention by Turkey’s Capital Markets Board (SPK) in March to appoint three independent board members for Turkcell was not enough to solve problems with the major shareholders who are still unable to hold the company’s first board meeting in two years.

The row centers on Çukurova’s 13.8 percent holding in Turkcell, which is a controlling stake due to a complicated shareholder structure. Altimo seized the shares when Çukurova defaulted on a $1.35 billion loan eight years ago.

Altimo separately owns 13.2 percent of Turkcell. The Judicial Committee of the Privy Council also ruled that, on top of the $1.57 billion payment, Çukurova will have to pay further interest accruing between the date of the judgment and the date of payment.

TDZ