Bloomberg News

Alfa’s Altimo Says It Could Seize Cukurova Stake in Turkcell

February 21, 2012

Feb. 20 (Bloomberg) -- Altimo, the indirect owner of 13.2 percent of Turkcell Iletisim Hizmetleri AS, Turkey’s biggest mobile-phone operator, said it may seize another 13.7 percent if Cukurova Holding AS fails to pay $1.45 billion in debt by early March.

The potential seizure is based on a decision in September by the Eastern Caribbean Court of Appeal, said Mustafa Kiral, vice president for mergers and acquisitions at Altimo, the telecommunications investment firm controlled by Russian billionaire Mikhail Fridman’s Alfa Group. According to Istanbul- based Cukurova, the court order doesn’t allow Altimo to take the shares in dispute.

Cukurova Holding, owned by Chairman Mehmet Emin Karamehmet, controls Turkcell Iletisim through a complex structure. Alfa and TeliaSonera AB, Sweden’s largest telephone company, are fighting Cukurova for control of the Turkish mobile operator.

Cukurova signed a $3.3 billion agreement with Altimo in 2005 to finance payment of debt owed to the Turkish government because of its collapsed Pamukbank AS. Altimo bought an indirect 13.2 percent of Turkcell Iletisim for $1.6 billion from Cukurova and lent it $1.7 billion after Cukurova pledged 13.7 percent of Turkcell as collateral. Cukurova repaid $350 million and Altimo later said Cukurova defaulted on repayments of the rest, while Cukurova said Altimo didn’t take installments after it borrowed $1.5 billion from international markets.

“According to the court decision, Cukurova must pay $1.45 billion to the court or may face the seizure of the Turkcell stake to Altimo,” Kiral said in an interview. The figure includes principal and interest, and the ruling is on appeal to the Privy Council in London.

Cukurova Response

Cukurova expects to pay the money owed and believes that Moscow-based Altimo can’t seize shares in the meantime, according to a Cukurova executive who declined to be identified.

“Cukurova was concerned to ensure that, during the appeal process, and while ownership of the Turkcell shares is yet to be finally determined, Alfa could not take any steps which would have a potentially damaging or irreversible effect on those shares,” the executive said in a statement today.

“What the Court of Appeal’s order does not do is to say that if Cukurova does not make the payment into court, its main appeal to the Privy Council falls away and Alfa takes ownership of the shares in dispute,” he said. “Compliance or otherwise with the condition to make payment into court does not affect Cukurova’s main appeal to the Privy Council, which will continue regardless.”

Turkcell Holding, which owns 51 percent of Turkcell Iletisim, is 53 percent owned by Cukurova Telecom Holding, with TeliaSonera holding the remainder. Altimo’s parent Alfa Telecom Turkey Ltd. owns 49 percent of Cukurova Telecom Holding and Cukurova Holding controls 51 percent, which is the stake Altimo may potentially sieze, Kiral said.

--Editors: David Risser, Tom Lavell

To contact the reporter on this story: Ercan Ersoy in Istanbul at

To contact the editor responsible for this story: Benedikt Kammel at

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