Turkcell shares soar on solution hope for owners’ row

ISTANBUL / NEW YORK - Reuters

DAILY NEWS Photo

Turkcell shares enjoyed a boost yesterday after a U.S. appellate court on April 25 threw out a ruling that froze the assets of Çukurova Holding.

The ruling has cleared the way for the company to try to buy back a controlling stake in the mobile phone operator.    

The decision, which came as the latest development in a longstanding dispute over the ownership of Turkcell among its major shareholders, has raised hopes for the settlement of year-long dispute.

Turkcell shares started the first day after the announcement of the Court’s decision by rising almost five percent in the morning at 12.35 Turkish Liras.

A long-running feud between Turkey’s Çukurova and Russia’s Altimo Group has prevented the approval of accounts and distribution of dividends. Çukurova is also in a dispute with the third and major stakeholder of the company, Swedish telecommunications giant TeliaSonera, making relations much more complicated and tense.

Multiple disputes

Nordic telecom company TeliaSonera, the majority shareholder of Turkcell, had secured an order from the U.S. District Court Judge Denise Cote last year, freezing Çukurova’s assets until it pays a $932 million arbitration award it owes to TeliaSonera, stemming from a disputed Turkcell share sale.

But in the decision on April 25, the 2nd U.S. Circuit Court of Appeals in New York ruled the district court in New York did not have jurisdiction over the case, since Çukurova lacks sufficient connections to the state, and vacated Cote’s order.

The decision is expected to trigger a two-month deadline for Çukurova to pay the $1.6 billion needed to recover the disputed controlling stake in Turkcell.

The Privy Council, a British court, said in February it would give Çukurova 60 days after the 2nd Circuit’s decision to pay the funds to Russia’s Altimo in an effort to regain its shares.

Altimo is a unit of oligarch Mikhail Fridman’s Alfa Group, which appropriated the stake when Çukurova defaulted on a $1.35 billion loan.

“Çukurova will be able to proceed to arrange financing to retrieve its interest in Turkcell,” said Richard Holwell, a lawyer for Çukurova.

Çukurova, headed by one of Turkey’s richest men, Mehmet Karamehmet, and Alfa have been fighting for years over control of Turkcell, with TeliaSonera cooperating with Alfa. Çukurova is registered in the British Virgin Islands, which is why the case was heard by Britain’s Privy Council, the final court of appeal for some countries in the Commonwealth.