Cukurova hunting $2bn loan as it pushes to recover Turkcell stake

By bne IntelliNews February 6, 2013

bne -

Following a UK court ruling handing it the right to buy its stake in Turkish mobile operator Turkcell that had been seized by Russia's Altimo, Cukurova Holding is scouting around for a $2bn loan, newswires reported unnamed sources as saying on February 5. However, sources say the two sides' valuation of that Turkcell stake is at least $700m apart.

Apparently determined to take the stake back, Cukurova is now negotiating with more than one lender for the cash, according to sources cited by Reuters. Cukurova owner Mehmet Emin Karamehmet could pledge holdings in oil firm Genel Energy or steelmaker Noksel Celik Boru as collateral, they claim.

Cukurova has been tussling with Altimo - the telecommunications arm of rapacious oligarch Mikhail Fridman's Alfa Group - over the 13.8% Turkcell stake ever since the Russian company seized it in 2005 after the Turkish stakeholder defaulted on a $1.35bn loan. In a final ruling, the UK Privy Council said on January 30 that Cukurova should have the option to buy back the shares, which currently give Altimo a controlling stake in Turkcell.

While the court ordered the Turkish holding be given the opportunity to recover the stake "on appropriate conditions," it said it needs more information from the two sides before it can make a final decision on "the basis and terms of such relief." Unsurprisingly, sources claim that there is some distance between the two sides. "Cukurova argues that the amount of debt has to be escalated by global borrowing rates, which will end up around $1.8bn-1.9bn," one said. "Altimo reckons it should be escalated by default rates, bringing the amount up to $2.5bn."

However, with the price of Turkcell shares having been held back for years by the dispute, as well as clear determination in Ankara that control of the country's biggest mobile operator should not end up in Russian hands, Karamehmet is reportedly ready to do whatever he must to reclaim the shares. "Cukurova would not want to lose control over Turkcell so it will pay whatever amount the Privy Council sets," a second source was reported as saying, highlighting the upside potential of Turkcell shares once the shareholder dispute is resolved.

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