UK court decides on Turkcell shares

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Solution to dispute appears near as UK court decides between rival shareholders in Turkcell

Turkish holding company Çukurova seems likely to regain control of Turkcell from Russia’s Alfa group after a decision by an obscure UK court.

Alfa took control of Çukurova’s holding in Turkcell in 2007 after Çukurova defaulted on a loan of $1.44 billion. The action did not affect TeliaSonera’s minority stake in the company, though TeliaSonera took Alfa’s side in the dispute.

The deal was done through a Turkcell subsidiary registered in the UK-controlled British Virgin Islands, so the parties took the dispute to the Judicial Committee of the UK’s Privy Council, which is the supreme court for a number of the UK’s existing and former possessions.

The court accepted that Çukurova, a holding company controlled Turkish businessman Mehmet Emin Keremehmet, had defaulted but said that Alfa should have allowed the company to regain control on repayment of the debt.

The court has not yet finished with the case, as it needs to set the compensation that Çukurova should pay to Alfa to repay the debt. And Turkey’s telecoms regulator has said that it has the right to decide on the shareholding.

Turkcell shares are traded on New York’s Nasdaq. Çukurova’s holding is through a chain of companies, including Çukurova Telecom Holdings and Turkcell Holding. Çukurova Telecom Holdings is 51% owned by Çukurova Finance International and 49% by Alfa Telecom.

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