TODAY’S ZAMAN – Turkcell untangled by Ziraat loan worth TL 1.6 billion

Turkcell untangled by Ziraat loan worth TL 16 billionukurova Holding finally managed to solve a seven-year-old dispute over Turkcell shares by paying Russia’s Alfa Group $1.6 billion, which it solicited from the state-run Ziraat Bank on Thursday.

With this step, ukurova has taken a major step towards regaining control of Turkey’s biggest mobile phone operatorIstanbul-based ukurova signed a loan agreement with Ziraat in connection with the Alfa Group payment, the company said in a statement to theIstanbul Stock Exchange ( BIST). The details of the agreement concerning the loan conditions have not been disclosed.

An agreement was reached when Gzde Girisim, the listed private equity unit of Turkish conglomerate YIldIz Holding, held talks over a “structured financing” to unblock the Turkcell shares last month. However, the Treasury refused to give the green light to the deal two weeks before deadline for the payment, forcing ukurova to search for an alternative urgently.

The Ziraat deal followed.The deal soon attracted media speculation that the agreement may have pushed Turkcell under further government control.

Seasoned journalist Daniel Dombey wrote in the Financial Times that “the Turkish state has already established a measure of de facto control over Turkcell.”A source at Altimo, the telecoms investment arm of Russia’s Alfa Group, said last week that ukurova would secure the financing from Ziraat Bank and that a payment was expected on July 31.

“Our Group has signed a loan agreement with Ziraat Bank to recover the Turkcell shares held by Alfa Group. By using loans from the agreement, about $1.

6 billion owed to Alfa Group, as per the Privy Council decision, has been paid to Alfa Group’s bank account,” ukurova said. “Because of this, the block in favor of Alfa Group has been removed and a block on the ownership rights of the same Turkcell shares has been restored in favor of Ziraat Bank,” it said in the statement.

A British court that has been arbitrating in the dispute said last week that ukurova and Alfa had agreed to terms under which ukurova could finance the recovery of the shares. Altimo appropriated the 13.

8 percent stake, a controlling position due to Turkcell’s complex ownership structure, when ukurova defaulted on a $1.35 billion loan.

The Privy Council ruled a year ago that ukurova, owned by one of Turkey’s richest men, Mehmet Emin Karamehmet, must pay Altimo $1.6 billion, which includes interest, in 60 days if it wanted to recover the shares.

The Turkish government has been keen for Turkcell, the country’s biggest mobile phone operator, to remain in Turkish hands and for ukurova to secure financing from a local partner ukurova is registered in the British Virgin Islands, which is why the case is being handled by the Privy Council, the final court of appeal for some countries in the Commonwealth. The Commonwealth is a group of mostly former territories of the British Empire.

SOURCE: Today’s Zaman