Court Orders Sale of Turkcell Stake to TeliaSonera for $3.1 Billion

TeliaSonera has won a legal ruling forcing Turkish holding company, Cukurova to sell its stake in Turkcell Holding to TeliaSonera for a cash consideration of US$3.1 billion. TeliaSonera says that it now intends to enforce the award against Cukurova in Turkey. If the shares are not delivered, TeliaSonera will demand damages from Cukurova in the amount of US$1.8 billion, which is the value for TeliaSonera of a lost transaction as determined by the arbitration tribunal.

TeliaSonera said in a statement that it does not yet know if Cukurova is willing to, or able to, proceed with a transfer of the shares to TeliaSonera, but a quick resolution of the ownership dispute is not to be expected.

In March 2005, an agreement was announced in which Cukurova agreed to sell all the remaining shares in Turkcell Holding to TeliaSonera, which would increase TeliaSonera's effective ownership in Turkcell from 37.3% to to 64.3%. The recent award results from an arbitration proceeding in Geneva that TeliaSonera commenced in May 2005 against Cukurova after Cukurova withdrew from the transaction.

Turkcell's shareholder structure is as follows: 51% is held by Turkcell Holding, 4.15% by Cukurova Holding, 13.07% by Sonera Holding, 2.32% by MV Holding and the free float is 29.38%. Cukurova Group controls the company despite holding only 18% of the share capital, due to a complicated shareholding/voting structure.

TeliaSonera owns 47 percent of the shares in Turkcell Holding. TeliaSonera also owns 13 percent of the shares in Turkcell, giving TeliaSonera a direct and indirect ownership of 37 percent in Turkcell.

A partial award was issued by the arbitration tribunal in January 2007, stating that a binding share purchase agreement was concluded in 2005 and obligated Cukurova to join TeliaSonera in good faith efforts to bring about a closing of the transaction. Cukurova has not acted in order to bring about a closing and the tribunal has now ordered Cukurova to deliver the shares to TeliaSonera.

Russia's Altimo Group also claims a stake in the company as collateral for a loan it made to the company, which could complicate the process of transferring the shares to TeliaSonera.

Posted to the site on 7th August 2009