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Cukurova Close to Securing $1.6 Billion Loan to Settle Turkcell Dispute

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The long running saga over control of Turkey's Turkcell has moved a step closer to resolution after a British court approved plans by Cukurova to repay a USD1.6 billion loan to Russia's Altimo.

Cukurova put its shares in Turkcell up as collateral for a USD1.35 billion bank loan from Altimo back in 2005, but then defaulted on the repayments. The two sides have been fighting in the courts over the details of the loan ever since.

Cukurova has been ordered by the UK court to repay the loan, or forfeit its shares in the mobile network, and is said to have secured the necessary funding following an extension of the original deadline.

The funding is said to be coming from the state-owned lender Ziraat Bank, which in theory could put Turkcell under state control, if Cukurova were to default on repayments of its latest loan agreement.

The funding by the state owned bank is understood to have been agreed following pressure from the government to ensure that Turkcell remains controlled by a majority Turkish shareholder.

It would represent the largest single loan by the bank in more than a decade.

However, the matter is still not fully resolved, as TeliaSonera is still pursuing legal action claiming that Cukurova should have approached it first when offering its shares in Turkcell as collateral against the Altimo loan.

Although TeliaSonera is the largest direct shareholder in Turkcell, with a 38 percent stake, it is Cukurova that has management control with a much smaller stake thanks to a complex shareholding arrangement.

The shareholders are still in dispute, but if they can settle the matter, then nearly USD2 billion in shareholder dividends can be paid out by Turkcell. The dividends were frozen while the dispute is ongoing.

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Tags: turkcel  cukurova  altimo  teliasonera  Turkey