Mehmet Karamehmet, one of Turkey’s richest men, has won the right to recover a stake in Turkcell, the country’s largest operator, following a UK court decision.
The Privy Council decided that Alfa – Karamehmet’s adversary in the six-year legal battle – had been justified to appropriate the 13.8 percent stake held by his company Çukurova, which had defaulted on a $1.35 billion loan.
However the court also decided that Çukurova has the right to repay the debt and recover its stake, which would give it indirect control of Turkcell through a complicated shareholding and management structure.
The court has yet to decide how much Çukurova must pay to regain its stake, and what the deadline is for it to produce the cash.
The dispute has tied Turkcell’s hands in a number of areas including the make-up of its board, dividend distribution and future strategic direction. Last summer a company EGM was delayed because of the dispute.
Yet reaction of the court decision was mixed. The company’s share price fell, reflecting investor concern that the decision still left its future direction unclear.
However, a report in the Financial Times said the Privy Council’s decision will be welcomed by the Turkish government, which had signalled its concern about Turkcell falling into foreign hands (Alfa is a Russian conglomerate headed by the billionaire Mikhail Fridman).
Turkcell is the country’s mobile market leader with more than 35 million subscribers (Q4, 2012 figures), according to Wireless Intelligence.
The case was being heard in the UK because it involves a Çukurova subsidiary that is incorporated in the British Virgin Islands. The Privy Council is the final court of appeal for many Commonwealth countries.
Turkcell’s other main shareholder is Sweden’s TeliaSonera, which holds a 37 percent stake.