Turkey’s Cukurova Holding is determined to recover its long-disputed 13.76% stake in Turkcell from Russian partner Altimo, and is seeking a loan of up to USD2 billion in order to do so, sources familiar with the situation have indicated to Reuters. Last week the UK’s Privy Council ruled that while Altimo was entitled to take over the stake – after its Turkish partner defaulted on a USD1.35 billion loan back in 2005 – Cukurova has the right to recover it, if it pays Altimo the outstanding loan, plus interest and costs. The Privy Council has yet to set out the terms under which Cukurova can recover the stake, and has requested more information from both parties to help it reach a decision. However, the source revealed: ‘Cukurova argues that the amount of debt has to be escalated by global borrowing rates which will end up around USD1.8 billion-USD1.9 billion. Altimo reckons it should be escalated by default rates bringing the amount up to USD2.5 billion’. Should Cukurova fail to win back the stake, Turkcell would be left without a major Turkish shareholder, something Turkey’s telecoms watchdog has already indicated it would challenge.
Described by Reuters as ‘an arcane British appeals court’, the Privy Council is hearing the case because Cukurova Holding is registered in the British Virgin Islands (BVI). The Council was formerly a supreme court of appeal for the entire British Empire (other than for the United Kingdom itself), and continues to hear appeals from the Crown Dependencies, the British Overseas Territories, and a number of Commonwealth member countries.