Cukurova Holding AS, owned by Turkey’s second-richest man, is in talks to raise as much as $2 billion in loans to repay debt owed to Mikhail Fridman’s Alfa Group, two people with knowledge of the matter said.
Cukurova is negotiating with lenders for $1.5 billion to $2 billion as it seeks to recover from Alfa a 13.7-percent stake in Turkcell Iletisim Hizmetleri AS (TCELL), Turkey’s biggest mobile operator, the people said, asking not to be identified as talks aren’t public. The stake in the phone operator was collateral seized by Alfa after Cukurova defaulted on a $1.7 billion loan.
The group, owned by Mehmet Emin Karamehmet and a founding shareholder in Turkcell, may pledge as collateral for new loans its holdings in oil explorer and producer Genel Energy Plc (GENL), co- owned by former BP Plc Chief Executive Officer Tony Hayward, according to the people. It may also consider putting up its stakes in Swiss lender Banque de Commerce & de Placements and steel pipemaker Noksel Celik Boru AS, they said.
Cukurova, based in Istanbul, will also re-pledge to the banks the 13.7 percent Turkcell stake held by Alfa through its investment unit Altimo, according to the people. Calls and e- mails made to Cukurova today weren’t returned.
The talks come after the U.K. Privy Council in London, a final appeal court for some British Commonwealth countries, ruled on Jan. 30 that Cukurova should be given the opportunity to repay its debt to recover the Turkcell stake. The stake had a market value of 3.26 billion liras ($1.86 billion) Feb. 1 at Istanbul bourse closing price of 10.8 liras.
The court said it will decide in future hearings how much interest should be accrued on the $1.35 billion principal that remains outstanding on the original $1.7 billion loan from 2005.
Karamehmet owns about 26 percent of Genel Energy, an oil producer operating mostly in northern Iraq, through his Focus Investments Ltd. unit, according to Genel’s website. Noksel is a joint venture with Nokia Oyj, according to Noksel website.
Cukurova may have to pay Altimo as much as $2.56 billion including debt and interest based on an average annual interest rate of 10 percent over benchmarks, to recover its Turkcell stake, Alexander Balakhnin, an analyst at Goldman Sachs Group Inc.’s Moscow unit, said in a note to investors on Jan 30.
Cukurova signed a $3.3 billion agreement with Alfa in 2005 to finance the payment of government debts resulting from the collapse of its Pamukbank business. Alfa bought 13.2 percent of Turkcell for $1.6 billion from Cukurova and lent the Istanbul- based company another $1.7 billion, taking a further 13.7 percent of the telecommunications company7 as collateral.
Turkcell rose 0.5 percent to 10.85 liras as of 2:42 p.m. in Istanbul.
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