Cukurova Said to Seek Loan to Repay Alfa for Turkcell Stake

Cukurova Holding AS, owned by Turkish billionaire Mehmet Emin Karamehmet, is seeking a loan of about $1.6 billion to recover a disputed 13.8 percent stake in Turkey’s biggest mobile-phone operator from Russia’s Alfa Group, two people with knowledge of the matter said.

Cukurova has until the end of June to repay as much as $1.59 billion to Alfa, an investment company owned by Russian billionaire Mikhail Fridman, to recover the holding in Turkcell Iletisim Hizmetleri AS (TCELL), said the people, who asked not to be named because the process is confidential. That would leave Alfa with a stake of 13.2 percent.

Cukurova plans to use the Turkcell stake as collateral for the long-term loan, the people said. It may also use assets at oil company unit Genel Energy Plc (GENL), co-owned with former BP Plc (BP/) Chief Executive Officer Tony Hayward, one of the people said.

Turkcell has been at the center of a dispute between its founder, Karamehmet, Nordic operator TeliaSonera AB (TLSN) andFridman. Alfa seized the Turkcell stake when it said Cukurova defaulted on a 2005 loan agreement for which the shares were pledged as collateral.

Turkcell fell 0.4 percent to 12.4 liras at 4:57 p.m. in Istanbul, giving the company a market value of 27.2 billion liras ($13 billion).

Court Ruling

“We view the news moderately positive,” Bora Tezguler, an analyst at Istanbul-based Ak Investment, said in an e-mailed note. “The news shows some further progress in the proceedings.”

Cukurova began work to seek loans after the U.K.’s Privy Council decided last year that Cukurova should be given a chance to repay the debt to Alfa before the Russian investor could seize the shares.

About a third of Turkcell’s shares are traded in Istanbul and New York. Sweden’s TeliaSonera is the biggest stakeholder with a 38 percent stake. Still, Cukurova controls the company through a complicated shareholder structure.

Cukurova and Alfa agreed in 2005 on a finance package totaling $3.3 billion as the Istanbul-based investor was seeking $2 billion to repay debt to the government after the collapse of a bank it had owned.

Cukurova and Alfa signed the agreement, which included a $1.7 billion loan for which 13.8 percent of Turkcell shares were pledged as collateral, after Cukurova pulled out of an earlier accord with TeliaSonera to sell a controlling stake at the mobile-phone operator for $3.1 billion. That prompted the Nordic company to sue to enforce the sale.

To contact the reporter on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net

To contact the editors responsible for this story: Benjamin Harvey at bharvey11@bloomberg.net Robert Valpuesta, Kim McLaughlin

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