Turkey’s Cukurova Said Seeking $3 Billion to Repay Fridman
Cukurova Holding AS, owned by Turkish billionaire Mehmet Emin Karamehmet, increased to as much as $3 billion the funds it’s seeking to repay Mikhail Fridman’s Alfa Group, two people with knowledge of the matter said.
The company is talking with lenders including Standard Bank Group Ltd. (SBK) and Russia’s OAO Sberbank (SBER) on financing, which may include loans and so-called fiduciary notes, the people said, asking not to be identified as talks aren’t public. Cukurova is seeking to repay Alfa and recover a 13.7 percent stake in mobile-phone operator Turkcell Iletisim Hizmetleri AS (TCELL), which was seized by Alfa after Cukurova defaulted on a $1.7 billion loan.
Karamehmet is also a founding shareholder in Turkcell, as the phone company is known. The financing talks come after the U.K. Privy Council ruled on Jan. 30 that Cukurova should be given the opportunity to repay its debt to recover the stake and is set to give a further decision on how much interest should be paid. The outstanding principal is about $1.35 billion and Cukurova had previously sought to raise as much as $2 billion, two people with knowledge of the matter said last month.
Turkcell rose 4.3 percent to 12.05 liras in Istanbul trading, the biggest gain since August.
Cukurova paid Alfa group $330 million two weeks ago as part of the plan to repay the debt, one of the people said. The company may use any funds left over after repaying the Alfa debt to acquire a 46 percent stake in Digiturk, a digital TV platform, from its partner Providence Equity Partners Inc., a Rhode Island-based buyout firm, one of the people said.
Erik Larsen, a spokesman for Standard Bank, didn’t reply to phone calls. Alexander Baziyan, a Sberbank spokesman, didn’t answer e-mailed questions from Bloomberg seeking comment. Cukurova officials, who don’t want to be identified because of company policy, declined to comment.
Cukurova may pledge as collateral for loans its holdings in oil explorer and producer Genel Energy Plc (GENL), co-owned by former BP Plc (BP/) Chief Executive Officer Tony Hayward, two people with knowledge of the matter said last month. 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.
Turkey’s capital markets regulator yesterday appointed three independent members to Turkcell’s board of directors to force the company to comply with corporate governance legislation, it said in a statement on its website. TeliaSonera and Cukurova said in separate statements that they welcomed the move and that it may pave the way for an annual meeting of shareholders to approve the distribution of unpaid dividends from 2010 and 2011 profits.
“You should expect the board to call an extraordinary general assembly in the following days as soon as the Privy Council decision is out and Cukurova recovers its stake after paying the determined amount to Alfa,” said Alper Ozdemir, an analyst at Istanbul-based Oyak Yatirim, in an e-mailed note.
Cukurova signed a $3.3 billion agreement with Alfa in 2005 to finance paying 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 what was effectively another 13.7 percent of Turkcell as collateral.
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