Mikhail Fridman / A. Makhonin / Vedomosti

Turkey's Cukurova Holding has filed a lawsuit in London's International Arbitration Court against Alfa Telecom Turkey (ATT), a subsidiary of the LetterOne investment group owned by Mikhail Fridman, German Khan and Alexey Kuzmichev, demanding that it be given the opportunity to buy out ATT's stake in the country's largest mobile operator, Turkcell, whose shares are traded on the Istanbul and New York stock exchanges. This was reported by the Turkish agency Anadolu Agency, citing anonymous sources. The fact that the lawsuit was filed was confirmed to Vedomosti by a person close to one of the co-owners of Turkcell.

Turkish officials have repeatedly warned that they will not approve the sale of a controlling stake in Turkcell to a foreign investor. But Turkcell is currently the most attractive cellular asset in Europe, so LetterOne will fight for the opportunity to take control of it until the end, Gazprombank analyst Sergey Vasin is sure. Most likely, the dispute with Cukurova will drag on for several more years, he expects.

If the court finds Cukurova right, she will be able to buy out the Alfa stake for about $2 billion, the agency writes. According to its information, Cukurova is trying to prove in court that Alfa violated the shareholder agreement because it tried to benefit from the fight between TeliaSonera and Turkcell.

LetterOne invites Turkcell partner to play “Russian roulette”

Technologies / Telecommunications

The Turkish group filed a lawsuit back in December, trying to prove that Alfa violated one of the clauses of the shareholder agreement with Cukurova five years ago, which means that the latter has the right to demand the buyout of Alfa's share at the market price plus 20%, says a person close to one of the co-owners of Turkcell. Such a norm is spelled out in the shareholders' agreement. Based on the market value of Turkcell shares in December, the valuation of ATT's share comes out to be exactly $2 billion, says the source of Vedomosti. He did not specify what violation Cukurova accuses Alfa of.

According to the shareholders' agreement, in the event of an event that entails the repurchase of shares, the price of such repurchase shall be determined as the weighted average market price of the relevant shareholding of Turkcell on the stock exchange for the previous 60 days.

Since 2005, Alfa has held an indirect 13.2% stake in Turkcell, Turkey's largest mobile operator, through Alfa Telecom Turkey (ATT). Cukurova's stake is 13.8%, but it gives it controlling rights in the operator.

Turkcell Can't Stand Two Shareholders

Opinions / Details

Last week, LetterOne, which currently owns all of Alfa's telecommunications assets, offered to buy out Cukurova's stake for $2.8 billion. According to a source close to one of Turkcell's co-owners, this offer is part of a mechanism for resolving a shareholder conflict, spelled out in the parties' agreement, the so-called "Russian roulette." The essence of the mechanism is that, in the event of a conflict, one of the shareholders can offer to buy out the partner's share at an arbitrary price, and the partner is obliged to either agree or buy out the first shareholder's share at the same price, according to the shareholders' agreement (Vedomosti has a copy). Thus, if Cukurova does not agree to sell its stake, it will be obliged to buy out Alfa's stake for $2.69 billion.

Cukurova files lawsuit against Alfa, wants to buy Turkcell stake for $2 billion