London ruling marks potential breakthrough in Turkcell tussle

Workers install the logo of Turkcell, country's top mobile operator, on the Tat Towers in Istanbul, Turkey, June 29, 2016. REUTERS/Murad Sezer (Reuters)

ISTANBUL (Reuters) - A London tribunal dismissed claims against Russian billionaire Mikhail Fridman from the founder of Turkcell, Fridman's company said on Monday, marking a possible breakthrough in a decade-long battle for Turkey's top mobile operator. Fridman has been locked in a legal battle for control of the company with another shareholder, Mehmet Emin Karamehmet, one of Turkey's richest men. The dispute prevented some dividends from being paid and has hampered the company's development. Fridman indirectly holds 13.2 percent of Turkcell, while Karamehmet indirectly holds a 13.8 percent stake. Swedish phone carrier Telia Company owns 37 percent. The dispute started when Fridman's company Alfa seized Karamehmet's stake, saying the Turkish businessman's company, Cukurova Holding, defaulted on a 2005 loan agreement for which the shares were pledged as collateral. An international arbitrator ordered Fridman to return the stake to Cukurova Holding in exchange for $1.6 billion. Strapped for cash, Cukurova financed the repurchase with a loan from state-owned Turkish lender Ziraat Bank , which now holds the shares as collateral for the unpaid loan. Cukurova has also made an offer to buy out Fridman's stake, which is held by his Alfa Telecom vehicle. Fridman refused and went to arbitration court at the end of 2014. The London tribunal has now upheld Fridman's counterclaim that he was entitled to launch a buyout procedure, triggered by the deadlock of corporate governance of Turkcell, an affiliated Fridman company said in an emailed statement. The tribunal's decision requires Cukurova to choose within 60 days whether to buy Fridman's shares in Turkcell for $2.7 billion or sell its own stake to Fridman for $2.8 billion. If Cukurova fails to make a decision within that time it shall be treated as having decided to sell its shares, Fridman's company said in the statement. A Cukurova source said it was too early for it to make a decision. Turkcell shares were up 0.9 percent at 10.45 lira by 0953 GMT. (Reporting by Asli Kandemir and Ceyda Caglayan, Writing by Seda Sezer; Editing by David Dolan and Louise Heavens)