Turkcell Litigation – Another Victory for Cukurova: Privy Council confirms the terms for Cukurova to recover its interest in Turkcell

The Privy Council today delivered another crucial ruling in favour of White & Case’s client Cukurova, in its six-year battle to recover its controlling interest in Turkcell (Turkey’s largest mobile phone operator). The effect of its decision is that Cukurova will have to pay approximately $1.5 billion to reacquire its shareholding, less than half the amount its opponents, Russia’s Alfa, had claimed was payable.

In January, the Privy Council found Cukurova had an equitable right to redeem the shares, which Alfa had appropriated under the terms of a $1.352 billion facility (see our previous Client Alert on the case).

The Privy Council has now set the terms for the redemption (essentially, the basis for and amount of interest payable). In doing so, it was unanimous on the financial consequences of Alfa’s rejection of a prompt tender by Cukurova, in 2007, of the full amount then due. It ruled that (1) interest was not payable for the three years Cukurova held these funds in an account available to repay Alfa; and (2) after that period, interest was payable at the ordinary contractual rate, rather than the contractual default rate (as Alfa had contended).

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