Kabine Law Office’s Tuvan Yalim, Gulce Keskin, and Ozgecan Korkmaz Talk About The Deal of the Year in Turkey.
CEELM: First, congratulations on winning the Deal of the Year Award in Turkey!
Yalim: Thank you so much. We are delighted about it.
CEELM: Can you describe the deal for us and the firm’s role in making it happen?
Yalim: Of course. Turkcell is the leading cellphone operator in Turkey. With this deal, the three major shareholders of Turkcell, namely the Cukurova Group, a Turkish business conglomerate, L1, a Russian-backed investment group, and Telia, the leading Scandinavian telecoms operator, transferred their controlling stake in Turkcell to the Turkish Sovereign Wealth Fund. The transaction also resulted in the settlement of long-standing international arbitrations and litigations among Turkcell’s major shareholders. Due to Turkcell’s business and market position, as well as the nature of the transaction, the deal required in-depth knowledge and engagement in many practice areas, such as dispute settlement, corporate law, mergers and acquisitions, capital markets, banking, telecommunications, and competition.
Korkmaz: In terms of the role we played, Kabine Law Office acted as principal counsel of the Cukurova Group and closely engaged with the parties and their counsel throughout the transaction. Kabine took the leading role in the Cukurova Group’s legal team, as we led all negotiations and drafting on behalf of the client, instructed Cukurova’s English solicitors, as well as local counsel in many jurisdictions, and advised the client on Turkish law matters. We were very familiar with the historical dynamics of the transaction, as well as the legal framework and structural issues to be resolved, as Kabine has been advising Cukurova on Turkcell-related matters for many years.
Keskin: In addition to the roles mentioned by Ozgecan, I should note that Kabine played another key role in the deal, as we undertook the corporate management and maintenance of the various joint-venture companies of Turkcell’s shareholders in several jurisdictions. All three major shareholders trusted us and effectively assigned this role to Kabine, which was critical in the execution of the transaction. We also led and organized all aspects of the due diligence workstream on behalf of the sellers, including the establishment and maintenance of the data room.
CEELM: How did you land the mandate and what do you believe it was about your team that got it for you?
Korkmaz: Our firm has been acting for the Cukurova Group for many years. For instance, Kabine advised the Cukurova Group in almost all their cross-border transactions, as well as their international arbitrations and litigations, for the last decade. Cukurova is therefore familiar with our team’s professionalism and expertise in the relevant fields.
Keskin: So, it did not come as a surprise to us that the Cukurova Group preferred to work with us on this deal, but we were all very excited to be a part of this transaction from the beginning.
CEELM: What was the most difficult part of this deal and how did you/your team circumvent it?
Yalim: This was a multi-party deal where three major shareholders, with very different backgrounds and objectives, had been engaged in legal battles for the control of Turkcell, in many jurisdictions, for the last 15 years. There was also the added complexity of the involvement of top-level state entities, such as the Turkish Wealth Fund and the largest Turkish state bank. As a result, there were diverging incentives to be aligned and highly contentious issues to be resolved. Our firm’s approach in such a complex deal was to be practical, business-minded, and results-oriented. With instruction and support from our client, we managed to conclude a deal that achieved the optimum result for the client.
CEELM: In contrast, what, from your perspective, went particularly smoothly and what do you believe contributed to it?
Korkmaz: Despite the animosity among the major shareholders, because of the complex and costly litigations and arbitrations that had been ongoing for a long time, the parties and their counsel were able to constructively work with each other in the context of this transaction to achieve the desired outcome.
Keskin: I agree. I think this was made possible due to the optimal transaction structure which was put in place at the beginning, and which was continuously adjusted as things progressed over the course of the deal. The highly professional deal teams and the trust and goodwill gradually built over time among the parties also contributed a great deal to the successful conclusion of the transaction.
CEELM: Looking back at the whole process, would you do anything differently if you had a second go at it?
Yalim: Looking back, we obtained the desired result for the client, with minimal inconvenience. We are satisfied with how the process was run and I don’t think we would do anything significantly different.
CEELM: In your view, what is the significance of this deal for the Turkish market? Why do you believe the judges voted for this deal over the others?
Korkmaz: Turkcell is the first and leading GSM operator of Turkey, with a pioneering role in digitalization and innovation. With this deal the long-standing shareholder disputes were resolved, for the benefit of all stakeholders of Turkcell.
Keskin: I think the value of the deal and its complexity must have been factors that affected the judges’ votes. The deal involved the settlement of ongoing disputes, a complex transaction structure executed simultaneously in many jurisdictions, the dissolution of multiple joint ventures and shareholder agreements, as well as regulatory complexities. As Turkcell is a regulated telecommunications company that is listed on both Borsa Istanbul and the New York Stock Exchange, and the undisputed market leader in its business, the deal involved important capital markets, telecommunications, and competition implications.
CEELM: Can we look forward to future similar restructurings? Why/why not?
Yalim: The Turkcell transaction is a unique one involving a complex structure with three major shareholders and a secured lender, and the settlement of high-profile international disputes. It is not likely that a transaction of this size and complexity will occur in the Turkish market in the short term. However, there has been a wave of restructurings in the Turkish market, mostly in the banking and finance market, and it is likely that there will be future restructurings in that field, among other things, due to the recent devaluation of the Turkish Lira.
This Article was originally published in Issue 8.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
