Nokia said it has made a deal with the state-controlled Turkish Savings and Deposit Insurance Fund, which controls Telsim’s assets, to get a payment when TMSF sells off Telsim. The amount of the payoff will depend on how much cash TMSF secures.
The deal stems from claims that Nokia and Motorola Inc have against Telsim, and the Uzan family that controlled it until it was seized by the Turkish government, relating to loans delivered in 2000 that Telsim used to build out its cellular network.
Nokia said Telsim owes it $900m, but that the company defaulted on repayments. Motorola’s claim is for over $2bn. Both companies sued Telsim and the Uzans in 2001 in the US, claiming racketeering-related violations.
They also took Telsim to a Swiss arbitrator in Zurich, which has ruled in Motorola and Nokia’s favor on a number of occasions.
The ongoing struggle was complicated by the fact that Turkey, via TMSF, seized Telsim from the Uzan family to help recover $6bn that the country spent to cover losses at Turkiye Imar Bankasi AS, the collapsed Uzan-controlled bank.
TMSF has been in talks with Nokia and Motorola since June 2004, and at the start of this year it was announced that Motorola could recover 20% of the Telsim sale proceeds (or at least $400m), and Nokia could get 5% (or at least $100m).
However, that deal became unstuck in the spring when Turkish President Ahmet Necdet Sezer, vetoed a law that would have facilitated the sale of Telsim’s assets and other assets held by TMSF.
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Motorola says it is continuing to pursue the Zurich judgment, which awarded it $2.13bn. In June, the Supreme Court of Canton of Zurich said Telsim had not appealed that ruling, and that Motorola was free to collect.
Motorola said earlier this month that it is continuing aggressively to enforce the judgment for $2.13bn rendered on behalf of Motorola against the Uzan family of Turkey for perpetrating a massive fraud against Motorola relating to the Telsim loans.
Turkey has since put Telsim on the block, with a September 19 deadline for interested bidders to come forward. The estimated minimum sale price is $2.8bn. A sale is expected to be closed before the end of the year.
