Mehmet Emin Karamehmet
Analysis by Metin Münir
Çukurova Holding's boss Mehmet Emin Karamehmet has made a comeback after a lot of people wrote him off in the aftermath of the 2001 crisis.
The proof – the $1.5 billion credit he has recently secured for Çukurova Holding from an international syndication.
Karamehmet got the loan to pay his debts to his Russian partner Alfa Telecom Turkey Ltd and to get back the shares of his Turkcell Communications that he has used as a collateral.
The $1.5 billion credit was put together by 20 different funds syndicated by JP Morgan.
For collateral, Karamehmet used his own personal assets, and the assets of such non-public Çukurova companies like Genel Sigorta, Show TV and Digitürk. Çukurova boasts a total of 140 such companies under its corporate umbrella.
When it got into trouble with the state regulatory agencies due to his debt to the Yapi Kredi Bank, Karamehmet sold 13% of Turkcell’s shares to Alfa back in 2005 after placing some shares in escrow, in return for a $1.7 billion credit.
Alfa and many industry observers claimed back then that Karamehmet would not be able to pay back his debt, buy back the escrowed shares and try to expand his ownership of Turkcell.
But that did not happen.
According to my sources inside Çukurova Holding, Karamehmet has paid back the $355 million first installment of his debt to Alfa during the first year of the loan.
JP Morgan followed that payment by a notice to the Russians that their 6-year credit may be facing an "early payment". The Russians, who expected to end up with Turkcell shares rather than an early payment, did not like the news.
Alfa responded by suing Karamehmet in British Virgin Islands, claiming that Karamehmet failed to make timely payments and thus they were entitled to the Turkcell shares as fair compensation. The court is yet to decide who is right and who should own the Turkcell shares.
The recent interest of the foreign investors in Turkish companies and the rise in the estimated worth of such businesses have also benefited Çukurova on paper. That’s the source of Karamehmet’s renewed confidence in the future of his group of companies.
Since there is a lot of money available out there in the global market, finding new credit by using higher asset values as a collateral has become an easier task for the captains of the Turkish industry.