Motorola Inc. said it received a $500 million cash payment as part of an agreement to settle its financial and legal claims against Turkish cellular operator Telsim Mobil Telekomunikasyon and the Turkish Savings and Deposit Insurance Fund.
Telsim owed Motorola $2.5 billion after being taken over by TMSF last year after the collapse of the Uzan family’s Imar Bank. TMSF took control of hundreds of other firms owned by the family.
Motorola said that in addition to the cash payment, the agreement also gives Motorola the right to receive 20 percent of the proceeds from the sale of Telsim assets over $2.5 billion. The company said it has agreed to dismiss its litigation against Telsim and has rescinded its demand for arbitration against the government of Turkey at the International Center for the Settlement of Investment Disputes in Washington, D.C. In addition, Motorola said it agreed not to pursue collection efforts against certain corporate defendants under TMSF control.
However, the agreement permits Motorola to continue its efforts, except in Turkey and certain other agreed-upon countries, to enforce a judgement against the Uzan family.
“This agreement represents a positive outcome for all parties,” Motorola said in a statement. “Motorola has attained certainty of payment and has agreed to halt collection efforts against Telsim. The Turkish Government’s cooperations and diligent efforts to find a solution to allow Motorola to collect on its debt while preserving the business operations of Telsim, instills confidence in Turkey’s strong economic and investment climate. The agreement also makes possible Motorola’s continued support for Telsim’s operations, which we believe will benefit Telsim’s subscribers and the entire Turkish telecommunications sector. Motorola looks forward to working cooperatively with the Government, TMSF and potential purchasers to ensure maximum value from the sale of Telsim and to facilitate a swift and successful transaction.”
The company also noted that matters have not been settled with certain current and former Telsim directors and officers who are defendants in two class-action lawsuits, and an investigation by the Securities and Exchange Commission involving Telsim is also outstanding.
In early July, Motorola scored agreements to freeze international roaming payments to Telsim after Motorola filed a lawsuit against the carrier for not making loan payments. Motorola had said the carrier owed it $2.5 billion, a claim backed by international courts.
Motorola had loaned Telsim $2 billion to help the carrier build its network. Motorola said the carrier had 8 million subscribers but had not paid back the loan, which grew to be worth some $2.5 billion.
In early September of this year, Nokia Corp. also reached a settlement with Telsim to receive a payment after the sale of Telsim’s assets.
Nokia’s claims arose from Telsim’s default on its repayment obligations under a loan facility related to network equipment delivered in 2000. In February 2004, the Arbitral Tribunal in Zurich fully approved the claim against the Turkish company.
TMSF said that 15 companies had applied to qualify for the sell-off of Telsim, which is scheduled for Dec. 13.
