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QVT demands Galatasaray Sportif adhere to CMB directives

QVT Financial has sent a letter to Galatasaray Sportif demanding that it make a full and fair disclosure of how it intends to comply with the Capital Markets Board of Turkey’s decision, both in relation to the outstanding loans and to the proposed improper use of assets.

It follows the response issued by the CMB in relation to QVT’s petition to halt the coercive tender offer for shares of Galatasaray Sportif by its majority shareholder, Futbol. 

QVT Fund, QVT’s flagship fund, is the largest minority shareholder in Sportif, currently holding approximately 17.7 per cent of the public stock.

In its response dated 22 March 2010, the CMB ordered Sportif to disclose the steps it has taken and will take to collect the more than TRY343m in outstanding related-company loans extended by Sportif to Futbol and other related parties. The CMB, in a previous decision on this matter, has ordered these loans to be repaid by 28 March 2010.

The CMB also notified Sportif that it must act in full compliance with its articles of association in the financing of the tender offer; it did not, however, suspend the tender offer. As laid out in Sportif’s disclosures on 12 March 2010, and in contravention of Sportif’s articles of association, certain assets of Sportif would be used improperly as collateral for the USD70m loan obtained by Futbol to finance its tender offer.  

Dan Gold, chief executive officer of QVT, says: “We are  gratified that the CMB has taken steps to address two egregious elements of the tender offer by ordering Sportif to disclose how it will secure full repayment of its loans to Futbol and other related parties and to ensure that the tender offer not be funded by the company’s assets. While we are disappointed that the CMB did not formally suspend the tender offer, it is clear that its directives must be fully and fairly addressed before the tender offer or any proposed merger can be finally consummated by the Sportif. Accordingly, we have urged that the tender offer be suspended pending the Sportif’s response to the CMB’s order."

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