[Federal Register Volume 63, Number 80 (Monday, April 27, 1998)]
[Notices]
[Pages 20679-20681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-11046]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 23118; International Series Release 
No. 1130; 812-11108]


Cellco Finance N.V.; Notice of Application

April 20, 1998.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for exemption under section 6(c) of the 
Investment Company Act of 1940 (the ``Act'') from all provisions of the 
Act.

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SUMMARY OF APPLICATION: Applicant requests an order under section 6(c) 
of the Act exempting applicant from all provisions of the Act. The 
order would permit applicant to sell certain debt securities and use 
the proceeds to finance the business activities of Turkcell Iletisim 
Hizmetleri A.S. (``Turkcell'').


[[Page 20680]]


FILING DATE: The application was filed in April 16, 1998.

HEARING OR NOTIFICATION OF HEARING: An order granting the application 
will be issued unless the SEC orders a hearing. Interested persons may 
request a hearing by writing to the SEC's Secretary and serving 
applicant with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:00 p.m. on May 11, 1998, 
and should be accompanied by proof of service on applicant, in the form 
of an affidavit or, for lawyers, or certificate of service. Hearing 
requests should state the nature of the writer's interest, the reason 
for the request, and the issues contested. Persons who wish to be 
notified of a hearing may request notification by writing to the SEC's 
Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C. 
20549. Applicant, c/o Amicorp N.V., Attn: Jeroen Eichhorn, 
Caracasbaaiweg 199, Cuaraco, Netherlands Antilles.

FOR FURTHER INFORMATION CONTACT: Kathleen L. Knisely, Staff Attorney, 
at (202) 942-0517, or Nadya B. Roytblat, Assistant Director, at (202) 
942-0564 (Division of Investment Management, Office of Investment 
Company Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch, 450 Fifth Street, NW., Washington, DC 
20549 (tel. 202-942-8090).

Applicant's Representations

    1. Applicant is a Netherlands Antilles limited liability 
corporation. Applicant was organized specifically to raise funds for 
the operations of Turkcell by issuing debt securities (``Notes'') and 
lending the proceeds to Turkcell. Turkcell is a joint stock company 
organized under the laws of the Republic of Turkey and is a leading 
operator of cellular telephone systems in Turkey.
    2. Turkcell has determined to raise capital through applicant 
because the direct issuance of the Notes by Turkcell would not be 
feasible under Turkish tax and corporate law. In addition, under 
Turkish law, significant tax disadvantages may be borne by Turkcell 
were it to own or control applicant and/or directly guarantee the 
Notes. For these reasons, all of applicant's common shares will be held 
by a Netherlands Antilles stichting (the ``Foundation'') for the 
benefit of an existing charity named in the Foundation's articles of 
organization (``Charity''). The Foundation will be prohibited by its 
articles of organizations from transferring the shares of applicant to 
any other party. The Foundation will have no owners or shareholders, 
but will be managed by a Netherlands Antilles trust company. The 
Charity will have no ownership or other rights with regard to the 
Foundation. Neither the Foundation nor the Charity will pay any 
consideration in connection with its involvement in the activities 
described in the application.
    3. Applicant intends to issue the Notes in reliance on rule 144A 
under the Securities Act of 1933 (``1933 Act'') and shortly thereafter 
file a registration statement under the 1933 Act. Applicant will loan 
the proceeds of the Notes to Turkcell and assign applicant's right to 
receive interest and principal payments on the loan to an indenture 
trustee for the noteholders (the ``Trustee''). The Trustee, which will 
be a major U.S. commercial bank, will have the right to proceed 
directly against Turkcell in the event of default on the loan payments. 
The loan agreement will provide that a default under the Notes and the 
trust indenture agreement constitutes a default under the loan 
agreement. In the event of a default under the Notes, the Trustee may 
declare the outstanding amount of the loan and any accrued but unpaid 
interest with respect to the loan to be immediately due and payable. 
Under the trust indenture agreement, if the Trustee does not exercise 
its rights following a default, holders of at least 25% in aggregate 
principal amount of the Notes outstanding may direct the Trustee to 
exercise the rights, or may themselves accelerate the Notes.
    4. Turkcell and applicant, in connection with the offering of the 
Notes, will submit to the jurisdiction of any state or federal court in 
the Borough of Manhattan in the city of New York, and will appoint an 
agent to accept any process which may be served, in any suit, action, 
or proceedings brought against Turkcell or applicant based upon their 
obligation to the Trustee as described in the application. The consent 
to jurisdiction and appointment of an authorized agent to accept 
service of process will be irrevocable until all amounts due and to 
become due with respect to all outstanding obligations of Turkcell to 
the Trustee as described in the application have been paid.
    5. Applicant will loan at least 85% of any cash or cash equivalents 
raised by applicant to Turkcell as soon as practicable, but in no event 
later than six months after applicant's receipt of the cash or cash 
equivalents. In the event that applicant borrows amounts in excess of 
the amounts to be loaned to Turkcell at any given time, applicant will 
invest the excess in temporary investments pending lending the money to 
Turkcell. All investments by Turkcell, including all temporary 
investments, will be made in government securities, securities of 
Turkcell or a company controlled by Turkcell, or debt securities which 
are exempted from the provisions of the 1933 Act by section 3(a)(3) of 
the 1933 Act. Applicant's articles of incorporation and the trust 
indenture relating to the Notes will limit applicant's activities to 
issuing the Notes or other debt securities, loaning the proceeds to 
Turkcell and assigning all of applicant's rights to repayment from 
Turkcell to the Trustee.

Applicant's Legal Analysis

    1. Applicant states that it may be viewed as falling technically 
within the definition of an investment company under section 3(a)(1) of 
the Act. Applicant requests an exemption under section 6(c) of the Act 
from all provisions of the Act. Section 6(c) of the Act permits the SEC 
to grant an exemption from the provisions of the Act if, and to the 
extent, that such exemption is necessary and appropriate in the public 
interest, consistent with the protection of investors, and consistent 
with the purposes fairly intended by the policy and provisions of the 
Act.
    2. Applicant states that rule 3a-5 under the Act provides an 
exemption from the definition of investment company for certain 
companies organized primarily to finance the business operations of 
their parent companies or companies controlled by their parent 
companies. Applicant states that it meets all of the requirements of 
rule 3a-5 except for two, which it cannot meet for Turkish tax reasons.
    3. Rule 3a-5(b)(1)(i) under the Act requires that all of 
applicant's common stock be owned by Turkcell or a company controlled 
by Turkcell. Applicant argues that, even though for Turkish tax reasons 
applicant's common stock will be held by the Foundation, applicant was 
organized to serve solely as a conduit for Turkcell's capital raising 
activities. Applicant further states that its functions will be limited 
by its articles of incorporation and the trust indenture agreement to 
those of a traditional finance subsidiary.
    4. Rule 3a-5(a)(1) under the Act requires that applicant's debt 
securities be directly guaranteed by Turkcell. Applicant states that 
under the arrangement described in the application, the Trustee will 
have the right to proceed directly against

[[Page 20681]]

Turkcell. Applicant argues that this arrangement is necessitated by 
Turkish tax law and that the arrangement will provide the noteholders 
with the functional equivalent of a guarantee by Turkcell. For the 
above states reasons applicant argues that it is not the type of entity 
intended to be regulated under the Act.

Applicant's Condition

    Applicant agrees that any order granting the requested relief will 
be subject to the following condition:
    Applicant will comply with all provisions of rule 3a-5 under the 
Act except: (i) With respect to rule 3a-5(b)(1)(i), applicant's common 
shares will be owned by the Foundation for the benefit of the Charity, 
and (ii) with regard to rule 3a-5(a)(1), the noteholders will have 
recourse to Turkcell for payment of principal and interest on the Notes 
as described in the application. Applicant's articles of incorporation 
and the trust indenture agreement will: (1) Limit applicant's 
activities to issuing Notes or other debt securities, loaning the 
proceeds to Turkcell, and assigning all of its rights to repayment from 
Turkcell to the Trustee; (ii) prohibit the sale of applicant's common 
shares held by the Foundation; and (iii) enable the Trustee in the 
event of a payment default to proceed directly against Turkcell, as 
assignee of the loan agreement between applicant and Turkcell.

    For the Commission, by the Division of Investment Management, 
under delegated authority.

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-11046 Filed 4-24-98; 8:45 am]
BILLING CODE 8010-01-M