More stay appeals to come as Doğan Yayin settlement talks fail

Doğan Yayın announced yesterday that the court process for a stay will continue and that more lawsuits will be filed.

The talks, which commenced Tuesday afternoon at 2 p.m., lasted for some 16 hours. Doğan Yayın attended the meeting with a delegation led by Mehmet Ali Yalçındağ, the chief executive officer of Doğan Yayın and an executive of Doğan Holding. Revenues Administration (GİB) head Mehmet Kilci presided over the meeting, which was also attended by Doğan Holding Deputy Chairwoman İmre Barmanbek.

In a written statement released early yesterday through the Public Disclosure Platform (KAP) of the İstanbul Stock Exchange (İMKB), Doğan Yayın said that during the talks with GİB neither Doğan Yayın nor its subsidiaries reached an agreement on the tax fine levied on them. Doğan Yayın noted in the statement that, as previously announced to the public, the court process for a stay which was launched by Doğan Yayın’s subsidiaries, Doğan TV Holding A.Ş., D Yapım Reklamcılık ve Dağıtım A.Ş., Doğan Prodüksiyon Hizmetleri A.Ş. and Alp Görsel İletişim Hizmetleri A.Ş. -- on which liens had been placed by the Finance Ministry after a guarantee raised for the TL 3.76 billion tax fine by Doğan Yayın was rejected by tax authorities -- would continue from where it was, as the talks ended without a settlement.

Furthermore, Doğan Yayın Holding A.Ş. will appeal to the court for a stay of execution for a TL 35.18 million tax fine levied on the company after examining the accounts for the period between April 1, 2002 and March 31, 2003, along with Hürriyet Gazetecilik ve Matbaacılık A.Ş., which has not yet filed a lawsuit in request for a stay, Doğan Yayın announced in the statement.

Meanwhile, Petrol Ofisi, the country’s largest fuel retailer, which is majority-owned by Doğan Holding, releasing a written statement through KAP, announced that the company would file a lawsuit against the tax court as the talks seeking a settlement on a fine levied on the company for a claimed loss in tax revenue to the state failed. A TL 12.83 million fine for the tax alone and a TL 30.09 million fine for the loss in revenue have been levied on the company. The statement stresses that no payment would be made until an official notice detailing the outcome of this lawsuit is received by the company.

The lack of a deal on the tax fine plunges the future of Doğan Yayın back into uncertainty and could scupper plans by German publisher Axel Springer to buy a 29 percent stake in the company. Axel Springer, which has a 25 percent stake in Doğan Yayın’s TV unit, said earlier that the further purchase was conditional, based on successful resolution of the tax row. The company announced last week that it has reached an agreement with Axel Springer for TL 356.7 million.

Doğan shares plummet after news of failure in talks

In the wake of the news, shares in the Doğan group’s companies fell sharply yesterday. Doğan Holding shares fell by 8.82 percent, the largest drop seen on yesterday’s midday trading among the companies trading on the İMKB, while Doğan Burda decreased by 8.58 percent, Doğan Gazetecilik dropped by 7.78 percent and Doğan Yayın fell by as much as 7.46 percent during midday trading. In the afternoon, KAP announced that trading in the shares of Doğan group companies Doğan Holding, Doğan Yayın Holding, Hürriyet Gazetecilik, Doğan Burda, Doğan Gazetecilik and Milliyet Pazarlama was temporarily suspended because a statement was requested from the group regarding news published in the press.

Doğan Yayın was slapped with a TL 693 million fine by tax authorities in February over the sale of a minority stake in subsidiary Doğan TV Holding to German publishing giant Axel Springer, which owns the renowned Bild and Die Welt dailies. After failing to provide proper collateral in the given time frame, tax authorities froze Doğan’s bank accounts in March in a legal wrangle over the tax dispute. After four months, some of the assets were released, while Doğan TV Holding shares held by the tax office under a precautionary attachment rose to 53.9 percent. The worst came in September, when tax inspectors fined firms controlled by Doğan TL 3.76 billion, twice the level of tax arrears, which officials assessed at TL 1.88 billion after examining accounts for 2005, 2006 and 2007. The amount rose to TL 4.8 billion including interest accrued.

The tax office requested that Doğan Holding units Doğan TV Holding, D Yapim Reklamcılık, Doğan Prodüksiyon Hizmetleri A.Ş. and Alp Görsel Hizmetleri A.Ş. put up a guarantee equal to the total fine of TL 4.8 billion. Doğan reacted by launching a court challenge to the guarantee requirement. In mid-October, Doğan Yayın said it had provided collateral in the form of shares in Doğan units and 44 properties to the tax office to cover the fine. The tax office then imposed a preliminary injunction on the sale of shares in three of Doğan’s units, and one day after this, Doğan Yayın said the tax office had rejected the guarantees.

On Oct. 30, Doğan said the company had received an invitation from the Finance Ministry to hold talks on settling the tax fines. On Nov. 4, Doğan Yayın said its units Doğan TV Holding, Doğan Prodüksiyon, Alp Görsel İletişim Hizmetleri A.Ş. and D Yapım Reklamcılık would have talks with the Finance Ministry on Nov. 24 to discuss a possible settlement. Doğan Yayın also said that if there was no agreement, the court process for the stay would continue from where it was.