A minor shareholder of Avianca Holdings has filed a lawsuit in the New York Supreme Court over the Colombian airline's strategic alliance with United Airlines (UA, Chicago O'Hare), reports El Tiempo. Kingsland Holdings says that majority shareholder Germán Efromovich – who is chairman of the board of directors of Avianca Holdings and owner of Synergy Aerospace Corporation – made the deal with United for his own personal benefit.
Controlled by the Kriete family, Kingsland Holdings is the parent firm of TACA International Airlines (San Salvador International), an El Salvador-based Central American airline that was merged with Avianca in 2010. It now owns 21.9% of the merged entity, Avianca Holdings S.A. (formerly AviancaTaca Holding S.A.) with Synergy Aerospace Corp. controlling over 50%.
The case follows on from Avianca's announcement in early February that it had chosen United for a strategic alliance, over offers from Copa Airlines (CM, Panamá City Tocumen International) and Delta Air Lines (DL, Atlanta Hartsfield Jackson). As part of the agreement, United is to provide a USD800 million loan to Synergy, which will use its equity stake in Avianca as collateral. Kingsland says that only about USD200 million of the loan will go directly to Avianca, with the rest to be used to pay off Synergy debts to third parties.
Kingsland contends that the negotiations were carried out in secret and that the other offers from Copa and Delta were more favourable than United's. Under its own agreement with Avianca, Kingsland states that it has the right to veto any major decision in regards to the management of the company and its finances, but says that Efromovich deliberately handled negotiations in such a way as to shut out and mislead other shareholders.
The lawsuit further claims that Efromovich has leveraged his position within Avianca to negotiate unnecessary contracts with third parties in order to benefit his own companies, and that it is attempting to force Avianca to absorb OceanAir (Rio de Janeiro Santos Dumont) "an almost insolvent regional airline whose sole qualification is ownership and administration by Efromovich and Synergy."
Speaking to El Tiempo, Efromovich said that Kingsland "resorted to these actions because it was diluting the participation of the Kriete family [which owns Kingsland]." He added that he will 'gladly' respond to the lawsuit in court and said that he himself urged board member Roberto Kriete to file the lawsuit in order to get the discussion out in the open.
