United Continental Holdings has effected changes in the leadership at Avianca Holdings in a bid to help steer the ailing South American carrier holding back into financial stability.
Earlier this month, BRW Aviation LLC, a Delaware limited liability company that holds Synergy Aerospace's 78.1% stake in Avianca Holdings, defaulted on a USD456 million loan extended by United Airlines back in November last year. Since then, Avianca Holdings has seen its S&P Global Ratings downgraded alongside that of its frequent flyer subsidiary LifeMiles and for certain outstanding debt owed by both the holding firm and LifeMiles.
In a stock market filing on Friday, May 24, United said that in light of these developments it had now acted to protect the value of its collateral, it had now begun to exercise the remedies available to it under the terms of the loan agreement and related documents.
To that end, an extraordinary meeting of Avianca Holdings' shareholders was called on May 24 during which it appointed Avianca Holdings' largest minority shareholder, Kingsland Holdings Ltd, to act as an independent third party.
Kingsland, which is owned by the El Salvadorian Kriete family of TACA International Airlines fame, will now exercise the voting rights associated with BRW's shares and consequently in its subsidiary Avianca Holdings. Its owner, Roberto Kriete, has since been voted in to replace German Efromovich as chairman of Avianca Holdings' board.
Avianca Holdings underscored in a separate stock market filing that United Airlines has not taken control of Avianca Holdings, its operation, its service, or business decisions.
"The contractual rights exercised by United to date consist of appointing an independent third party (Kingsland), to exercise the right to vote in BRW and its subsidiaries Avianca Holdings and Avianca Colombia," it said. "This means that Germán and José Efromovich still have indirect ownership of BRW and its subsidiaries, but not the right to vote."
In tandem with the change in leadership, United and Kingsland have pledged to extend up to USD250 million in financing to Avianca Holdings provided that certain commitments are assumed by other interested parties.
