Efromovich fires back over Avianca-United Continental deal
Investor Germán Efromovich said the complaint was a “controversy started without any grounds, because of greed and ego”.
United announced in January that it was working with Avianca Holdings and Avianca Brasil on deepening “commercial and strategic relationships”. On Tuesday Kingsland Holdings, the Bahamas-based investment company and Avianca’s second-largest shareholder, filed a lawsuit in against Mr Efromovich seeking to block the tie-up.
With the two largest shareholders at loggerheads, Mr Efromovich, chairman of Avianca’s board, stressed that the joint venture between carriers “will happen”. He said that Kingsland was seeking to arm-wrestle his investment group Synergy to sell its controlling stake in Avianca: “We are not willing to give away control.”
“Nobody can oblige somebody to sell. We are not in the Al Capone days when someone comes to your house and says: ‘Hey, you have to sell otherwise I’ll kill your mama’.”
Mr Efromovich also told reporters in New York that rumours of higher bids for Avianca — one of Latin America’s biggest airlines — from Delta Air Lines and Panama’s Copa were “not accurate and are not correct”.
But the deal, plaintiffs allege, would not solve the liquidity needs of Colombia’s flagship airline, while benefiting Mr Efromovich and Synergy. “Efromovich has forced Avianca to pursue the United transaction because it provides much greater benefits to him personally,” the complaint said, adding that his other “companies are bleeding financially”.
“This is only the latest example of Germán Efromovich’s self-dealing at the expense of other shareholders,” Kingsland Holdings said on Thursday.
US hedge fund Elliott Management, famed for its long pursuit of Argentina’s defaulted bonds, was said to have been leveraging its position as a lender to Mr Efromovich.
Loans made to Mr Efromovich, a Bolivian-born tycoon who bought Avianca out of bankruptcy in 2004, were secured against the value of his 51 per cent stake in the carrier. But Mr Efromovich shrugged off concerns, saying: “We borrowed money from Elliott, we are going to pay Elliott, but Elliott has nothing to do with this, zero.”
Mr Efromovich’s enterprises have also come under attack in Argentina, where he is keen to expand Avianca’s footprint. After Synergy last year bought Macair, an air taxi service belonging to the family of Mauricio Macri, Argentina’s president, government critics are now questioning the sale, alleging that it represents a conflict of interest.
Mr Macri is already accused of favouritism towards his father’s company in negotiations over the repayment of a debt after a botched privatisation of the post office, and a prosecutor requested on Wednesday that he and other officials be investigated over the sale of Macair.
Although there are no formal charges yet, the prosecutor wants to investigate Mr Macri over allegations of illicit association, defrauding the state and influence peddling. Still willing to grow Avianca’s presence in Argentina, Mr Efromovich: “We have to finish our job being the most important airline from Rio Grande to the penguins of Patagonia.”