Avianca’s second largest shareholder, Kingsland Holdings Ltd, has reportedly filed suit against the Colombian airline, its potential strategic partner United Continental Holdings, and its largest shareholder, claiming that the deal would hurt minority investors, according to Bloomberg.
Kingland’s suit, filed in New York state, alleges that German Efromovich, the controlling shareholder in Avianca, initiated negotiations with United for personal gains and passed over proposals from two other airlines that more highly valued Colombia’s largest carrier.
“The United transaction diverts the vast majority of the consideration United is paying for a partnership with Avianca — a valuable asset that may provide United with an estimated annual profit in excess of $75 million USD — to Efromovich’s financially shaky affiliates,” states the lawsuit, according to Bloomberg. “He torpedoed the strategic process by clandestinely negotiating a transaction with United.”
Though other airlines may not be specifically mentioned in the suit, both Delta Air Lines and Copa Airlines were rumored throughout 2016 to be interested in forming a partnership with Avianca.
According to Colombian business publication Portafolio, Kingsland has controlled 21.9% of the carrier since a 2010 merger between Avianca and Central American airline Taca. Efromovich holds the remaining 78% through his holding company Synergy Aerospace Corp.
Both Avianca and United have said that they have yet to be officially served with the lawsuit. “Avianca Holdings S.A., informs that it has come to its knowledge by news published in different media, that one of its minority shareholders, Kingsland Holdings Ltd., has filed a lawsuit in New York state court against the company, the majority shareholder, Synergy Aerospace Corp., two of Synergy’s principals, and United Airlines,” said Avianca in a statement.
“Avianca Holdings S.A., informs that it has not yet been officially served with such complaint,” added the Bogtotá-based carrier. “If the company is served, it will assess with its lawyers the terms of the complaint and respond in the normal legal course of action. As it corresponds, the company will vigorously defend its interests.”