In a statement, a spokesperson for the nascent group said that the airlines will all maintain separate brands, employees and culture, but passengers will benefit from synchronized connections, co-ticketing, and cross compatibility between loyalty programs such as Avianca’s LifeMiles and Gol’s Smiles.

Salvadorean airline tycoon Roberto Kriete (above photo) will serve as the chairman of the group. Kriete grew TACA airlines, founded by his father, into a significant regional airline until it was sold to Avianca, and Kriete became a major shareholder of the Colombian airline.

Adrian Neuhauser, current President and CEO of Avianca, and Richard Lark, current CFO of GOL, will serve as the group’s Co-Presidents, while Gol founder Constantino de Oliveira Junior will serve as the group CEO.

“Our vision is to create an airline group that tackles 21st century issues and improves air travel for our customers, employees, and partners as well as the communities in which we operate. Our customers will benefit from access to even better fares, more destinations, more frequent flights and seamless connections, and the ability to earn and use points across the brands’ loyalty programs. They will also be able to enjoy enhanced travel benefits and access to superior products and services,” said Chairman Roberto Kriete.

Upon closing, the Group will control Avianca and GOL and, as a consequence, also hold Avianca’s non-controlling economic interest in Viva’s operations in Colombia and Peru as well as convertible debt representing a minority interest investment in Sky. The new entity is based in the UK and privately held.

Earlier this month, Kriete announced a deal with another aviation heavyweight, Declan Ryan, who controls among other airlines, Medellín based Viva Air through his aviation venture capital firm Irelandia Aviation. The deal does not merge Avianca and Viva, but rather places Viva’s ownership into the same holding company that owns Avianca, with Ryan joining the board and contributing his expertise Ryan was once CEO of Ryanair, the European low cost airline founded by his father, Tony Ryan.

This complex, multi-level merger under a new holding company still faces regulatory and practical hurdles, as approvals are needed from Colombian, Brazilian, Peruvian, and possibly Chilean regulators. Viva cofounder (no longer with the company) Frederik Jacobsen has come out against the merger. “I don’t believe the AV-Viva merger will serve the Colombian market well. A holding company with a 65% share will not offer the level of competition necessary to advance products and services to the needed level. We are going back to the pre-2012 conditions with airlines unwilling to compete on price to the detriment of millions of Colombians that need to travel by air,” he stated on LinkedIn.

At the very least, some airport slots may have to be surrendered to other airlines such as competitors like Latam and Copa-owned Wingo, in markets where the two carriers dominate, such as Viva’s home base of Medellín or Avianca’s home base of Bogotá.

Viva and Avianca also have very different, almost opposing corporate cultures. Avianca, the second oldest airline brand on earth, is very buttoned down, culturally conservative, even staid. Viva on the other hand, has a youthful, irreverent atmosphere not just in its marketing but it its corporate DNA. On any given day their mascot golden retriever Waffles can be seen romping about their offices. Neckties and high heels are almost unknown. Onboard announcements are purposefully humorous.

“Viva from day one has sort of seen itself as out to slay the aviation Goliath,” said one industry observer with connections throughout both airlines. “It’s hard to get my head around the employees attitude going from ‘we are going to slay Goliath’ to ‘we are going to marry Goliath.’”

For now, the administration and operational control of Viva in Colombia and Peru will not be part of the same holding company, and to that extent Viva’s operations will continue to compete with the airlines that are part of Avianca Group in all the countries where both groups have a presence. Likewise, as long as the authorizations are not achieved, the way in which users, suppliers, employees and entities relate to the different airlines will remain the same, maintaining their internal and external processes, as well as their own sales channels and their customer service services as they are known today.

The three aviation scions behind the move are optimistic.

“This is the perfect setting to continue our strategy of growth and expansion, maintaining the flag of air inclusion and strengthening our company. In addition, if in the future the authorities approve the management of both groups in the same holding, it will encourage the air transport market to continue growing, promoting low rates for users and a good service with the best punctuality, giving everyone the opportunity to fly to many destinations around the world. Likewise, it will be a source of generating qualified employment, giving more and better job opportunities to current and future employees, as well as continuing to positively impact the connectivity of Colombia, the region and the economic development of the country,” said Viva’s Executive Chairman, Declan Ryan when announcing his deal with Kriete.

Roberto Kriete, Abra Group’s Chairman, said: “Our vision is to create an airline group that tackles 21st century issues and improves air travel for our customers, employees, and partners as well as the communities in which we operate. Our customers will benefit from access to even better fares, more destinations, more frequent flights and seamless connections, and the ability to earn and use points across the brands’ loyalty programs. They will also be able to enjoy enhanced travel benefits and access to superior products and services.”

Constantino de Oliveira Junior, Abra Group’s CEO, said: “This agreement places Abra’s airlines in a position to lead air travel within the region – serving a population of over one billion and GDP of nearly three trillion US dollars – providing significant opportunities for capacity and revenue growth. Our unique enterprise structure will allow each airline to drive results by maintaining their independent brands, talent, teams, and culture and will provide employees more opportunities for personal and professional growth at every stage of their careers.”

Abra Group said in a statement that certain financial investors have committed to invest up to $350 million in shares of Abra upon closing, and the closing of the transaction is expected to be completed in the second half of 2022, subject to customary closing and regulatory conditions.

Evercore and RBC Capital Markets are serving as financial advisors and Milbank LLP is serving as legal advisor to Abra Group. Gibson, Dunn & Crutcher LLP is serving as legal advisor to certain investors, and Lefosse Advogados and Brasilpar are advising GOL’s controlling shareholders.

Guyana Goldfields’ board says that the Gran Colombia Proposal is not in the best interests of the Company or its shareholders since, among other things, the Gran Colombia Proposal is complex and highly conditional in nature as it is contingent on the concurrent completion of a separate acquisition by Gran Colombia of Gold X Mining Corp. (TSXV: GLDX, OTCQX: SSPXF), the terms of which have not been disclosed to Guyana Goldfields; it requires the approval of the shareholders of each of Gran Colombia, Gold X and the Company, each conditional on the other providing such approval, and it fails to provide Guyana Goldfields with adequate short term liquidity, given the $3.65 million CAD break fee that would be payable to Silvercorp upon the entering into of a transaction agreement with Gran Colombia and the increased ongoing costs to the company associated with a delayed closing date relative to the Silvercorp Transaction. The board acknowledges that, based on current trading prices, the Gran Colombia Proposal represents a premium to the agreed price under the Silvercorp Transaction; however, the board is of the view that such premium does not sufficiently compensate the company’s shareholders for the increased risk associated with the Gran Colombia Proposal.

Guyana Goldfields prefers completing the Silvercorp deal

Under the terms of the arrangement agreement dated April 26, 2020 entered into with Silvercorp, Silvercorp has agreed to acquire all of the issued and outstanding shares of the Company by way of a plan of arrangement under the Canada Business Corporations Act. Pursuant to the terms of the Arrangement Agreement, each holder of Guyana Goldfields shares will have the option to receive, for each share held, C$0.60 in cash or 0.1195 of a Silvercorp common share, subject to a maximum cash consideration of C$33.2 million.

First published on our sister publication, Finance Americas

Guyana Goldfields’ board says the Silvercorp Transaction will provide significant benefits to the Company’s shareholders including:

• Exposure to a significant premium to the Company’s April 24, 2020 closing price, enhanced trading liquidity, and a significant re-rating opportunity with a geographically diverse mid-tier precious metal company;
• Strong management team that is committed to developing the Aurora Underground Project and has a track record of operational excellence in underground mining over the last 15 years;
• Option to elect to receive cash in the Silvercorp Transaction which provides downside protection.
• Elimination of the funding risk associated with the Aurora Underground Project, providing access to Silvercorp’s strong balance sheet and financing options available to a larger company during these times of uncertain market conditions; and
• Provision of interim loan facility sufficient to fund expenditures of the Company and advance the Aurora Underground Project during the period before closing of the Silvercorp Transaction.

Shareholder Meeting details

The shareholder meeting is scheduled for June 29^th, 2020 with a Record Date for shareholders of May 20th, 2020.  Full details of the Silvercorp Transaction will be included in the management information circular of Guyana Goldfields that is expected to be mailed to Guyana Goldfields’ shareholders in early June 2020.

Shareholders who have questions regarding the Silvercorp Transaction should contact the company’s strategic shareholder advisor and proxy solicitation agent Kingsdale Advisors at 1-800-775-1986, or collect call outside North America at 416-867-2272, or by e-mail at contactus@kingsdaleadvisors.com.

RBC Capital Markets is acting as financial advisor to Guyana Goldfields and Fasken Martineau DuMoulin LLP is acting as Guyana Goldfields’ legal advisor. Kingsdale Advisors is acting as strategic shareholder and communications advisor and proxy solicitation agent.

Above photo courtesy of Guyana Goldfields, Inc.

According to the regional development bank, which is AAA-rated by Moody’s, the transaction will pay a semi-annual coupon of 2.5% and mature on January 18, 2023. It is “priced with a spread of 15.7 basis points over the 2.125% UST due December 31, 2022, which represents a yield of 2.500% s.a.,” said the IDB in a statement.

Orders exceeded $5.2 billion USD from more than 100 investors, which were distributed across the Americas (39% of the investors); Asia and the Pacific (22%); and Europe, Africa, and the Middle East (39%).

As for the types of investors, 48% are banks, 36% are central banks (and other “official institutions”), 13% are asset managers, and the remaining 3% are a collection of pension funds, insurance companies, and corporate investors.

“We usually issue $3 billion USD benchmarks in this maturity and so we are very pleased with the result,” said Laura Fan, head of funding at the IDB.

The joint lead managers are Bank of America Merrill Lynch, BMO Capital Markets, RBC Capital Markets, and TD Securities. The co-lead managers are BNP Paribas, Citibank, Deutsche, Goldman, HSBC, JPM, Mizuho, Nomura, NatWest, and Wells Fargo.

Fen added that the “typical strong demand in January” for the bond issuance made it particularly significant in a number of ways. “It is our largest five-year primary U.S. dollar global benchmark, our largest five-year order book, and a record number of investors for a five-year bond,” she said.