Avianca Airlines’ No.2 shareholder files injunction to halt United deal

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By Dion Rabouin

<span class="articleLocation”>A minority shareholder in Colombian airline
Avianca filed a motion for a preliminary injunction
Wednesday seeking to halt a deal between the airline’s
controlling shareholder Synergy Group Corp and United
Continental Holdings Inc.

The preliminary injunction request is tied to a lawsuit that
shareholder Kingsland Holdings Ltd filed against Synergy in New
York State Supreme Court late last month.

In the lawsuit, Kingsland, which holds about 22 percent of
Avianca’s voting shares and 14 percent of total shares, says it
is seeking “injunctive relief to prevent the cabal of insiders
that controls Avianca … from proceeding with their unlawful
attempt to ram through the egregiously one-sided United
Transaction in order to divert hundreds of millions of dollars
to themselves in violation of their fiduciary and contractual

Synergy holds 78 percent of Avianca voting shares. Calls to
the holding company’s Hong Kong and Malaysia media centers
seeking comment were not answered.

Wednesday’s filing was the third action taken by Kingsland
against Synergy and its controlling investor, German Efromovich,
seeking to pump the brakes on a deal between the two airlines in
as many weeks.

Kingsland formally requested that shareholders vote on
whether to appoint an auditor to examine transactions between
Avianca and Synergy last week and filed a lawsuit against
Synergy on Feb. 28 in New York State Supreme Court.

The lawsuit alleges that Synergy is “clandestinely”
negotiating an $800 million loan and strategic alliance behind
the backs of other shareholders.

Kingsland, controlled by El Salvador’s Kriete family, said
in a statement last week that it has been requesting for several
months that Avianca retain an independent auditor to review
transactions with Synergy.

“To date, Synergy has caused Avianca to deny these requests,
leaving Kingsland no choice but to take all actions necessary to
protect the interests of Avianca’s minority shareholders,” the
statement said.

“In the event that, at the extraordinary shareholders
meeting, Synergy uses its controlling position in Avianca’s
voting shares to again deny an impartial review of its related
party transactions with Avianca, Kingsland intends to request
that a civil court in Panama appoint independent auditors.”

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