Latin American airline Avianca has countersued its minority shareholder Kingsland Holdings, asking a New York court to stop Kingsland from interfering with the airline’s partnership talks with United Airlines.
Bogota-based Avianca’s complaint, filed with the Supreme Court of the State of New York today, says that Kingsland’s actions had violated a shareholder’s agreement it has with Avianca and the airline’s majority shareholder Synergy.
Avianca reiterates today that it plans to explore an alliance with Star Alliance partner United Airlines - first announced by the airlines in February.
“We are looking beyond the litigation. Avianca remains committed to achieving its two strategic objectives approved by the board: entering into a commercial alliance with a world-class airline and raising needed new capital,” says Avianca chief executive Hernan Rincon in a statement.
Kingsland sued Avianca, Synergy, United and Synergy’s German Efromovich and Jose Efromovich in late February, seeking to stop the deal with United. Kingsland says German Efromovich had chosen United over superior offers from two other airlines, for his own financial benefit.
The two other airlines - Copa Airlines and Delta Air Lines - are being subpoenaed by Kingsland’s attorneys, court documents show.
In its counter lawsuit, Avianca calls Kingsland’s Roberto Kriete a “disloyal director who has worked actively to undermine the company’s strategic goals”.
A Kingsland spokesperson says the company is still reviewing the Avianca complaint, but adds that it stands by its own lawsuit. "[We] reject any assertion that Mr Kriete has acted improperly in any way or other than in the best interests of Avianca and its minority shareholders in his role as a company director," says the spokesperson.
Kingsland owns 14% of Avianca and holds almost 22% of voting stock in the airline. Kriete was chief executive of Central American airline group Taca before it merged with Avianca in a transaction that closed in 2010. Avianca, Synergy and Kingsland are parties to a shareholder agreement that governs control of the airline among its majority and minority shareholders.
Avianca’s complaint says Kriete is seeking to block a partnership between Avianca and United for his own benefit. It points out that Kriete sits on the board of Mexico’s Volaris, which recently launched a Costa Rican subsidiary that “now competes with Avianca”.
Avianca says Kingsland’s lawsuit resulted in the release of confidential information involving the airline’s search for a strategic partner, causing the carrier “irreparable harm”.
The airline argues that it has not negotiated a deal with United, and that Kingsland has no right to “upend strategic opportunities”. The shareholder’s agreement allows Kingsland to formally disapprove of certain transactions, which could trigger a buyout of most of Kingsland’s shares.
“Kriete’s goal is to force Avianca into an alternative sale transaction so that Kriete can extract a profit on the sale of his shares,” alleges Avianca.
The New York court is scheduled to hear Kingsland’s request for expedited discovery of documents on 6 April. Kingsland is seeking access to documents in Avianca and Synergy’s possession. Avianca has opposed the request.
The court says in an interim 24 March order that it is deferring Kingsland’s request for a preliminary injunction, pending the hearing on expedited discovery.
Story updated with Kingsland statement
Source: Cirium Dashboard
