U.S. hedge fund Elliott Management has been pushing Avianca Holdings SA AVT_p.CN (AVH.N), one of Latin America's largest airlines, into a sale or strategic partnership, though it does not hold a stake in the carrier, the Financial Times reported.
Elliott has held talks with the company's senior executives in recent weeks and has provided input on Avianca's line of action in future, FT reported, citing people close to the company. (on.ft.com/2cYMYxT)
The hedge fund provided loans to Bolivian-born entrepreneur Germán Efromovich, the carrier's controlling shareholder, more than a year ago, against the value of Efromovich's 51 per cent stake in the company, the report said.
Efromovich had taken the loans to invest in shipyards in Brazil with his Synergy Group conglomerate, which provides oil exploration services and operates domestic airlines. However, the investment fell into financial difficulty, and Elliott stands to gain if the airline is sold, the FT report said.
Avianca said in June that it was not looking at a sale, but had indulged in talks with other airlines to look for possible partnerships that will speed up growth.
Latin American airlines have been hit by economic woes and a slump in the value of currencies in the region, and have shifted flights away from countries such as Brazil and Venezuela to growing economies such as Peru.
Reuters had reported that United Continental Holdings Inc (UAL.N), Delta Air Lines Inc (DAL.N) and China's HNA Group have shown interest in purchasing Avianca, which is a key player in South and Central America.
Elliott and Avianca were not immediately available for comment.
Avianca's U.S.-listed shares were up 1.5 percent at $6.50 in afternoon trading on the New York Stock Exchange. Up to Wednesday's close, the stock had risen about 50 percent this year.
(Reporting by Ankit Ajmera in Bengaluru; Editing by Maju Samuel)