BOGOTA, March 1 (Reuters) - German Efromovich, controlling shareholder of Colombian flagship airline Avianca, said on Wednesday he would “gladly” respond in court to a lawsuit by minority owners that alleged he forced the carrier into a deal that hurts them, a Colombian newspaper reported.
Efromovich and United Continental Holdings Inc are being sued by Kingsland Holdings, controlled by El Salvador’s Kriete family, for “clandestinely” negotiating an $800 million loan and strategic alliance behind the backs of other shareholders.
The lawsuit filed in New York State Supreme Court claims Efromovich negotiated the deal with United for his own benefit even when there were competing offers from other airlines.
It says that as a result of Efromovich’s financial distress, he negotiated transactions in which he pledged about 97 percent of his equity stake in Avianca to third parties as collateral for loans, including to New York hedge fund Elliott Management.
“I’ll gladly answer the lawsuit,” Efromovich said by telephone as he boarded an airplane in China, daily El Tiempo reported.
United said it could not comment on pending litigation. Avianca also declined to comment on the lawsuit. Efromovich was not immediately available for comment.
Synergy, which is owned by Efromovich, holds 78 percent of Avianca voting shares, while Kingsland holds 22 percent.
In 2010 the Kriete family merged airline Taca with Avianca.
“Kingsland brings this action principally to enjoin an egregiously one-sided proposed transaction that Efromovich secretly negotiated with United for his own benefit at the expense of Avianca and all of its other shareholders,” the lawsuit said.
“Although the strategic process produced offers from two major international airlines on far better terms for Avianca, Efromovich has forced Avianca to pursue the United transaction because it provides much greater benefits to him personally,” it said.
The lawsuit claims Efromovich purposely misled the committee that was seeking alliances for the airline. He canceled meetings and gave an exclusivity window to United after calling for Avianca to cancel talks with other bidders, the lawsuit said.
Kingsland claimed that any benefit from the United deal flowed into Efromovich’s “financially shaky affiliates.”
The United loan was backed by shares in Avianca and its Brazilian airline, owned by Efromovich’s brother Jose.
Avianca operates flights in Colombia, Peru, Ecuador, Central America and the Caribbean. The company transported 29.5 million passengers to 105 destinations in 2016. (Reporting by Helen Murphy, additional reporting by Alana Wise; Editing by Andrew Hay)