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UPDATE 2-Avianca Airlines' No.2 shareholder files injunction to halt United deal
March 15, 2017 / 6:04 PM / 8 months ago

UPDATE 2-Avianca Airlines' No.2 shareholder files injunction to halt United deal

(Adds more from statement from Kingsland)

March 15 (Reuters) - 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 duties.”

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.” (Reporting by Dion Rabouin; Editing by Jonathan Oatis)

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