NASSAU, Bahamas--(BUSINESS WIRE)--Kingsland Holdings Limited (“Kingsland”), the largest minority shareholder of Avianca Holdings S.A. (“Avianca”), today issued a statement in response to a misleading securities filing issued by Avianca on May 5, 2017 regarding the vote on Kingsland’s motion to appoint an independent auditor to examine numerous related party transactions that Avianca has entered into with the controlling shareholder, Synergy Aerospace Corporation (“Synergy”), and other entities affiliated with Synergy and Germán Efromovich.
“In a securities filing issued on May 5, 2017, Avianca misleadingly states that, at the Extraordinary Shareholders Meeting, controlling shareholder Synergy supported the motion by Kingsland to appoint an independent auditor. In fact, Synergy rejected Kingsland’s highly qualified auditor candidate, and insisted instead that the auditor be appointed by the Audit Committee of Avianca. This is fundamentally at odds with the spirit of Kingsland’s motion and yet again demonstrates Efromovich’s determination to avoid any checks on his power.
Synergy’s ploy to involve the Audit Committee is a smokescreen intended to stall the appointment of an auditor and create the appearance of transparency. Because the Audit Committee’s membership consists entirely of directors appointed by Synergy, the committee and any auditor it appoints will answer to Efromovich. Further, it is the same Audit Committee that examined and recommended in recent years that the Board of Directors approve the very same 30-plus related party transactions that purportedly will be audited. Kingsland believes these transactions have, at the expense of the company and its minority shareholders, diverted hundreds of millions of dollars’ worth of Avianca assets to projects of Germán Efromovich and Synergy, a matter which should be investigated by the authorities. These types of practices fly in the face of appropriate corporate governance. Kingsland is seeking a truly independent auditor that will conduct an unbiased audit and thereby determine whether and how much Avianca and all its minority stockholders have been injured by Synergy's control of Avianca. It is clear that when seeking to investigate related party transactions, the parties to such transactions (Avianca and Synergy in this case) should not be the ones appointing the independent auditor. The independent auditor should audit on behalf of the minority shareholders, the authorities, the creditors and other relevant stakeholders, not on behalf of the parties involved.
This self-serving behavior is in line with the deal Efromovich is negotiating with United Airlines under which Kingsland believes hundreds of millions of dollars from United would flow directly to his holding company, Synergy, with few of the monetary benefits flowing to Avianca and its minority stockholders.
In light of these events, Kingsland will exercise the rights it has at its disposal in the Panamanian courts.”
On March 8, 2017, Kingsland announced it had formally requested an extraordinary meeting of shareholders to consider appointing an independent auditor, in light of the many related party transactions that Mr. Efromovich has caused, and is continuing to cause, Avianca to enter into with his affiliates, and the one-sided nature of such transactions that favor Synergy at the expense of Avianca’s other shareholders. Arbitrarily, the shareholders meeting to consider this request was only convened almost two months after it had been requested by Kingsland.
On February 28, 2017, Kingsland filed a lawsuit in New York State Court challenging Synergy’s and Mr. Efromovich’s conduct with respect to Avianca. Court filings by Synergy on March 27, 2017 concede that it is actively negotiating with United to obtain funds for itself as part of a United-Avianca transaction, just as Kingsland has alleged in its lawsuit.
As a significant shareholder, Kingsland Holdings is deeply committed to the long-term success of Avianca and is pursuing this action to protect the viability of the company and safeguard the interests of all minority shareholders.