Colombian airline Avianca’s second largest shareholder, Kingsland Holdings Ltd, has reportedly filed suit against German Efromovich, chairman and controlling shareholder and its potential strategic partner United Continental Holdings. Kingsland claiming that a deal between the two companies would hurt minority investors, according to Bloomberg.
According to a lawsuit filed Tuesday in New York State Supreme Court German Efromovich, alleges is secretly negotiated an $800 million loan and strategic partnership with Chicago-based United.
German Efromovich chose the United deal for his personal gains and passed over proposals from two other major international airlines that assigned a highly valued Colombia’s largest carrier, Kingsland said.
“The United transaction diverts the vast majority of the consideration United is paying for a partnership with Avianca — a valuable asset that may provide United with an estimated annual profit in excess of $75 million USD — to Efromovich’s financially shaky affiliates,” states the lawsuit, according to Bloomberg. “He torpedoed the strategic process by clandestinely negotiating a transaction with United.”
Although other airlines name were not specifically mentioned in the suit, both Delta Air Lines and Copa Airlines were rumored throughout 2016 to be interested in forming a partnership with Avianca, Finance Colombia reports.
German Efromovich owns, through his privately held Synergy group, 78 percent of the Columbian national airline Avianca, which he had rescued from bankruptcy as well as a private airline in Brazil, Avianca Brazil.
Kingsland has controlled 21.9% of the carrier since a 2010 merger between Avianca and Central American airline Taca.
“Avianca Holdings S.A., informs that it has come to its knowledge by news published in different media, that one of its minority shareholders, Kingsland Holdings Ltd., has filed a lawsuit in New York state court against the company, the majority shareholder, Synergy Aerospace Corp., two of Synergy’s principals, and United Airlines,” said Avianca in a statement.
“Avianca Holdings S.A., informs that it has not yet been officially served with such complaint,” added the carrier. “If the company is served, it will assess with its lawyers the terms of the complaint and respond in the normal legal course of action. As it corresponds, the company will vigorously defend its interests.”
About: German Efromovich is 63, was born in Bolivia and was brought up in Brazil and in Chile. Today his Brazilian based company, the Synergy Group, of which he is the Chairman and CEO, owns extensive energy and industrial interests, as well as Columbia’s national airline Avianca, and a number of smaller affiliated regional airlines.
The company also owns a Brazilian-Ecuadorian private airline as well which today has the same name, Avianca Brasil. German’s brother José, five years his junior, is his partner in Synergy and CEO of the Brazilian airline.German and José’s parents came from Poland after the Second World War. They settled first in Bolivia, where German was born, then in Chile where German went to school and then moved finally to Sao Paulo in Brazil in 1964.
German Efromovich earned his degree in mechanical engineering from FEI University in Brazil. He got started in business selling encyclopedias, and later helped to dub movies into Portuguese. At one point he even ran a school where he taught a union leader by the name of Lula da Silva, who went on to later serve as one of the most popular Presidents of that country.
A citizen of Brazil, he was granted honorary citizenship of Columbia as well in 2005 by a grateful government there for saving the domestic airline industry after it had gone bankrupt. In 2012 he also became a Polish citizen, in a clear nod to his family’s roots, though nominally primarily in order to qualify as an EU citizen to qualify to bid for TAP and surmount ownership restrictions.
In an interview several years ago when German Efromovich was asked where he got his business skills from he credited his father, but also his grandmother too, saying: “My father was a good negotiator, but even better than him was my grandmother. Despite the fact that she was illiterate and had never set foot in a school, she bought and sold and did the most complex calculations in her head.”
The Columbian Avianca airline has been a member of the Star Alliance of international airlines since 2009, which shares codes and cooperates on international marketing issues and includes some of the world’s largest airlines. In December 2013 the Alliance voted to add Avianca Brasil to the Alliance as well.