Previously owned by the country’s richest family, it was hemorrhaging money in the wake of the Sept. 11 terrorist attacks and the global recession that followed. Its stock price is down by almost 75% since it went public in 2011 and its bonds are trading in distressed territory amid concerns it will struggle to refinance debt. He deemed them flight risks and ordered they be detained under house arrest and banned from leaving the country. According to Reuters, prosecutors accused the brothers of laundering money and bribing public officials in order to land ship-building contracts with Transpetro, the logistics unit of Brazilian oil company Petrobras. Brazilian police have arrested and detained Germán Efromovich and his younger brother José over allegations the two were involved in a mass money laundering and bribery racket. Avianca’s situation was “controlled,” he told Blu Radio. In addition to the bonds due next year, Avianca owes roughly $800 million to European export credit agencies, quasi-government financial institutions that secure funding for exporters, among other debts, according to executives. England Virus Lockdown May Be Extended Beyond December, Fund Manager Nightmare Is Biden Without Blue Wave Congress, These Are the Airlines Teetering on the Brink of Covid Ruin, U.S. Futures Climb as Oil Slides to Five-Month Low: Markets Wrap. But it’s an option it could exercise at any point. It has been buffeted by surging fuel prices this year along with weaker Latin American currencies and less demand for air travel amid slowdowns in the region’s biggest economies. 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His shipyards have shut down. It’s among the worst performers this year in the Bloomberg Barclays Emerging Markets Corporates bond index. Efromovich, who is also Avianca Holdings SA’s chairman, said in a radio interview in Bogota on Tuesday that there was no possibility of United taking over anytime soon. But to say Avianca’s problems are all the fault of Efromovich is not entirely fair.”. [2] The Efromovich family created the Synergy Group in 2003, an industrial conglomerate in Brazil operating in various business segments. Efromovich bought it out of Chapter 11 for $64 million and an assumption of debt. He is CEO of the Brazilian airline Avianca Brazil and has a seat in the supervisory board of the AviancaTaca Holding company. The multinational he heads with his brother has capital invested in companies in the aeronautical, energy, oil, and shipping sectors in several Latin American countries. In a written response to questions from Bloomberg, he denied that problems at his other businesses are creating risks for Avianca, which isn’t party to the loan. [1] His brother is Germán Efromovich, the owner of AviancaTaca. 7000 Chur The siblings control a majority stake in Avianca Holdings through their Panama-based vehicle, Synergy Aerospace, and had also controlled bankrupt OceanAir (previously Avianca Brasil) through their Brazilian holding firm, SPSYN Participações Ltda. The self-made millionaire imperiled the airline’s future by last year offering up his 51.5% stake in Avianca as collateral on a loan from United Continental Holdings Inc. His holding company BRW Aviation quickly breached terms of the contract and, as a result, control of Avianca could pass to United’s hands. United says it hasn’t seized the Avianca shares and is working with BRW. He took a loan from Elliott Management to prop up his shipyard business there, which ended up closing. Avianca needs to update loan contracts to include United as a potential controlling shareholder “to prevent a breach of the company’s financial commitments,” S&P Global Ratings said in a May 13 note. Of course the loan isn’t Avianca’s only headache, and some observers say Efromovich is getting too much of the blame for the company’s woes. “Corporate governance has been questioned and that has affected the stock price. Investors are hesitant to lend to a company that could at a moment’s notice be on the hook for a bunch of money that it doesn’t have. It’s quite a turnaround from 2004, when Efromovich was lauded across Colombia for rescuing the world’s second-oldest airline. That’s more than four times the amount of cash it had on its balance sheet at the end of the first quarter. Efromovich’s personal fortune began to turn in 2014, at the start of Brazil’s worst recession on record.

“Everything is aligned with United as per the loan agreement. And low-cost carriers are adding competition. There is nothing to rectify,” he wrote.

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He is CEO of the Brazilian airline Avianca Brazil and has a seat in the supervisory board of the AviancaTaca Holding company. Segundo o G1, German Efromovich e José Efromovich foram presos preventivamente e cumprem prisão domiciliar por causa da pandemia de covid-19. A judge said there was reason to believe that the two had created a corporate structure in Brazil and abroad to launder some BRL610 million reais (USD111 million) in public funds. He has a brother named José Efromovich, five years younger, who is chairman of Avianca Brazil. It downgraded the debt rating further into junk territory, the CCC+ level, citing “higher refinancing risk” due to BRW’s breach. Germán Efromovich is married to Hilda Liberas, related to the Gilinski, Rabinovitch, and Garcias business families from Colombia and they have three daughters. [3], German Efromovich: Unlikely owner saves national airline, https://en.wikipedia.org/w/index.php?title=José_Efromovich&oldid=976542216, Brazilian people of Polish-Jewish descent, Creative Commons Attribution-ShareAlike License, This page was last edited on 3 September 2020, at 14:51. The tumult couldn’t have come at a worse time for Avianca. O ministro Edson Fachin, do Supremo Tribunal Federal (STF), negou seguimento ao Habeas Corpus (HC) 192130, impetrado pela defesa dos empresários Germán e José Efromovich, presos na Operação Navegar é Preciso, um desdobramento da operação Lava-Jato. His Brazilian airline was forced to seek court protection from creditors.

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The Efromovich brothers grew up in Brazil, with family origins in Bolivia and Poland.

“We Colombians admire you, we appreciate you, we value you, we consider you an example” of the type of investor the country needs, he said in 2010 when Efromovich received a “businessman of the year” award from newspaper La Republica. Avianca’s first-quarter loss was the biggest since 2015. Avianca is only the latest difficulty for Efromovich, who has seen parts of the sprawling Latin American conglomerate he built with his brother, Jose, unravel in recent years. Avianca was a failing airline with 37 outdated planes when German Efromovich purchased it out of bankruptcy in 2004. Switzerland, Phone: +41 (0) 44 508 47 07 Over 15 years the Bolivian businessman built it into a regional powerhouse as Latin America’s second-largest carrier.

Former President Alvaro Uribe, who granted Efromovich Colombian citizenship in 2005, was among his biggest fans. Have a confidential tip for our reporters? His brother is Germán Efromovich, the owner of AviancaTaca. “We’re very worried by the company’s instability at the moment,” said Jaime Hernandez, president of the Colombian pilots’ union ACDAC, which in 2017 went on strike for almost two months over a wage and benefits dispute. But for all its success, the Bogota-based company is now back on a rocky foundation.

That was partly because Avianca’s share price plummeted, causing its market capitalization to dip to $510 million by the end of 2018.

The rating downgrade accelerated a sell-off in the bonds that began at the end of April. By last year, Avianca’s 190 aircraft were carrying 30 million passengers, second only to Latam Airlines in the region. Want to receive the latest aviation news delivered right to your mailbox every week?

Meanwhile, Efromovich moved ahead with expansion plans for Avianca, forming a joint venture with United and Panama’s Copa Holdings in which the three airlines would coordinate routes and schedules. Even if United doesn’t take control, just the fact that it could do so complicates Avianca’s efforts to operate and raise financing. And now he’s at risk of losing Avianca. Avianca airplanes at El Dorado International Airport in Bogota. Corrupção e … The man most responsible for the mess is the same who so recently was treated as a hero -- Efromovich. While that would likely be a positive for Avianca’s minority shareholders and bondholders, the current uncertainty has created myriad problems for the airline just as it faces down a $550 million bond coming due next year. Chief Executive Officer Hernan Rincon quit in April.

José Efromovich (born 1955 in La Paz, Bolivia) is a Brazilian businessman of Polish-Jewish descent. The notes due next May now trade at about 88 cents on the dollar, pushing the yield to 23%, according to Trace bond trading data.

José Efromovich (born 1955 in La Paz, Bolivia) is a Brazilian businessman of Polish-Jewish descent. Quaderstrasse 8 Data Center Firm Rises 3% After $1.67 Billion Hong Kong List... A Forensic Accountant on Why Chinese Internet Companies Are... Allegro Record IPO a Boon for E-Commerce Investors in Poland, Ocado Raises Profit Target As Online Grocery Demand Expands. Brazilian police have arrested and detained Germán Efromovich and his younger brother José over allegations the two were involved in a mass money laundering and bribery racket. In the long term, a change in control to United could be a positive for Avianca, said Gimme Credit analyst Cedric Rimaud, who recommends buying the bonds. Meanwhile, it’s sticking to a business plan focused on cutting debt and increasing profitability by selling assets, canceling aircraft orders and scrapping some routes. Honda Joins Fiat in Tapping Tesla for Europe Emission Compli... Mukesh Ambani Loses $7 Billion as Oil Sinks Reliance Shares, World’s Top Hedge Fund Soars 275% With Bets on China Schools. Germán Efromovich is also a Colombian citizen. Avianca was a failing airline with 37 outdated planes when German Efromovich purchased it out of bankruptcy in 2004. Photographer: Nicolo Filippo Rosso/Bloomberg. A mechanical engineer by training who got into the aviation business in Brazil, Efromovich doubled the number of aircraft Avianca operated and soon started turning a profit. “But everything becomes a factor when an emerging-market company is looking to refinance a $550 million bond.”, — With assistance by Fabiola Moura, and Pablo Rosendo Gonzalez, Woman Bathing In Milk Underscores Appeal of ‘TikTok Houses’. “There is still one year before the bonds come due and a lot can happen until then,” he wrote in a report. “If United takes over the control of the company, it will be a very positive news for bondholders, as the credit profile would improve markedly.”. “At first the assumption was that the problems were isolated” to just Efromovich and his outside businesses, said Roger Horn, a senior emerging-markets strategist at SMBC Nikko Securities America in New York.

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