After a seventh trial postponement dating to June, global air cargo handler Swissport International is concerned that it is not getting equal access to justice in Ukraine’s Highest Economic Court. The Zurich-based company is awaiting a decision from the economic court on whether it will win its shares back in a joint-venture it had with Ukraine International Airlines.
The company stated in a Sept. 10 news release
that judges have been changed three times over the summer with the next hearing
scheduled for Sept. 18.
“Swissport is very concerned about the obvious
delay tactics of the Highest Economic Court in Ukraine,” reads Swissport’s
statement. “The court appeal hearings in the third instance keep taking place
for not longer than five minutes before they are postponed again. The judges
are being exchanged for the third time now.”
The litigation stems from a March 27 lower court
ruling that gave Ukraine International Airlines – the nation’s largest airlines
– full control over the nation’s largest airport ground handler in Swissport
Ukraine. The joint venture between the two companies was worth an estimated $25
million, according to BDO Valuation LLC.
UIA didn’t respond to e-mailed questions from the
Kyiv Post and a request for a telephone interview.
Before the March 27 ruling, the lower court had
six scheduled hearings, three of which were postponed, and two of which saw the
judge changed at the last minute.
On April 16 Swissport appealed the unfavorable
ruling with the Highest Economic Court, the nation’s highest court for
commercial cases. As a result, UIA won
the right to and immediately purchased Swissport’s 70 percent share in the
joint-venture for $400,000, at less than 1 percent of its true value, according
to Swissport’s estimates.
Then Ukraine International Airlines quickly
rebranded as Interavia, and Aron Mayberg, the airline’s chairman, announced on
April 18 that management had set the task of submitting a business plan and a
long-term development strategy.
Swissport called the move a “raider attack,”
while UIA asserted in earlier communication with the Kyiv Post that it was
defending its minority rights in the joint venture after Swissport voted to
dilute the airline’s shares in the company.
In turn, Swissport said that it had merely
proposed to dilute UIA’s shares because the airline refused to invest
additional money to sustain double-digit growth in Ukraine.
Following the rebranding to Interavia, UIA
increased the company’s share capital in August by $1 million, diluting
Swissport’s former share – based on the original share capital where it had 70
percent – to 0.23 percent, Mark Skinner, Swissport’s senior vice president,
told the Kyiv Post.
Skinner observed that “UIA and Mayberg initiated
the first court trial accusing us of diluting their shares, but UIA on their
part in August increased the share capital of Interavia, which makes it
difficult for us to return as the majority shareholder if we win the court
hearing.”
Skinner also alleged that since UIA’s takeover
the quality of services that Interavia delivers to airlines at Boryspil Airport
and Zhyliany Airport have declined.
“We received many calls from our (former)
customers and airlines stating that they’re not happy with the quality (of
services from Interavia), asking if we’re thinking of (re-)entering the
(Ukrainian) market,” said Skinner. “We’re afraid that without the know-how and
management, this company is turning into a mediocre handling company which is
not able to satisfy international customers anymore.
“They want to get as much money out of this business while delivering
poor quality services and then want to sell the company later at a higher
price.”
However, budget airlines Wizz Air Ukraine, whom
Interavia services at Zhyliany Airport, said that nothing has changed after the
ownership change.
“Both parties act according to the contract and
we did not experience a service deterioration,” said Akos Bus, general director
of Wizz Air Ukraine.
Air France and British Airways, whom Interavia
services in Boryspil Airport, did not respond to Kyiv Post e-mailed inquiries
and phone calls.
Government
attention
Meanwhile, Swissport says it has applied
diplomatic and political pressure in an effort to regain its Ukrainian
business, which had 800 employees, some 20 customers, and was experiencing
double-digit growth.
Earlier in summer, Swissport said that the Swiss
and French embassies – Swissport is owned by French private equity firm PAI
partners – have discussed the case with First Deputy Prime Minister Serhiy
Arbuzov.
In late May, Arbuzov became the chairman of the
re-tooled inter-governmental commission to protect investors’ rights and combat
illegal mergers and company takeovers.
“We’ve been told our case is at the top of the
list to be handled,” Skinner told the Kyiv Post on June 4.
But in its latest news release, Swissport said
the “Ukrainian government and anti-raider commission are long in coming with
their promised support for foreign investors and companies that lost their
business through hostile takeovers.”
Arbuzov’s spokesperson, Oleksandr Kutereschchyn,
told the Kyiv Post that the anti-raider commission had an internal “analytical
group” meeting in summer and has preliminarily scheduled a commission meeting
open to the public for Sept. 16 where “Swissport’s case is on the agenda for
the day.”
Kutereschchyn added that the commission has kept in touch with official Swissport representatives in Ukraine.
Swiss Ambassador Christian Schoenenberger told the Kyiv Post that,
together with the French Embassy, the Ukrainian government
has been made aware of Swissport’s issue and its possible impact on the investment
climate, and has tried with the French to bring both parties together to find an amicable solution.
Skinner also said he has approached the central
European Union government in Brussels.
Zoltan Szalai, head of the press office of the EU
delegation to Ukraine, confirmed to the Kyiv Post that “Swissport has contacted
us,” but emphasized that the EU has been working with the Ukrainian government to
address “illegal company acquisitions on a general level to improve the legal
system, not on an individual, case-by-case basis.”
Kyiv
Post editor Mark Rachkevych can be reached at [email protected].
