Global air cargo handler Swissport International won a second successive court case on April 22 to restore majority ownership in a local joint venture that it lost to Ukraine International Airlines (UIA), its former partner in the company.
A commercial court in Kyiv invalidated the
transfer of Swissport’s 70 percent stake in the local joint-venture, valued by
the Zurich-based company at $25 million, to UIA, as well as its subsequent name
change from Swissport Ukraine to Interavia.
“The (court) system (seems) less corrupt,”
Swissport International Senior Vice President Mark Skinner told the Kyiv Post.
He added that Swissport is willing to settle out of court with UAI, owned by
billionaire and current Dnipropetrovsk Oblast governor Igor Kolomoisky,
according to Skinner, to regain ownership of the local airport
ground services provider and cargo handler.
The Swissport executive said he has offered
to give UIA a stake of 50 percent minus one share. But, Swissport’s in-house
lawyer, Caroline Bueth,
told the Kyiv Post she expects UIA to appeal the ruling.
In an emailed response to the Kyiv Post, UIA
wouldn’t say what course of action will be taken because it has not seen the full
April 22 court decision. The nation’s largest airlines also wouldn’t comment on
whether it will accept an out-of-court settlement.
A parallel court case in their corporate
dispute is scheduled for May 14. It centers on whether Swissport International had
violated the “participation agreement” in the Swissport Ukraine joint venture.
Based initially on a March 27, 2013 Kyiv
court ruling, the Swiss-based company lost its majority stake in Swissport
Ukraine to UIA for $400,000, or less than one percent of its value, according
to an assessment by BDO Valuation LLC. Swissport at the time accused the UIA’s
chairman Aron Mayberg of orchestrating a “hostile raider attack.”
In turn, UIA categorically denied the
allegations.
Earlier statements that UIA gave
to the media said that Swissport had set the low share price in the first
place. The nation’s largest air carrier has maintained that initially it
started litigation to protect its minority rights in the joint venture, which
it claimed were in breach. Particularly, UIA stated that Swissport had
threatened to dilute its 30 percent stake in their joint venture.
Swissport countered that it had
merely proposed that UIA gets a reduction in shares in place of the money the
Swiss-based company would invest on its behalf in order to sustain double-digit
growth in Ukraine. Swissport added that UIA refused to cover its share of the
proposed investment.
After taking full control, UIA
re-branded the local company as Interavia and pumped nearly $1 million into its
share capital to meet growing demand for services at Ukrainian airports, it
explained in a news release, adding that Swissport had neglected to do
so.
Skinner of Swissport called UIA’s
explanations “inconsistent.”
“First they say they are
protecting their minority rights, later they say we didn’t want to invest to
expand the company,” said Skinner.
After further legal setbacks,
Swissport went on the offensive to involve the Swiss and French embassies – it
is owned by a French private equity firm – and has written letters to European
Union officials and agencies, including European Commission President Jose
Manuel Barroso.
UIA denounced Swissport’s
out-of-courtroom actions calling it “inadmissible” that it involved
the “political resources of the European Union to resolve a commercial
dispute and to leveling the bias of the court of cassation…”
The case had even caught the
attention of the nation’s inter-agency commission on illegal company takeovers
that was chaired by ex-First Deputy Prime Minister SerhiyArbuzov. During a
public meeting the commission held on Sept. 16, Arbuzov first mentioned
Swissport’s case among a list of disputes that were being examined. The
commission added that it has received nearly 70 cases of raider attacks worth
up to $125 million in losses to victims.
But then on Oct. 2, the Highest
Commercial Court of Ukraine nullified a lower court’s ruling that awarded
Swissport’s 70 percent stake in the local joint-venture to UIA. A panel of
three judges sent the case to a lower court to hear the ongoing corporate
dispute.
Swissport Ukraine was established
in 2007 when the Swiss-based company bought a 51 percent stake in Interavia Ltd
from UIA. Over time Swissport increased its share to 70.6 percent and rebranded
the cargo handler. It maintained the relationship was amicable until Mayberg
acquired a 100 percent shareholding in UIA when it was privatized in 2011.
Exiting UIA’s shareholder structure were Austrian Airlines with more than 22
percent, the European Bank for Reconstruction and Development with 10 percent,
and the government with a 61.5 percent stake, which was valued as much as $150
million, for just $31 million, reported The Loadstar, a website devoted to
logistics and supply chain analysis.
When UIA took over Swissport
Ukraine last year, the Swiss-based company said that it had 800 employees, and
some 20 customers. Internationally, it reported achieving $2.39 billion in
revenues last year, an 11 percent increase over the previous year.
Kyiv Post editor Mark Rachkevych can be reached at [email protected].
