Paul Singer Gives Helping South America A Try

Failing that he might just try a land invasion.
By Yussef90 at English Wikipedia (Transferred from en.wikipedia to Commons.) [Public domain], via Wikimedia Commons

(Yussef90 via Wikimedia Commons)

When Paul Singer’s representatives showed up at an Avianca Holdings board meeting this summer, its members could be forgiven for wondering if Elliott Management planned to acquire an air force to add to its navy. Perhaps after years of battling a Latin American demagogue, Singer had decided to become one. Costa Rica has no military, after all, so all it would take might be a few A320s circling San Jose while some lightly-armed junior analysts storm a beach from a handsome tall ship.

But no: Having laid down his arms against Argentina, the new kinder, gentler Singer is in no mood to start a war in Colombia. Instead, he’s playing peacemaker, trying to broker a deal between his buddy (and one-time largest Avianca shareholder) Germán Efromovich and the company’s second-biggest shareholder, Roberto Kriete. The newly-diplomatic Singer’s idea is to get a solvent airline to invest in or buy Avianca before Efromovich defaults on all of his Elliott loans.

“I don’t have to share my relationship with Elliott, not only with Elliott but with a lot of funds. And this is my business,” said Mr. Efromovich, acknowledging a relationship with Elliott. “It’s my problem….”

Elliott has long specialized in taking positions in complicated loan arrangements, most notably its investment in defaulted Argentine debt, and over the years Elliott has helped to bankroll the expansion of Mr. Efromovich’s Synergy Group. Most recently, Elliott helped to finance Mr. Efromovich’s foray into Brazilian shipyards through a series of loans that were secured to other assets in the empire, including Avianca.

As Avianca Weighs Bid, Hedge Fund Plays Unusual Role: Diplomat [DealBook]