Avianca Holdings acknowledges possibility of US sanctions over Cuba operations

    Avianca Holdings announced (23-Oct-2019) the holding “recently became aware” that it is presently subject to US jurisdiction for purposes of certain US sanctions laws and regulations administered by the Office of Foreign Assets Control of the US Department of the Treasury (OFAC). The jurisdiction is linked to Synergy Aerospace‘s transfer of approximately 78% of Avianca Holdings’ common shares on 09-Nov-2018 from a Panama based company to a Delaware limited liability company wholly-owned by Synergy (BRW). Synergy formed BRW and effected the share transfer unilaterally in connection with BRW obtaining a loan from United Airlines. Avianca Holdings became considered a person subject to US jurisdiction by OFAC. Avianca Holdings engaged outside counsel to conduct a review aimed at identifying any potential violations of US sanctions regulations. As a result of this review, Avianca Holdings identified that the regularly scheduled commercial passenger operations between cities in Central and South America and Havana, Cuba and related Cuba operations that it has historically conducted may have constituted inadvertent violations of the US-Cuban Assets Control Regulations during the period following the share transfer. During the period beginning on the date of the share Transfer and ending on 30-Sep-2019, such operations to and from Havana comprised an “immaterial amount” of Avianca Holdings’ gross revenue. Avianca Holdings state it is committed to fully cooperating with OFAC “but it is too early to predict what action OFAC may take in this regard (including sanctions and fines) and what effect such action could have on the Company’s reputation, business, financial position or results of operations”.