Shareholder Profile: Efromovich brothers double down on as shipyards struggle , OceanAir Linhas Aéreas, 19 June 2018

CONTENTS PAGE SHAREHOLDER-RELATED RISK Timeline 3 (see Risk Factors for details) Family Members 4 Germán (b. 1950) and José Efromovich Shareholdings 5 Succession Risk (b.1954) control the family’s business but Transfer of Affiliations 7 Moderate wealth and do not hold executive roles. Their chil- Risk Factors 8 control dren are not involved in the business, and Debtwire Coverage 11 neither brother has a clear successor. The outcome of ’s 17 June pres- Germán and José Efromovich control Colombia-based Avianca Hold-  idential election was favorable for Avian- ings. José controls OceanAir Linhas Aéreas (). ca. The sister of president-elect Iván Du-  Other business, mostly held via Synergy Group Corp and Fundación que is a senior VP at Avianca Holdings. HJDK, includes shipyards, aircraft leasing and maintenance, trans- Political Risk Duque’s left-wing opponent, Gustavo portation, oil & gas production, hotels, palm oil and pharmaceuticals. Political Petro, had criticized Efromovich’s treat- exposure and Moderate ment of striking pilots and threatened to  Synergy borrowed heavily to invest in ’s shipyard industry, government punish Avianca. In Brazil, the family ob- which has largely collapsed. Its Avianca stake is pledged as collateral relations tained public contracts and government for loans to its private companies. financing under Workers’ Party (PT) ad- ministrations, whose relationships with  Shipyard EISA filed for bankruptcy in 2015. Its main creditor, Elliott business have been the target of corrup- Management, has long backed Efromovich companies. tion investigations.

INTRODUCTION Efromovich companies have a history of Germán Efromovich and his younger brother José control and legal conflict, including litigation with New York-listed Avianca Holdings, ’s second-largest over oil-platform contracts. company. The acquisition of Avianca out of bankruptcy in 2004 Efromovich and his companies have been was the culmination of a series of improbable deals – many involving Legal & accused of bribery, but not charged. Avi- Regulatory Risk anca is not currently involved in major contracts with Brazilian state-owned oil company Petrobras – led by High the Bolivia-born, Brazil-based son of refugees who fled during Lawsuits and litigation, but a 2017 lawsuit by minority World War II. Through Synergy Group Corp and other holding regulation shareholder Kingsland, while withdrawn, companies, the brothers also control shipyards and an oil producer in made damaging allegations against Brazil, a hotel chain and palm-oil plantation in Colombia, ’s Efromovich. Shipyard EISA, under bank- Avian Líneas Aéreas, and companies involved in aircraft leasing and ruptcy protection since 2015, is also in- ground transportation. José Efromovich owns Brazil’s fourth-largest volved in litigation. airline, OceanAir Linhas Aéreas SA (Avianca Brasil), which is slated for eventual acquisition by Avianca Holdings. Avianca Holdings is listed, but little pub- Transparency lic data is available on -based After early ventures that included quail eggs and an adult-education Risk Synergy Group Corp, the family’s main school reportedly attended by future president Luiz Inácio Lula da Structures of High Silva, Efromovich achieved modest success in Brazil’s oilfield-services ownership and . Some companies are industry by the 1990s. In the second half of the decade, Efromovich’s control held via Panama-based Fundación HJDK, Marítima Petróleo e Engenharia won USD 2bn in oil-rig building which likewise provides little disclosure. contracts, prompting speculation about the little-known bidder’s connections and financial backing. More investments followed: the A 2017 lawsuit by Avianca minority acquisition of shipyard Estaleiro Mauá in 1999, a Colombian oil JV shareholder Kingsland accused the with Elliott Management in 2000, the formation of Petrosynergy in Governance Efromovich family of corporate- Risk governance violations including related- 2001 to operate onshore oil concessions, the launch of commercial High flights by OceanAir in 2002 and the acquisition of shipyard Estaleiro Corporate party transactions and other conflicts of Ilha (EISA) in 2003. Marítima, EISA and Mauá contracts have been governance interest. The lawsuit was dropped, but subject to corruption allegations and investigations, but the Avianca’s financials reveal many transac- companies and their owners have not been charged with wrongdoing. tions with private Efromovich companies. Efromovich’s dealmaking skills have not been matched by success in execution. Marítima’s rigs were plagued by delays and defects, a major The family has diversified into varied accident and a high-profile dispute with Petrobras, which won Expansion Risk sectors, and pledged Avianca shares as judgments against Marítima in Brazil and UK courts. EISA filed for Growth and High collateral. It borrowed extensively to bankruptcy in 2015 – its secured debt consists of USD 294m owed to diversification expand its shipyard business. Synergy has an Elliott subsidiary – while the Mauá and Brasa shipyards have invested heavily in aircraft purchases. ceased production. OceanAir has never reported a profit; losses totalled BRL 237m in 2012-2016, with an additional BRL40m in losses EISA filed forjudicial recovery in 2015. through 9M17. Petrosynergy’s website has not been updated in Credit History Nearly all of Synergy’s Avianca shares Risk are pledged as collateral for loans on Shareholder High which, according to Kingsland’s lawsuit, Ilya Garger, Head of Due Diligence history and Synergy has defaulted. OceanAir and +1 212 686 5277, [email protected] reputation Synergy have repeatedly restructured Luciana Leite, Shareholder Research, Latin America their debt to Avianca. +1 212 390 7809, [email protected] Ben Miller, Managing Editor, Latin America Ratings indicate the probability of business disruption or investment loss. High: +1 212 686 5354, [email protected] over 50% or already occurring; Low: not of concern in the foreseeable future Page 1

Shareholder Profile: Efromovich brothers double down on Avianca as shipyards struggle Avianca Holdings, OceanAir Linhas Aéreas, Synergy Group 19 June 2018

several years, but the latest data showed production of roughly 600 FIGURE 1 : Avianca Holdings dividends (USD m) barrels per day. A 2009 JV with Israeli Aerospace appears to have vanished. Another unrealized venture was Efromovich/Silva Capital Partners, a now-defunct private-equity firm founded in 2012 by 300 Germán Efromovich and former Colombian defense minister Gabriel 249 250 Silva. Aside from the , Synergy’s normally-operating companies Dividends Total Dividends are minor: small-plane distributor Synerjet, pharmaceutical maker R2 200 to Synergy Profit and car service Empresariales, which provides ground-transport to 150 128 Avianca. Transportadora del Meta, a provider of cargo services to 100 82 Avianca, filed for reorganization in Colombia in 2017. 67 44 24 37 39 35 26 50 20 6 13 SYNERGIES OR CONFLICTS OF INTEREST? 0 0 Avianca is Efromovich’s most successful business, and he has continued 2013 2014 2015 2016 2017 gambling on its growth by aggressively expanding OceanAir, acquiring (50) airlines across Latin America and placing large aircraft orders through (100) Synergy Aerospace. Avianca Holdings has generated profits every year since at least 2010 with the exception of 2015, and paid roughly USD (150) (140) 120m in dividends to Synergy over the past five years (Figure 1). (200) Avianca Holdings reported 2017 revenue of USD 4.4bn and adjusted EBITDAR of USD 886m. However, leverage has remained high. Net adjusted debt to EBITDAR was 5.7x in 1Q18, little changed from recent Source: Company filings quarters. A majority of Avianca’s USD 4bn in long-term debt debt consists of aircraft leases, with roughly USD 1bn more in off-balance sheet operating leases. Its USD 550m 8.375% senior unsecured notes FIGURE 2: Avianca transactions with Efromovich companies (USD m) due 2020, rated B– by S&P and Fitch, last traded at 101. The airline has been seeking a strategic partner, but negotiations 60 between Efromovich and United prompted a lawsuit in 2017 by 57 Revenue from minority shareholder Kingsland Holdings, which claimed that a planned Payments to Efromovich United deal was a bailout for Synergy at Avianca’s expense. Kingsland, 50 Efromovich companies controlled by ’s Roberto Kriete, acquired its stake when its companies TACA airline merged with Avianca in 2010. According to the lawsuit – 40 35 withdrawn later in 2017 along with a countersuit by Avianca – nearly all 31 34 of Synergy’s Avianca shares are pledged to Elliott and others as 30 30 28 26 collateral for allegedly defaulted loans to Efromovich private 23 23 companies, including shipyards. The lawsuit claimed that of a planned USD 800m investment by United, half would go to pay Synergy debt, 20 and USD 130m to Oceanair. Kingsland also said that Elliott had been 12 active in Avianca’s search for a strategic partner, and attended board 10 meetings. The United deal never materialized, but José Efromovich told Bloomberg last month that a new, cashless JV with the airline was likely. 0 Kingland’s lawsuit accused Efromovich of non-arm’s length related- 2013 2014 2015 2016 2017 party transactions with Avianca, and alleged that he caused Avianca to acquire unneeded planes to settle Synergy’s obligations to . While Kingsland’s claims were never proven, Avianca’s financials show Source: Company filings many transactions with Efromovich companies (Figure 2). Synergy provides no disclosure, but available information is consistent with Kingsland’s portrayal of an overextended, distressed . FIGURE 3: Avianca Holdings shareholders Synergy’s website (synergygroupcorp.com) is down, emails were not returned, and a Synergy official hung up when asked for comment. Germán Efromovich also owns companies outside of Synergy. His Panama-registered Fundación HJDK controls Colombia-based Movich Hotels via Global Operadora Hotelera SAS (COP 84.7bn revenue and COP 649m profit in 2017). HJDK also controls palm-oil company Free Float Hacienda La Gloria (COP 36.1bn revenue and COP 10.8bn loss in 2017). Synergy 33.7% In a best-case scenario for the Efromovich brothers, Avianca could Aerospace provide Synergy with the resources to recover from its shipyard Corp 51.7% misadventures. However, they depend heavily on their hedge-fund creditors’ support, the withdrawal of which could cost them control of (78.1% Avianca – a development that many would welcome. voting Kingsland rights) RECENT SHAREHOLDER RESEARCH Holdings Ltd Dyer family’s orchards bear fruit, but bond deals die on the vine (21 May 2018) 14.6% (21.9% Gilinski family (Banco GNB Sudameris, Gilex Holding) (10 May 2018) voting rights) Kalach family (Grupo Kaltex SA de CV) (18 Apr 2018) Vilela de Queiroz family (Minerva SA) (5 Apr 2018) Batista family fights to stay atop JBS as scandals deepen (28 Mar 2018) Source: Company filings

Page 2 Shareholder Profile: Efromovich brothers double down on Avianca as shipyards struggle Avianca Holdings, OceanAir Linhas Aéreas, Synergy Group 19 June 2018

and a 13.7% stake in Petro Rubiales, which later merges with Pacific TIMELINE Stratus Energy Ltd to form Pacific Rubiales Energy Corp. Brazilian federal prosecutors accuse Mauá Jurong of fraud in its bid for the P-16 1940s-60s The Efromovich family immigrates from Poland to La Paz, Petrobras oil platform. Synergy Business Management Corp establishes Bolivia, where brothers Germán and José are born. After moving to pharmaceutical company R2 Soluções em Radiofarmácia Ltda. Synergy in 1956, the Efromovich family settles in São Paulo in 1964, where Group acquires Elliott Management’s stake in Transmeta. Germán and José’s father runs a textile company. 2008 Avianca acquires Colombian Tampa Cargo SA from 1970s Germán establishes an adult-education school in São Bernardo Holland NV. EISA establishes EISA Petro Um SA after do Campo, outside São Paulo. One of his students is reportedly future receiving four ship orders from Petrobras Transporte SA (Transpetro). president Luiz Inácio Lula da Silva. Germán sells the business in 1975. BNDES provides a total of BRL 283m in loans for the project. Another early venture is a quail-egg export company. 2009 Synergy Resources Corp acquires oil-and-gas producer 1975 Germán establishes industrial-equipment distributor Korko (now Petrocolombia SAS. Germán Efromovich enters the hospitality medical-products distributor REM Indústria e Comércio Ltda). industry, acquiring Hotel Cartagena de Indias. In a JV with state-owned Israel Aerospace Industries Ltd (IAI), Synergy Group forms defense and 1977 Germán establishes Brasitest Ltda, which performs inspections on aerospace products manufacturer EAE Soluções Aeroespaciais Ltda. oil and gas equipment. 2010 Avianca merges with El Salvador’s Grupo TACA Holdings Ltd, 1995 Germán and José’s Marítima Petróleo e Engenharia Ltda, an owned by the Kriete family. Synergy Group holds a 67% stake in oilfield-services company, wins contracts to build six floating platforms AviancaTaca Holding SA, while the Kriete family’s Kingsland Holdings for Petrobras. They are the first in a USD 2bn series of contracts won by Ltd owns 33%. AviancaTaca Holdings acquires ’s Aerolíneas Marítima through the late 1990s. Galapagos SA (now SA). OceanAir Linhas Aéreas begins to operate as Avianca Brazil, but continues to be owned 1997 Despite delays in completing the original contracts, Marítima wins separately from Avianca. Germán acquires Grupo Agroindustrial concessions to build five additional floating platforms for Petrobras. Hacienda La Gloria, which owns palm oil plantations in Colombia. The brothers enter the aviation industry with the founding of charter company Senior Taxi Aéreo Executivo Ltda. 2011 AviancaTaca Holdings lists in Bogotá, raising COP 500bn. Germán Efromovich brands his hotels as Movich Hotels & Resorts. 1998 The brothers establish OceanAir Linhas Aéreas SA as an airplane- charter company. 2012 With former Colombian defense minister Gabriel Silva Luján, Germán forms PE firm Efromovich/Silva Capital Partners. Synergy’s 1999 Marítima acquires shipyard Estaleiro Mauá SA from Omar Naval Ventures Corp and SBM Offshore NV found Estaleiro Brasa Ltda, Resende Peres Filho for USD 1, assuming USD 700m in debt. a shipyard JV focused on floating production storage and offloading vessels (FPSOs) for Petrobras. 2000 In their first Colombian deal, the Efromovich brothers partner with Elliott Management to acquire rights to a portion of the Rubiales 2013 AviancaTaca Holding is renamed Avianca Holdings SA, which oil field via Meta Petroleum Ltd. They also establish oil-transport issues USD 300m 8.375% senior unsecured notes due 2020 and lists subsidiary Transportadora del Meta SAS (Transmeta). ADRs on the New York Stock Exchange. EISA Petro Um SA obtains eight more orders from Transpetro, with 46% of the total financed by 2001 The Efromovich brothers establish Petrosynergy Ltda, which bids Caixa Econômica Federal. for Petrobras’ mature oil field concessions and obtains nine contracts in Alagoas state. In a JV with Singapore’s Jurong Shipyard SCM (part of 2014 Avianca Holdings reopens its 2020 notes, issuing an additional SembCorp Marine Ltd), Estaleiro Mauá establishes Mauá Jurong SA. USD 250m. It raises USD 153m through a private placement arranged by Burnham Sterling Securities LLC, with the proceeds used to acquire 2002 OceanAir begins operating commercial flights in Brazil. The three new aircraft. Eight of EISA’s contracts (from Swire Pacific Efromovich brothers establish airplane-maintenance company Navegação Offshore Ltda and Brasil Supply SA) are cancelled. Turbserv Engenharia de Manutenção Ltda. 2015 Transpetro rescinds three contracts with EISA Petro Um. EISA 2003 Marítima acquires a controlling stake in shipyard Estaleiro Ilha SA and EISA Petro Um file for judicial recovery in , citing the (EISA) from Jurong Shipyard for BRL 20m and the assumption of BRL cancelled orders and lack of payments from PDVSA. Avianca Holdings 30m in debt. The Efromovich brothers establish holding company sells a 30% stake in LifeMiles Ltd, its frequent flyer program subsidiary, Synergy Group Corp and airplane-charter company OceanAir Taxi to Advent International for USD 344m. Synergy loses the privatization Aéreo Ltda. Synergy Group acquires airline VIP Ecuador SA. auction of TAP Air SA to a consortium led by JetBlue founder , who also controls Azul Linhas Aéreas Brasileiras SA. 2004 Synergy Group acquires control of Colombia’s Aerovías del Continente Americano SA (Avianca) out of bankruptcy for USD 63m 2016 Synergy Group acquires Argentine airline MacAir Jet SA (renamed and assumes USD 220m in debt. The 75% acquired by Synergy was Avian Líneas Aéreas SA) for USD 10m from Sideco Americana SA, previously held by Grupo Santo Domingo and the National Federation controlled by the family of Argentine president Mauricio Macri. of Coffee Growers of Colombia. OceanAir unsuccessfully attempts to Germán Efromovich is accused by former Transpetro CEO Sérgio acquire the cargo business of SA Linhas Aéreas. With ’s Machado of paying bribes to win shipyard contracts. Synergy Group Fondo de Inversiones Sustentables, owned by Pedro Koechlin, announces plans to acquire 49% of Mexico’s Transportes SA OceanAir establishes airline Wayra Peru. de CV, owned by the Katz family. OceanAir Linhas Aéreas and sign a code-share agreement. 2005 Synergy Group acquires the remaining 25% stake of Avianca from the National Federation of Coffee Growers of Colombia. 2017 In February, Kingsland sues Avianca, Synergy, the Efromovich brothers and United to block a proposed strategic partnership. Avianca 2006 EISA receives 10 tanker orders from PDV Marina SA , a subsidiary countersues Kingsland and Kriete, but both lawsuits are dropped in of Venezuela’s PDVSA. November. Synergy Group sells Petrocolombia to Hades E&P Holding SA. Transmeta files for reorganization in Colombia. 2007 Toronto-listed AGX Resources Corp (renamed Petro Rubiales Energy Corp) acquires a 75% stake in Rubiales Holdings Ltd, the holding Sources: Company filings and websites, press reports. company for Meta Petroleum (50% from Elliott and 25% from Synergy). Later in the year, Synergy sells its remaining 25% stake for USD 10m Page 3 Shareholder Profile: Efromovich brothers double down on Avianca as shipyards struggle Avianca Holdings, OceanAir Linhas Aéreas, Synergy Group 19 June 2018

FAMILY MEMBERS

Germán Efromovich José Efromovich b. 1950 b. 1954 Wife: Hilda Efromovich

Controlling shareholder and director of Controlling shareholder of Avianca Avianca since 2004, and chairman since since 2004 and director since 2005; 2013; founder and controlling owner, director and former CEO of shareholder of Synergy Group Corp and OceanAirLinhas Aéreas SA; founder and Fundación HJDK; based in São Paulo; controlling shareholder of Synergy citizen of Brazil, Colombia and Poland; Group Corp; based in São Paulo; citizen daughters Jenifer, Danielle, Karen do of Brazil and Colombia; son does not not appear to be involved in the family appear to be involved in the family business except via holding company business Fundación HJDK

Note: This chart is based on public information and is not intended to be comprehensive. It includes only individuals relevant to the family business. Page 4 Shareholder Profile: Efromovich brothers double down on Avianca as shipyards struggle Avianca Holdings, OceanAir Linhas Aéreas, Synergy Group 19 June 2018

SHAREHOLDINGS: AIRLINES

20-F 2017 Current or past related-party Synergy Group Corp (Panama) transactions with Avianca Holdings Directors: Germán & José Efromovich

Indirectly controlled by Germán and José Efromovich

20-F 2017

Synergy Aerospace Corp (Panama)

Synergy Group Corp 100%

Mkt Cap: USD 902m 20-F 2017 Avianca Holdings SA (Panama) [BVC: PFAVH; NYSE: AVH] Chairman: Germán Efromovich Directors: José Efromovich & 8 others

Synergy Aerospace Corp 51.5% (78.1% voting rights) Kingsland Holdings Ltd 14.5% (21.9% voting rights) Free Float 33.6%

USD 550m 8.375% senior unsecured notes due 2020

Frequent Flyer Program Aircraft & Equipment Leasing Avianca Brasil and Other 20-F 2017 20-F 2017 20-F 2017 20-F 2017 & 2013 CNPJ, Sao Paulo court Latin Airways Corp Grupo Taca Holdings Ltd Avianca Leasing LLC SPSYN Participações Ltda LifeMiles Ltd (Bermuda) (Panama) (Bahamas) (Delaware) JoséEfromovich 99.53% Avianca Holdings SA 70% Aerovías Beta Corp Avianca Holdings SA 100% Avianca Holdings SA 100% Avianca Holdings SA 100% Advent International Corp 30%

20-F 2017 20-F 2017 20-F 2017 & 2013 Sao Paulo court Ground Handling Services Aviation Leasing Services AVB Holding SA Aerovias del Continente Taca SA (Panama) 20-F 2017 Investments SA (Panama) Americano SA [Avianca] Servicios Aeroportuarios (Colombia) SPSYN Participações Ltda 80% Grupo Taca Holdings Ltd 100% Integrales SAI SAS Avianca Holdings SA 100% (Colombia) OceanAir 3Q17 Latin Airways Corp 94.96% 20-F 2017 & 2013 Avianca Holdings SA 5.02% OceanAir Linhas Aéreas SA 20-F 2017 Avianca Holdings SA 90% Turboprop Leasing [Avianca Brasil] Cargo Services Company Ltd (Bahamas) SA AVB Holding SA 100% 20-F 2017 & 2013 Call Center 2017 20-F Avianca Holdings SA 68% Panama corp reg Tampa Cargo SAS Taca SA 92.40% Getcom International Aerovías Beta Corp (Colombia) 20-F 2017 20-F 2017 & 2013 Investments SL (Spain) Aerovias del Continente Americano Taca International Southern Equipment Germán and José Efromovich SA 71.66% Airlines SA (El Salvador) Avianca Holdings SA 50% Corp Ltd (Bahamas) Avianca Holdings SA 28.32% (indirect stake) Taca SA 96.84% 2017 20-F Avianca Holdings SA 100% CNPJ 2017 20-F 20-F 2017 Digex Aircraft 20-F 2017 & 2013 Tampa Cargo Logistics Inc Trans SA Getcom Colombia SAS 100% Maintenance Ltda Getcom Servicios SAS (Colombia) Intercontinental Equipment (Florida) (Peru) 100% SPSYN Participações Ltda Getcom International SA de CV Corp Ltd (Bahamas) Taca SA 100% Aerovías Beta Corp Avianca Holdings SA 99.98% (El Salvador) 100% 20-F 2017 Getcom SA de CV (El Salvador) 100% Avianca Holdings SA 100% CNPJ Avianca Ecuador SA Turbserv Engenharia de Financing (formerly Aerolíneas 20-F 2017 & 2013 Other Sales, Logistics, Maintenance Manutenção Ltda Galapagos SA) 20-F 2017 & 2013 20-F 2017 & 2013 SPSYN Participações Ltda Ronair NV (Curacao) Aerovías Beta Corp Avianca Holdings SA 99.62% Subsidiaries of Avianca Holdings SA Avianca Inc (Florida) Vu-Marsat SA (Costa Rica) 100% Little Plane Ltd (Bahamas) Avianca Holdings SA 100% Oil Industry Testing Little Plane Six Ltd (Bahamas) Other Central American Airlines Technical and Training Services SA Avianca Holdings SA 100% CNPJ 20-F 2017 20-F 2017 & 2013 de CV (El Salvador) 99% Brasitest Ltda Turbo Aviation Three SA Aerotaxis La CosteñaSA () (Panama) 68.08% JoséEfromovich Isleñade Inversiones SA de CV SPSYN Participações Ltda (Honduras) 100% Jorge Alberto Vianna Avianca Holdings SA Servicios Aéreos Nacionales SA (Costa Rica) 100% 20-F 2017 & 2013 Nicaraguense de Aviacion SA (Nicaragua) 99.61% 20-F 2017 Aerospace Investments Ltd Aviateca SA () (Bahamas) Avian Líneas Áereas SA (formerly Macair Jet SA) Avianca Holdings SA 100%

Synergy Aerospace Corp (indirect controling stake)

Note: This chart is based on public information. It contains key companies but is not intended to be comprehensive. USD bonds and market capitalization are included where relevant. Family shareholdings are italicized. Companies are domiciled in Brazil unless otherwise noted.

Page 5 Shareholder Profile: Efromovich brothers double down on Avianca as shipyards struggle Avianca Holdings, OceanAir Linhas Aéreas, Synergy Group 19 June 2018

SHAREHOLDINGS: SHIPYARDS AND OTHER Avianca 20-F 2017 Panama corp reg Panama corp reg Current or past related-party JDK Holdings Corp (Panama) transactions with Avianca Holdings Synergy Group Corp (Panama) Fundación HJDK (Panama) Directors: Jenifer Efromovich Directors: Germán & José Efromovich Klepacz, Danielle Efromovich Mayo, Karen Efromovich Mroz JDK Holdings Corp 100% Controlled by Germán and José Efromovich Controlled by Germán Efromovich

Shipyards Oil & Gas Movich Hotels Palm Oil ICIJ Panama corp reg Panama corp reg Teka website, 20-F 2017 Panama corp reg, RSPO 2015 Petrogas Services Group Grupo Agroindustrial Synergy Shipyard Inc Synergy Business Global Operadora Corp (Panama) (Synergy Hacienda La Gloria SA (Panama) Management Corp Hotelera SAS (Colombia) Resources Corp until Feb. 2018) (Panama) (Panama) Synergy Group Corp Hamilton Trustees Ltd (Guernsey) Synergy Group Corp Controlled by a foundation created Fundación HJDK (controlling stake) Hamilton Nominees Ltd (Guernsey) Synergy Group Corp by Germán Efromovich Teka Capital Inc 47% Col corp reg Restruct plan 2018, press reports Panama corp reg Pharmaceuticals Grupo Agroindustrial CNPJ Estaleiro Ilha SA [EISA] Petrosynergy SA 20-F 2017, 2013 OM Hacienda La Gloria SA (in judicial recovery since 2015) (Uruguay) R2 Soluções em Sucursal Colombia Radiofarmácia Ltda Movich Hotels include: Synergy Shipyard Inc Hotel Pereira SA (Colombia) Grupo Agroindustrial Hacienda La Synergy Resources Corp 100% Cartagena de Indias Small Luxury Gloria SA Restruct Plan Synergy Business Management Corp JM Participações e Administração Hotel SAS (Colombia) EISA Petro Um SA Ltda (José Antonio and Hieldis Promotora de Hoteles Medellín SA CNPJ Coffee (in judicial recovery since 2015) Fernandes Martins) (Colombia) Colombia corp reg, 2013 OM Petrosynergy Ltda Estaleiro Ilha SA 100% Colombian Mountain Transportation Holding Companies CNPJ 20-F 2017 Panama corp reg, CNPJ Coffee CI SAS (Colombia) Director: Germán Efromovich Synergy Resources Corp Transportadora del Meta EISA Montagens Ltda Petrosynergy SA Controlled by Germán Efromovich SAS (Colombia) HJDK Aerospacial Inc (Panama) Former related party of (filed for reorganization in 2017) Translog SA (Panama) Avianca Holding Estaleiro Ilha SA Aircraft Sales Capital Logistics Holding Corp Synergy Shipyard Inc Synergy Group Corp (Panama) Panama corp reg Pineapples Press reports 20-F 2017 Controlled by HJDK Aerospacial and Colombia corp reg, 2013 OM Synerjet Corp (Panama) Empresariales SAS Translog SA King Pineapple CI SAS Estaleiro Mauá SA Segurasa Participações Ltda (Colombia) Newco Participações Ltda (Colombia) Synergy Group Corp Synergy Shipyard Inc Former related party of Synergy Group Corp Avianca Holding; RS Corp is listed as Portal Naval CNPJ Student Residences legal representative as of 2018 Esstudia website Mauá Jurong SA Synerjet Brasil Ltda Back-Office Services Colombia corp reg, 2013 OM RS Corp website Esstudia SAS (Colombia) Savannah Crops SAS Estaleiro Mauá SA 100% Synerjet Corp Recursos y Soluciones (Colombia) José Efromovich Corporativas SAS (Colombia) Press reports Germán Efromovich Former related party of [RS Corp] Gabriel Silva Avianca Holding Helicopter Charters Estaleiro Nordeste SA Affiliated with Synergy Group Corp Colombia corp reg, 2013 OM Agricultural Land Synergy Shipyard Inc Helicópteros Nacionales de Medical Sales & Distribution Panama corp reg SBM 2017 Colombia SA [] 2014 FS REM Indústria Tucurinca SA (Panama) SNV Offshore Ltd (Bermuda) Controlled by Synergy Group Corp; RS Corp is listed as legal e Comércio Ltda representative as of 2018 Germán Efromovich is listed as Naval Ventures Corp 50% (Synergy José Efromovich 80% president and director as of 2018 Group Corp) Marina Foracchi Abud 15% Holding Companies Col corp reg SBM Offshore NV 50% Yara Gonçalves 5% (Defense & Chemicals) Tucurinca SA CNPJ Offshore Rig Builder Sucursal Colombia SBM 2017 ALQ Participações Ltda (formerly CNPJ, Panama corp reg Pelican Assets Sàrl Etrum Participações Ltda, Synergy Tucurinca SA; RS Corp is listed as (Luxembourg) Defesa e Segurança Ltda and EAE Maritima Petróleo e legal representative as of 2018 Soluções Aeroespaciais Ltda) QTS Participações Ltda Engenharia Ltda SNV Offshore Ltd 50% AEQ Aliança Eletroquímica Ltda SBM Offshore NV 50% (formerly AEQ Aeroespacial, Quimica Germán & José Efromovich (via Una e Defesa) Ventures Corp (Panama)) SBM 2017 Lomus Investments Inc (Panama) Brasil Superlift Servicos de Içamento Ltda

SNV Offshore Ltd 50% SBM Offshore NV 50%

SBM 2017

Estaleiro Brasa Ltda CNPJ

SNV Offshore Ltd 50% SBM Offshore NV 50%

Note: This chart is based on public information. It contains key companies but is not intended to be comprehensive. USD bonds and market capitalization are included where relevant. Family shareholdings are italicized. Companies are domiciled in Brazil unless otherwise noted.

Page 6 Shareholder Profile: Efromovich brothers double down on Avianca as shipyards struggle Avianca Holdings, OceanAir Linhas Aéreas, Synergy Group 19 June 2018

AFFILIATIONS Relationships with individuals, companies and institutions

Former Brazilian president Luiz Inácio Lula da Silva (2003-2010) was a student at an adult-education school run by Germán Efromovich in the 1970s, according to press reports. While their relationship is unclear, Synergy received numerous shipyard con- tracts under Lula and his hand-picked successor Dilma Rousseff (2011-2016). Government-owned banks BNDES and Caixa Brazil political Econômica Federal provided financing for some of these contracts. affiliations José Carlos Bumlai is a Brazilian executive and friend of Lula. In 2015, federal police found documents in Bumlai’s apartment sug- gesting he used his influence to help Efromovich’s Marítima Petróleo e Engenharia win Petrobras contracts, according to Istoé. He was sentenced to nearly 10 years in prison for fraud and corruption in 2016, in connection with the Lava Jato investigation.

Paul Singer’s Elliott Management Corp is a major lender to Synergy Group, most of whose shares in Avianca are pledged as collat- eral for loans. Elliott has been involved with Efromovich companies since at least 2000, when they formed a Colombian oil JV. El- liott also partnered with Efromovich in power-barge JV Proteus Power. Kingsland Holdings stated in its 2017 lawsuit that 97% of Synergy’s Avianca Holdings shares were collateral for defaulted loans from Elliott and others, that Elliott representatives attended Avianca board meetings, and that the fund was “an advisor to Synergy and the Efromoviches throughout the Strategic Process” of Elliott finding a partner or buyer for Avianca. The New York Times reported in December 2016 that the loans backed by Avianca shares Management were to Synergy’s shipyards. Germán Efromovich told Valor Econômico that the loans secured by Avianca shares were used to Corp finance airplane purchases, and that while his shipyards also received loans from Elliott, these were backed by shipyard assets and personal guarantees. Avianca Holdings disclosed in 2013 that Synergy Shipyard had debt to Citibank NA secured by Avianca shares. According to the March 2016 restructuring plan of Estaleiro Ilha SA (EISA), the shipbuilder’s only secured debt at end- 2015 was USD 294m owed to Elliott subsidiary Manchester Securities Corp. In March 2017, La República reported that Synergy Group’s total debt to Elliott was over USD 500m.

Israel Aerospace In 2009, state-owned Israel Aerospace Industries Ltd (IAI) and Synergy Group formed Brazil-based JV EAE Soluções Aeroespaciais Industries Ltda, a defense and aerospace equipment manufacturer, according to an IAI announcement. EAE does not appear to be active.

El Salvador’ Kriete family, led by Roberto Kriete, has held a minority stake in Avianca Holdings through Kingsland Holdings since 2010, when Avianca merged with Kriete’s Grupo TACA Holdings Ltd. Kriete is on the board of Carlos Slim’s Teléfonos de Mexico Roberto Kriete SAB, as well as Fundación Carlos Slim Helú and other entities related to the Mexican billionaire. The family also owns hotels in (Kingsland Central America which have transactions with Avianca. Kingsland currently has a 14.5% stake in Avianca Holdings. Kingsland’s Holdings) joint-action agreement (shareholders’ agreement) with Synergy allows it to appoint two board members. Alleged violations of the agreement were the basis of lawsuits between Kingsland and Avianca in 2017 (see Risk Factors).

The family of Mauricio Macri, the president of Argentina since 2015, sold MacAir Jet SA (now Avian Líneas Aéreas) to Synergy Mauricio Macri Group in March 2016 for USD 10m, according to La Nación. The Macri family, Germán Efromovich and the CEO of Avian Líneas Aéreas have been under investigation in Argentina since 2017 over the allocation of airline routes (see Risk Factors).

Petrobras granted Efromovich’s Marítima Petróleo e Engenharia contracts to build floating platforms in the 1990s, despite Ma- rítima’s lack of experience. Marítima and its subsidiaries were subsequently involved in protracted litigation with Petrobras over contract cancellations (see Risk Factors). According to reports by Época and other publications, Germán Efromovich was close to Petrobras former Petrobras executives Joel Rennó (CEO from 1992 to 1999) and Antônio Carlos Agostini (director from 1995 to 1999). Syn- ergy’s shipyards also won many contracts with Petrobras for ships and oil platforms. There have been allegations of corruption in relation to both Marítima’s and the shipyards’ contracts with Petrobras (see Risk Factors).

Netherlands-based SBM Offshore NV formed JV Estaleiro Brasa with Synergy Group Corp in 2012. The FPSO-focused shipyard is SBM Offshore now largely dormant following contract cancellations by Petrobras. SBM signed a leniency agreement with Brazilian authorities in July 2016, admitting to bribing Petrobras employees to obtain oil-platform contracts, and agreed to pay BRL 1.2bn in fines.

Gabriel Silva is Colombia’s former defense minister (2009-2010) and ambassador to the US (2010-2012). He is also the former Gabriel Silva CEO of the National Federation of Coffee Growers of Colombia (2002-2009), whose 50% stake in Avianca Synergy acquired in 2004-2005. In 2012, Silva and Germán Efromovich founded Efromovich/Silva Capital Partners, which is no longer in operation.

Private-equity firm Teka Capital was founded in 2009 by Diego Córdoba. He previously led Valorem SA, the holding company of Colombia’s Santo Domingo family, from which Synergy acquired a 50% stake in Avianca. According to its website, Teka has a Teka Capital “partnership with the Santo Domingo and Rothschild families”. In April 2013, Teka acquired a 47% stake in Efromovich’s Global Operadora Hotelera SAS (Movich Hotels). In June 2018, Germán Efromovich told El Tiempo that the chain expects to receive USD 150m in new capital and plans to expand to Miami in 2019.

In June 2016, OceanAir Linhas Aéreas and United announced a code-share agreement. In February 2017, Germán Efromovich said he had negotiated a strategic partnership with United. However, the planned deal was scrapped after minority shareholder Kings- United Continental land Holdings sued Avianca, United and the Efromovich brothers (see Risk Factors) to block the transaction. In May 2018, Bloom- Holdings berg cited José Efromovich as saying that Avianca and United were close to reaching a new agreement that did not include a cash contribution from United.

Isaac Yanovich has been an independent director of Avianca Holdings since 2010. He was CEO of Empresa Colombiana de Petróle- Isaac Yanovich os SA () from 2002 to 2006. During this time, the Efromovich brothers’ Meta Petroleum operated three oil-field proper- Farbaiarz ties with Ecopetrol. According to Kingsland Holdings’ 2017 complaint, Yanovich was a member of the investment committee of Efromovich/Silva Capital Partners and his daughter Denisse Yanovich worked at Efromovich/Silva from 2012 to 2015.

Page 7 Shareholder Profile: Efromovich brothers double down on Avianca as shipyards struggle Avianca Holdings, OceanAir Linhas Aéreas, Synergy Group 19 June 2018

RISK FACTORS Legal issues, conflicts and controversies

In June 2015, Efromovich-owned Brazilian shipyard Estaleiro Ilha SA (EISA) and its subsidiary Eisa Petro Um SA filed for bank- ruptcy and laid off 3,000 workers. The shipyard cited cancelled contracts by Transpetro, Swire Pacific Navegação Offshore and Brasil Supply, as well as PDVSA’s failure to make payments. In April 2017, KPMG was appointed as the judicial administrator and the case is ongoing in a Rio de Janeiro court. According to the restructuring plan dated 24 March 2016 and amended in May 2017, the company’s secured debt at end-2015 consisted of USD 294m owed to Elliott Management subsidiary Manchester Se- Estaleiro Ilha curities Corp. bankruptcy (2015-present) Chubb Seguros Brasil and Fator Seguradora, two of EISA’s insurers, sued EISA, Germán and José Efromovich, Synergy Shipyard Inc, Synergy Enterprises Corp, Synergy Group Corp, and Avianca Brasil holding companies AVB Holding SA and SPSYN Partici- pações Ltda in October 2017. According to court documents, the two insurance companies paid BRL 203m in claims to Swire Pacific Navegação. In October, a São Paulo court granted the insurance companies’ request for an injunction barring the sale of SPSYN’s shares of AVB Holdings (a 99.53% stake) and AVB’s shares of its wholly-owned OceanAir Linhas Aéreas. José Efromo- vich appealed the injunction, according to OceanAir’s 3Q17 financial statement.

In their 2016 plea bargains related to the Lava Jato investigation, former Transpetro CEO Sérgio Machado and his son Expedito Machado Neto said they accepted a BRL 28m bribe from Germán Efromovich between 2009 and 2013 in exchange for awarding contracts to EISA, according to Valor Econômico. Expedito told prosecutors that the bribe was disguised as the cancellation fee Lava Jato and for an unfulfilled investment agreement between the Machado family and a company linked to Efromovich. Expedito said that bribery allegations another bribe was structured as interest payments on a loan he made to Efromovich. After the claims were reported, Efromovich (2015-2016) held a press conference at which he acknowledged making business-related payments to the Machados, but said that he had turned down their requests for bribes. Efromovich was also implicated in the federal police’s Operação Passe Livre, part of Lava Jato. In November 2015, a raid of the home of José Carlos Bumlai, a friend of ex-president Luiz Inácio Lula da Silva, yielded evidence that “Bumlai used his political con- tacts to influence Petrobras to hire Marítima Petróleo e Engenharia", according to a police document cited by Istoé.

In October 2016, Wells Fargo Northwest NA (the trustee for Avolon Aerospace Leasing Ltd) filed a lawsuit against Synergy Aero- Lease-default lawsuit space Corp and OceanAir Linhas Aéreas in the US District Court for the Southern District of New York. The lawsuit sought USD against Synergy and 5m in unpaid rent, interest and damages in relation to a 2014 lease for an Airbus A320. In August 2017, the court denied the de- OceanAir fendants’ motion to dismiss the case based on lack of jurisdiction. The case was voluntarily dismissed on the same day that the (2016-2017) court denied the motion to dismiss.

Kingsland Holdings filed a lawsuit against Avianca Holdings, Synergy Aerospace, Germán and José Efromovich and United Air- lines in the Supreme Court of the State of New York in February 2017 to block a proposed strategic partnership between Avian- ca and United. Kingsland alleged that Efromovich secretly negotiated Avianca’s proposed partnership with United for his own benefit – essentially as a bailout of Synergy – at the expense of Avianca and minority shareholders. According to the complaint, the deal included a USD 800m loan from United to Synergy, backed by Avianca and OceanAir shares. Half of this would be used to repay existing Synergy debt (including defaulted loans from Elliott) and USD 130m would go to OceanAir, while Avianca itself would only receive about USD 200m. Kingsland also claimed Avianca’s liquidity problems had been caused by Efromovich’s “misconduct”, accused Efromovich of channeling Avianca funds to his private companies through non-arm’s length related-party transactions, and alleged that Synergy used “Avianca’s assets to shore up Efromovich’s other financially-strapped business con- Conflict with cerns”. Kingsland claimed that Avianca board meetings resembled a “corporate politburo rubberstamping Efromovich’s initia- Avianca minority tives without advance notice, deliberation, independent judgement or hesitation”. Kingsland also claimed that Synergy’s pledge shareholder of Avianca shares to back its loans violated the Kingsland-Avianca shareholders’ agreement, as Synergy did not request Kings- Kingsland Holdings land’s approval, and third-party creditors were not permitted transferees of Avianca shares. Avianca denied wrongdoing, but its (2017) defense and countersuit focused on Kingsland’s alleged violations of the shareholder agreement, disclosure of non-public infor- mation through its lawsuit and the media, and technical problems with Kingsland’s lawsuit. On 27 March, Avianca Holdings filed a retaliatory lawsuit against Kingsland and Roberto Kriete to stop Kingsland's "improper actions" aimed at blocking the pending alliance with United and “any further dissemination of the company’s confidential infor- mation”. Avianca also filed a motion to dismiss Kingsland’s lawsuit. Its defense of the United deal noted that while Delta and Copa were also interested in Avianca, their proposals required a change in control, which Synergy would not accept. The lawsuit ac- cused Kingsland of trying to “take over the company” with other partners, and argued that Kriete’s Mexican airline Concesionaria Vuela Compañía de Aviación SAB de CV () competes with Avianca in Central America. In November 2017, Synergy and Kingsland agreed to drop their lawsuits. In May 2018, José Efromovich told Bloomberg that Avianca and United were close to reaching a joint-venture agreement that did not include a cash component.

Page 8 Shareholder Profile: Efromovich brothers double down on Avianca as shipyards struggle Avianca Holdings, OceanAir Linhas Aéreas, Synergy Group 19 June 2018

RISK FACTORS Legal issues, conflicts and controversies

Grupo Agroindustrial Hacienda La Gloria SA, a palm-oil company on property acquired by Germán Efromovich from the family of Colombian politician Carlos Arturo Marulanda Ramirez in 2010, is in an area that has been the subject of land-rights disputes. The Marulanda family was accused of collaborating in the 1990s with paramilitary groups that forcibly evicted peasants, burned Hacienda La Gloria homes and assassinated leaders on the property, then called Hacienda Bellacruz. La Gloria responded to criticism by stating that it land dispute had acquired the land in good faith and has no connection to the previous owners or crimes committed on the property. Conflict (2010-present) has continued in recent years, with peasants attempting to reclaim land reportedly having been evicted by police and private secu- rity forces. In January 2018, a Colombian court ordered the company to return 1,500 hectares of land to 64 local families, accord- ing to Las 2 Orillas. La Gloria had losses of COP 10.8bn and COP 21.3bn in 2017 and 2016, according to public-registry data.

Synergy Group acquired MacAirJet SA in March 2016 from the family of Mauricio Macri, Argentina’s president since 2015, for Concessions to USD 10m, according to La Nación. In 2017, after the airline (now called Avian Líneas Aéreas SA) received authorization from Ar- MacAir Jet (Avian gentine aviation authority Anac to fly 16 routes, two congressmen filed a criminal complaint against Macri, his father Franco, chief Líneas Aéreas) of staff Fernando De Andreis, Germán Efromovich and Avian Líneas Aéreas CEO Carlos Colunga , according to Clarín. The com- (2017) plaint claims that Macri influenced Anac to favor Avian. Federal prosecutors charged Macri, his father and De Andreis in March 2017. The investigation is ongoing and also involves concessions to other airlines, according to Reportur.

More than half of Avianca’s over 1,200 pilots, represented by the ACDAC union, began a strike on 20 September 2017, according to press reports. The pilots demanded improved safety, wage increases and a reduction in working hours. Due to the strike, Avian- ca suspended ticket sales for over two weeks, and asked a Bogota court to declare the strike illegal based on a law establishing civil Avianca pilot strike aviation an essential public service. The court ruled in Avianca’s favor on 6 October, according to El Pais. Avianca opened internal (2017) disciplinary proceedings against striking pilots who failed to return to work. Pilots agreed to resume work on 10 November, but the proceedings continued, and in February 2018 the Supreme Court upheld a lower-court decision authorizing Avianca to fire 702 unionized pilots, El Colombiano reported. The first phase of Avianca’s disciplinary proceedings involved 232 pilots, of whom 107 were fired and 109 suspended. The appeals phase of the proceedings began in April, according to El Colombiano.

In 2007, Brazilian federal prosecutors accused shipyard Mauá Jurong of fraud in the bid for the P-16 Petrobras oil platform, as Mauá Jurong part of the Águas Profundas investigation into Petrobras platform contracts. According to O Globo, Mauá Jurong and other com- bribery allegations panies paid bribes to Petrobras employees and politicians to win bids and obtain environmental certification. According to Conex- (2007) ão Marítima, a director of Mauá Jurong was charged in the investigation.

Marítima Petróleo e Engenharia was involved in lawsuits with Petrobras in Brazilian and UK courts between 2001 and 2007 in connection with oil platform contracts. Marítima obtained numerous contracts with Petrobras to build oil platforms in the second half of the 1990s, but Petrobras cancelled six contracts in 1999 following delays in delivery. In 2001, an accident at one of these platforms killed 11 people and spilled 1,500 tons of oil, according to press reports. According to Valor Econômico, Marítima subsidiaries Petromec Inc and Petrodeep Inc filed lawsuits in Brazil and the UK against Petrobras subsidiary Braspetro Oil Services (Brasoil) in 2002, seeking a total of USD 245m in damages related to cancelled con- Legal conflicts tracts and the accident. In 2004, a Brazilian court ruled in Marítima’s favor, but in 2007 the Supreme Court of Justice reversed the with Petrobras decision and ordered Marítima to pay Petrobras 10% of the BRL 2.5bn total contract value. In 2004, a UK court ordered Petromec and Petrodeep to pay Brasoil USD 131m in connection with platform-delivery delays. In 2002, Petrobras filed a lawsuit against Marítima in a UK court to recover USD 255m that Petrobras had paid to repair two alleg- edly defective platforms. In 2007, the court ordered Marítima to pay Petrobras USD 350m. In August 2015, EISA Petro Um SA filed a lawsuit in a Rio de Janeiro court against Petrobras subsidiary Transpetro, which rescind- ed three contracts with the shipbuilder that year, seeking BRL 384m in damages.

Synergy Aerospace, the private holding company for Avianca Holdings and Avianca Brasil, purchases airplanes for lease and sale to its affiliated airlines. In 2016 it signed a purchase agreement for 62 Airbus A320neo planes, a deal reportedly worth over USD 6bn. The planes were described as being for OceanAir, which at the time had roughly 40 active aircraft. German Efromovich told Valor Econômico in September 2016 that the Synergy debt secured by Avianca shares was related to aircraft purchases. The purchase of planes for OceanAir came as larger rivals, including Gol and LATAM Brasil, were reducing capacity and in some cases selling planes. Kingland Holdings’ 2017 compliant against Synergy, Efromovich and Avianca Holdings claimed that Avianca was forced to Synergy Aerospace bear the costs of Synergy’s allegedly “speculative aircraft orders”. The same week in October 2016 that OceanAir took delivery of aircraft purchases its first Airbus A320neo, OceanAir and Synergy Aerospace were sued for USD 5m in relation to missed lease payments to aircraft and leasing lessor Avolon (owned by China’s HNA Group). Some of Synergy Aerospace’s new A320neo aircraft – originally intended for OceanAir – will be delivered to Mexico’s Aeromar, aviation-news website Transponder 1200 cited Germán Efromovich as saying last week. Plans by Synergy Aerospace to acquire a 49% stake in Mexico’s Aeromar for up to USD 100m, announced in 2016, have so far failed to materialize. However, it reportedly plans to deliver three A320neo planes to Aeromar by end-2018 and eight in 2019. The aircraft deliveries are described as part of a deal that would lead to Aeromar’s rebranding as Avianca Mexico.

Page 9 Shareholder Profile: Efromovich brothers double down on Avianca as shipyards struggle Avianca Holdings, OceanAir Linhas Aéreas, Synergy Group 19 June 2018

RISK FACTORS Legal issues, conflicts and controversies

Avianca Holdings has a substantial volume of related-party transactions with Efromovich-owned private companies (Figure 1). In 2017, Avianca reported USD 57m in payments to these companies, and nearly USD 30m in revenues from them (reflecting aircraft leased by Avianca to OceanAir). Minority shareholder Kingsland Holdings claimed in its February 2017 lawsuit that Germán and José Efromovich’s use of allegedly non-arm’s length related-party transaction amounted to “self-dealing”. The number of Efromovich companies with which Avianca reports related-party transactions has declined since the airline’s New York listing in 2013. However, recent airline reviews show that Avianca serves coffee produced by Colombian Mountain Cof- fee, which was listed until 2011 as a related party. The Colombian corporate registry still lists Germán Efromovich as a director of the company. Restructuring of OceanAir/Synergy debt to Avianca Holdings: In 2009, Avianca provided working capital to OceanAir as part of an unexercised purchase option agreement. In December 2010, Avianca and OceanAir agreed to a restructuring of USD 60.7m in OceanAir debt guaranteed by Synergy Group, with repayments through 2013. The debt was restructured again in December 2011 and February 2012, extending payments through December 2014 and adding personal guarantees from the Efromovich brothers, according to Avianca disclosures and Kingsland’s complaint. OceanAir holding company SPSYN, which assumed the liability, repaid USD 17.2m in 2012, and in December 2013 Synergy transferred to Avianca real estate worth USD 15.9m. In December 2014, SPSYN failed to make a USD 22.6m payment, and in March 2015 Synergy Group committed to repaying the amount using dividends from Avianca in 2015 and 2016. Synergy repaid Avianca USD 11m in 2015, but received an extension on the USD 14.4m payment due 2016 until December 2017. According to Kingsland’s complaint, some of these extensions Related-party were granted “without cost or penalty and without providing basic information concerning the likelihood of further defaults”. transactions Avianca’s 1Q18 financials showed roughly USD 14m in receivables from SPSYN, little changed from a year earlier. According to a motion to dismiss filed by Synergy in March 2017, Kingsland signed a settlement agreement in March 2015 unconditionally approving the restructuring. Aircraft leases and purchases: Kingsland alleged that Synergy caused Avianca to lease unnecessary aircraft on unfavorable terms from Airbus, in exchange for Airbus agreeing to renegotiate debt owed to it by Synergy. The complaint also alleged that Avianca purchased unnecessary aircraft from Synergy, and that these leases and purchases caused Avianca to incur over USD 1bn in debt. Kingsland noted as well that Avianca allowed OceanAir and Avian to use its trademark without payment. Ground transport: Kingsland cited Avianca Holdings’ contract with Synergy Group company Empresariales SAS, which provides ground transportation for Avianca employees, as another instance of irregular related-party transactions. According to the complaint, a 2015 internal audit found irregularities and instances of fraud in relation to transactions with Empresariales, but Avianca did not terminate the contract or investigate further. Avianca paid Empresariales USD 10.1m in 2017. In 2017, Avianca Holdings also reported USD 3.4m in payments to Synergy’s Transportadora del Meta SAS, which provides ground cargo services, and USD 5.3m in payments to Efromovich’s Global Operadora Hotelera SA. Other Efromovich-affiliated companies have also reported extensive related-party transactions with his private business. To- ronto-listed Pacific Rubiales Energy Corp (later renamed Pacific Exploration & Production, now Corp), of which Germán Efromovich was a minority shareholder and director prior to its 2016 bankruptcy, reported USD 170m in trans- actions with Transportadora del Meta and USD 34m with Helicópteros Nacionales de Colombia SA between 2010 and 2014.

Page 10 Shareholder Profile: Efromovich brothers double down on Avianca as shipyards struggle Avianca Holdings, OceanAir Linhas Aéreas, Synergy Group 19 June 2018

DEBTWIRE COVERAGE

05 Jun 2018 Avianca Holdings does not need capital injection - Efromovich (translated)

16 May 2018 Avianca negotiating delay in plane deliveries to reduce indebtedness (translated)

10 May 2018 Avianca: Advent analyzes options for LifeMiles stake - report

02 May 2018 Avianca, United close to reaching JV agreement - report

26 Apr 2018 Avianca Holdings merger with Avianca Brasil postponed for at least 18 months - (translated)

22 Mar 2018 Avianca starts appeals phase of disciplinary proceedings against 210 striking pilots (translated)

16 Mar 2018 Avianca outlook revised to stable

08 Mar 2018 Avianca fires 107 pilots in first stage of disciplinary proceedings (translated)

02 Mar 2018 Avianca has 'plan B' if United deal falls through - CEO (translated)

01 Mar 2018 Avianca updates 4Q17 adjusted operating income to USD 169.1m from USD 126.2m

27 Feb 2018 Avianca fires 20 pilots (translated)

26 Feb 2018 Avianca set to open sanctioning proceedings against striking pilots (translated)

14 Feb 2018 Avianca authorized by Supreme Court to fire unionized workers (translated)

27 Dec 2017 Avianca board yet to decide on investing in Argentina, Mexico

15 Dec 2017 Avianca challenges normative aspects of arbitration award on pilots’ strike

29 Nov 2017 Court: Avianca-Kingsland lawsuit discontinued

10 Nov 2017 Avianca pilots end strike, will resume work 13 November (translated)

03 Nov 2017 Avianca Brasil's shares frozen by Sao Paulo court (translated)

01 Nov 2017 Avianca's Brazilian merger hampered by court order to pay BRL 200m Estaleiro Ilha debt (translated)

25 Oct 2017 Avianca declines to meet with striking pilots (translated)

18 Oct 2017 Avianca agrees to invest in Servicios Aeroportuarios Integrados

16 Oct 2017 Avianca to open disciplinary proceedings against pilots who fail to return to work today (translated)

13 Oct 2017 Avianca acquisition of Aeroportuarios Integrados authorized by Colombian regulator

10 Mar 2017 Avianca capitalization proceeds to increase liquidity; eventual Argentina merger ‘probable’ – Efromovich

Disclaimer: We have obtained the information provided in this report in good faith from sources that we consider to be reliable, but we do not inde- pendently verify the information. The information is not intended to provide tax, legal or investment advice. We shall not be liable for any mistakes, errors, inaccuracies or omissions in, or incompleteness of, any information contained in this report. All such liability is excluded to the fullest extent permitted by law. Data has been derived from corporate disclosures, regulatory announcements, government publications, media reports, press releases, presentations and Debtwire intelligence.

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