Avianca Files to Raise $545 Million in New York Share Sale

Oct. 21 (Bloomberg) -- Avianca Holdings SA filed to raise as much as $544.7 million by selling shares in the U.S. as the Colombian airline seeks funds for new planes and routes.

The company said today it will offer about 27.2 million American depositary receipts for $17 to $20 apiece, each representing eight preferred shares. The preferred shares closed at 4,010 pesos in Bogota on Oct. 18, giving eight of them a value of about $17.05.

Avianca is selling 12.5 million ADRs in the offering and expects proceeds of about $219.5 million, which will be used to help pay for 98 new aircraft through 2019, including 15 Boeing Co. 787 Dreamliners that will start arriving next year, according to the filing. The company competes with Latam Airlines Group SA and Copa Holdings SA for passengers in the Andes and Central America.

“After entering the international market, it’s going to get more exposure and maybe other investors will see it as more attractive,” Maria Adelaida Velasquez, a Medellin-based analyst at brokerage Serfinco, said in a telephone interview. “It’s posted positive results but in Bogota the shares haven’t reacted like you’d expect.”

The company’s shares advanced the most in three weeks, adding 3.6 percent to 4,155 pesos at the close in Bogota. They’re still down 8.2 percent this year after gaining 38 percent in 2012, Avianca’s first full year as a public company after an initial public offering in 2011.

2013 Results

Operating revenue increased 6.9 percent to $2.2 billion for the six months through June 30 from the same period a year earlier. Avianca will report third-quarter results in mid-November and expects operating revenue to increase about 7 to 8 percent from a year earlier, the filing says.

Chairman German Efromovich and his brother Jose control about 70 percent of Avianca’s common shares through their closely held Synergy Aerospace Corp. The stake may rise to 78 percent after other investors convert some of their common shares to preferred as part of the transaction.

Efromovich said in a Sept. 10 interview that he thought the Bogota-traded shares were undervalued.

“It’s at a totally unjust price if you have a company that meets all its goals, that distributes generous dividends in a complicated sector where it’s one of the few profitable airlines in the world,” Efromovich said in that interview. The shares should fetch 6,000 pesos to 7,000 pesos, he said.

To contact the reporter on this story: Christine Jenkins in Bogota at cjenkins28@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net