Swissport International Ltd.

Swissport Alleges Bias In Ukrainian Court

Swissport is very concerned about inefficiencies of Ukrainian judicial system and silence on governmental side.

  • The court appeal hearings at the Highest Economic Court keep being postponed, for the seventh time based on dubious reasons lastly on Aug. 30.
  • In the meantime UIA (Ukrainian International Airlines) took unilaterally the decision to increase the share capital in Interavia with the obvious goal to dilute Swissport. By doing so UIA did now for what it sued Swissport, when UIA falsely alleged Swissport of a dilution attempt.
  • The Ukrainian government and it Anti-Raider-Commission are long in coming with their promised support for foreign investors and companies that lost their business through hostile takeovers. 

Swissport is very concerned about the obvious delay tactics of the Highest Economic Court in the Ukraine. The court appeal hearings in the third instance keep taking place for not longer than five minutes before they are postponed again. The judges are being exchanged for the third time now. Delays of this kind were already typical for the court hearings of the first two instances. And it is also not unusual to hear about the outcome of the court appeal hearing already ahead in time, just as for the next hearing scheduled for Sept.18. Well-informed sources told Swissport that the court ruling will be against Swissport.

The delay tactics and inaction from judicial and governmental side gave the opposing party UIA and its shareholders, the time to increase its share capital in Interavia (formerly Swissport Ukraine and renamed into Interavia after the court decision in March) by $1 million, with the obvious goal of diluting Swissport´s shares in case of winning the court case and becoming shareholder again.

It is important to note that UIA had originally - falsely - accused and sued Swissport for the dilution of UIA´s shares through an increase of the share capital. The facts indeed were different. (See details below.)

The judicial system in the Ukraine still seems to allow activities that create facts difficult to reverse. These facts are typical for shareholders that intend to get as much profit out of a company as possible before selling it partially or completely without investing into the company, its people or equipment. The growing business for UIA and the lack of investment into Interavia, its staff and equipment already lead to quality problems. In addition, three experienced top managers of Interavia who had been working for Swissport Ukraine have quit their job in the meantime. This leads to additional trouble and the risk of further decreasing service quality for airline and airport customers.

The promised strong support by the Ukrainian government and the Anti-Raider-Commission of the Ukraine is long in coming. Meetings of this Anti-Raider-Commission with Swissport representatives and the Swiss and French ambassadors scheduled for the beginning and mid of July have not yet taken place.

Swissport is very concerned about the inaction and silence from the Ukrainian government that seems to remain passive in this obvious violation of foreign investment. This is even more surprising for a country that is currently negotiating a free-trade-agreement with the EU and has a strong interest in getting in closer contact with the EU and its membership states. With the experiences Swissport has made so far with investing into business in the Ukraine, other foreign companies that are considering to enter this market can only be warned to better keep hands off.

Swissport appreciates the still on-going support and active involvement of the Swiss and French Embassies in the Ukraine very much, as well as the increasing awareness of this and similar cases at the European Commission. The offices of the President of the EU Commission, José Manuel Barroso and the Vice President, Siim Kallas, are aware of Swissport fighting to get back its business in the Ukraine. And Swissport is about to send an update on its case to the EU Commission to show evidence that the promises of the Ukrainian Anti-Raider-Commission to date only consisted of promises, contradicted by the ability of the Ukrainian aggressor to dilute Swissport's share despite the pending litigation. There appears to be no effective protection of foreign investment in the Ukraine.

Swissport International Ltd. provides ground services for around 118 million passengers and 3.5 million tonnes of cargo a year on behalf of some 650 client-companies in the aviation sector. With a workforce of around 40,000 personnel, Swissport is active at 181 stations in 37 countries on five continents, and generates annual consolidated operating revenue of CHF 1.9 billion. www.swissport.com

Background information on the history of Swissport in the Ukraine:

In 2006 Swissport acquired 51% shares in the company "Interavia", which then was renamed to "Swissport Ukraine". Other shareholders were UIA (29.4%), and ABH (19.6%). Both UIA and SPI had a call option to acquire the remaining 19.6% of ABH, either on a pro rata basis or all of the 19.6% if the other did not exercise the call option. In 2008 Swissport exercised the call option, UIA did not. Consequently Swissport could acquire the full 19.6% of ABH, which resulted in Swissport holding 70.6% shares of Swissport Ukraine. Until 2011 the company had a very good partnership with UIA, until UIA´s ownership changed to more private investors with Aron Mayberg at the forefront. As Swissport Ukraine was successfully growing double-digit every year, investments into the company became necessary to support further growth. UIA from the beginning struggled with being able to meet their pro rata share obligations. Swissport was ready to finance the growth and was expressing its future will to further invest in the company's future and to ensure continuous growth by financing the company even beyond obligations. Based on mere discussion during a Participants´ Meeting about a potential future capital increase, UIA and particularly Aron Mayberg alleged that Swissport would violate UIA´s minority shareholder´s rights and went to court.

Kyiv City Economic Court
UIA claimed that Swissport allegedly violated the Participants' Agreement and UIA's minority shareholders' rights and demanded that Swissport International´s shares of Swissport Ukraine (70.6%) are transferred to UIA. UIA aimed at gaining 100% of the shares in Swissport Ukraine.

Kyiv Economic Court of Appeal
Swissport International decided to appeal against the decision of the 1st instance, but the court refused the delivery of the written court ruling and thereby hindered Swissport International's appeal preparations. On 27th March 2013: after approx. 1.5 hours of court hearing, the court ruled against Swissport International and lost ownership of its 70.6% shares in Swissport Ukraine.
Already in the first two instances the court proceedings were not conform with Ukrainian law and Western European standards: Swissport in one case did not receive proper notification from the court, then the court hearings were postponed several times, two judges had been replaced for flimsy reasons, and several times Swissport heard from its lawyers hours before the court hearings that they got the information the court will decide against Swissport - so on 27th March.

For further information please contact:
Swissport International Ltd.
Corporate Communications
P.O. Box
CH-8058 Zurich-Airport
+41 43 815 0010
corporate.communications@swissport.com

Farner Consulting AG
Oberdorfstrasse 21
CH-8001 Zurich
+41 44 266 67 22
swissport@farner.ch

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