Pluna aftermath: Cosmo can’t afford the $137 million they pledged for Pluna’s auctioned airplanes

Cosmo has dropped out of negotiations for the seven bombardier jets they had agreed to pay $137 million USD for at the Pluna liquidation auction on Oct. 1 according to sources in the Uruguayan government.

Sources within Uruguay’s executive branch told the weekly magazine Busqueda that “media noise” was the reason that the Spanish airline was not able to get financing for the seven airplanes which had belonged to Uruguay’s bankrupt flag carrier Pluna.

Investors in the company indicated that they did not know Hernán Antonio Sanchez, who made the bid on behalf of Cosmo at the Pluna auction, and signaled that Cosmo does not have the “capacity” to move forward on their winning bid.

Alberto Vidal Castañon, a lawyer who represents two of Cosmo’s minority shareholders, Miguel Martín Lucas (who owns 49%) and Miguel Castro Marín (who owns .012%), told the newspaper El País that his clients are “worried and surprised” by the information coming out of Uruguay.

Mr. Martín and Mr. Castro and other Cosmo shareholders are suing Joaquín y Antonio Álvarez Hernández, the Cosmo’s majority shareholder.

The lawyer, Mr. Vidal said that his client Mr. Castro only found out that Cosmo had purchased the airplane through an email. Mr. Vidal went on to say that Cosmo “does not have the capability” for a purchase of this amount. “It is a very odd move [bidding on the jets], very strange, something stinks in this business”, Mr. Vidal said.

Miguel Martín, the owner of 49% of Cosmo’s shares, said the he was “surprised and scandalized” by the news that Cosmo was even participating in the Pluna liquidation auction. He did not understand how a company with 7 million Euros (a little more than $9 million USD) in assets would be able to make a $137 million USD purchase.

This Uruguay Business Reports news article is a translation of a news story that appeared in the Uruguayan newspaper El Observador. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry

Pluna aftermath: Uruguay’s executive branch rejects López Mena and BQB’s proposal to take over Pluna’s air routes

Uruguay’s executive branch has rejected Juan Carlos López Mena’s plan to take over Pluna’s old air routes and schedules.

The owner and CEO of BQB airlines and Buquebus (a ferry company) had proposed renting seven airplanes from the Spanish charter airline Cosmo and using them to service “without cargo and without cost” all of Pluna’s former routes and schedules. Cosmo had purchased the seven airplanes during a liquidation auction for bankrupt Uruguayan flag carrier Pluna.

Mr. López Mena’s offer was rejected by the government which hopes to sell the rights to Pluna’s old routes connecting Argentina, Brazil, Chile and Paraguay with Montevideo. The government wants the money to go towards the debts Pluna left unpaid.

Now president Jóse Mujica is waiting for a counterproposal from BQB.

This development has given hope to Pluna’s former employees who are attempting to bring in a private investor to jointly managed the airline and save as many jobs as possible. They are currently in talks with Spanish airline Air Nostrum.

Oct. 9 Pluna’s remaining corporate officers submitted a letter from a group of Uruguayan entrepreneurs who are interested in creating a new Uruguayan airline. Mujica read the letter at the end of the cabinet meeting.

Uruguay Business Reports news article is a translation of a news story that appeared in the Uruguayan newspaper El País. The original article is available here. Uruguay Business Reports translation by Donovan Carberry.

Pluna gate: Pluna auction winner Cosmo Airlines representative tied to Argentina’s BQB airlines, UruguayBR special report

Cosmo representative used fake name at Pluna auction to hide his ties to BQB airlines owner Juan Carlos Lopez Mena

In an emerging scandal already dubbed “Pluna gate” by the Uruguayan press, the Cosmo airlines’ representative who purchased 7 jets belonging to Pluna at an Oct. 1 bankruptcy auction used a fake name and is closely tied to BQB airlines owner Juan Carlos Lopez Mena.

“Antonio Sanchez” A.K.A. “Hernan Calvo” at the Pluna liquidation auction where he bid $137 million USD for 7 jets on behalf of little known Cosmo Airlines

During the auction, the Cosmo representative identified himself as “Antonio Sanchez”. However, his real name is Hernan Antonio Calvo Sanchez (making Antonio and Sanchez both middle names).

Mr. Calvo is currently a vice president at Cosmo airlines but until 2009 he was the director of Buquebus Europe. Buquebus is owned by Mr. Lopez, who also owns BQB airlines.

Speculation in Uruguay is that Mr. Calvo used his middle names to hide his connection to Mr. Lopez and a prearranged deal between Cosmo and BQB.

After the auction where “Antonio Sanchez”  was the only one to place a bid, he told the Uruguayan press that Cosmo airlines (an obscure charter airline that does not even have a working website) had no intention of using the planes in Uruguay.

On Wednesday Oct. 3, the Uruguayan newspaper El Observador succeeded in surprising  Economy minister Fernando Lornezo at lunch with Mr. Lopez and “Antonio Sanchez”. The Uruguayan government then announced it was brokering a deal between BQB and Cosmo to keep the planes in Uruguay and restore some of the international air connections to Montevideo which had been left un-serviced by Pluna’s bankruptcy.

El Observador surprised Economy minister Fernando Lorenzo (center right) at a secret meeting with Juan Carlos Lopez Mena (far left), and “Antonio Sanchez” A.K.A. Hernan Calvo (back right)

Neither the government nor the two airlines revealed a previous connection between Mr. Lopez and Cosmo airlines. However, by Friday Oct. 5 the Uruguayan press had discovered the “Maritime Consulting Spain” blog belonging to former Buquebus Europe executive Jose Rodriguez. The blog features numerous photos and press stories about Buquebus Europe including several identifying “Antonio Sanchez” as Hernan Calvo and picturing him with Mr. Jose Calvo Lopez. Cosmo Airlines confirmed that their representative’s full name is Hernan Antonio Calvo Sanchez.

A news article posted on “Maritime Consulting Spain” picturing “Antonio Sanchez” with Juan Carlos Lopez Mena

After the connection was revealed, Mr. Lopez admitted that he has a “strong personal connection” with Mr. Calvo, the Cosmo representative. Mr. Lopez denied giving Cosmo the $13 million USD they used to guarantee their $137 million USD bid for the 7 airplanes or using Cosmo as a proxy to buy the airplanes.

However, he did say that the Uruguayan government asked him if he knew of any potential bidders for the Pluna auction and he recommended Cosmo Airlines.

What the government knew about the connection between Comso and BQB is unclear. The fact that Cosmo may have been the only qualified bidder at the Oct. 1 auction has generated even more suspicion.

Uruguayan President Jose Mujica went on the radio Friday Oct. 5 to speak about the scandal. He said, “it is very common in this type of deal for there to be an intermediary company. The truth is I had no clue [about the connection between about the Cosmo BQB connection]”. When asked about Hernan Antonio Calvo Sanchez, Mujica said “I have no idea who that man is”.

Economy Minster Fernando Lorenzo also felt compelled to speak out about the scandal. “The auction was transparent and open to all interested and possible offers”, Lorenzo declared Oct. 5 among increasing rumors that the government had planned to sell the planes to Cosmo.

Uruguay’s opposition parties have seized on the news. Javier Garcia, a deputy from the Blanco party, has already submitted a formal request with the Economy ministry to find out under what name Mr. Calvo registered for the auction. The head of the Partido Independiente, Pablo Miernes speaking after a meeting with Mr. Lopez said that he was surprised by the government’s “erratic and unclear” role in the deal between BQB and Cosmo.

Uruguay Business Reports original reporting by Donovan Carberry.

BQB airlines is negotiating with Pluna auction winner Cosmo to use those jets in Uruguay

The Argentinean businessman and CEO of BQB Juan Carlos López Mena is proposing to use Pluna’s former airplanes to restore international service to Montevideo

The Argentinean entrepreneur Juan Carlos López Mena, owner of the Buquébús ferry and airline BQB, has begun negotiations with the Spanish company Cosmo over using the seven former Pluna jets they purchased at auction Monday Oct. 1 for $137 million USD.

According to a BQB press release, Mr. López wants to use the airplanes to cover Uruguayan air routes left vacant after Pluna’s bankruptcy.

The press release stated, “BQB Airlines began negotiations with Cosmo Airlines over using the seven CRJ 900 Bombardier airplanes that the Spanish company purchased in the recent Pluna trust auction in Uruguay”.

Mr. López, the CEO of BQB, explained his motivations, “We want to prioritize Uruguay’s connection needs and because of that we are talking with Cosmo, who acquired these airplanes at auction, about whether these airplanes can remain in the country and if they can create the conditions for new Uruguayan flag carrier. That is what we are working for.”

The plan also proposes hiring former Pluna employees. It would restore Montevideo’s air connections with the Brazilian cities of San Pablo, Río de Janeiro, Porto Alegre, Curitiba, Belo Horizonte; as well as Chile and Paraguay.

“The idea is to begin flying to these destinations in by the 15th of December.” Announced the CEO of BQB.

This Uruguayan Business Reports news article is a translation of a news story that appeared in the Uruguayan newspaper El Observador. The original Spanish language news article is available here. Uruguay Business Reports translation by Donovan Carberry.

 

Pluna auction result: Surprise bidder Cosmo Airlines purchases seven former Pluna jets for $137 million USD

The Spanish airline Cosmo offered $137 million USD for seven bombardier jets wining the Pluna liquidation auction. However, Uruguay’s air connections remain uncertain.

In a surprise twist, a Spanish company bought seven airplanes which had belonged to Uruguay’s now bankrupt flag carrier Pluna for $137 million USD. The government has not released information about the company’s record and for the moment many of Pluna’s former air routes remain unserviced.

Ten minutes after 2pm a man in a black suit and light blue tie appeared outside the door of the Rural del Prado asking about the auction of seven jet planes belonging to Pluna. Since the doors were closed the man, who identified himself as a “bidder” had to wait. After another 12 minutes, the man returned but was again told to wait. The mystery bidder (who appears to have been the only bidder), turned out to be a Spaniard named Antonio Sánchez. He told the Uruguayan newspaper El País that he represented a Spanish company called Cosmo Líneas Aéreas, which has its headquarters in Madrid and has flights to Lithuania and Iceland.

When asked about Cosmo’s interest in establishing a base in Uruguay, Sánchez responded: “we have no base in Uruguay, our base is in Europe”.

At 2:30 pm press were allowed to enter and the invitees began to enter among them the Canadian ambassador, Sergio Bañales the president of the Uruguayan Association of Travel Agencies, and deputies Jorge Pozzi (Nuevo Espacio) and Daniel Caggiani (MPP).

The last to arrive and officially the only one to pay the $13 million bank guarantee, was Mr. Sánchez. To the surprise of everyone present, 5 minutes into the bidding Sánchez offered $137 million USD. Expected bidders Buquebus, Sol, Venezuela’s state airline Conviasa, and an air taxi company owned by Argentinean Franco Macri were all uninterested in the auction.

“The offer is for $137 million USD and since there is no other offer we can proceed with the sale. However, we are going to wait, we know this is a very special auction” said Mario Stefanoli the auctioneer. At 3:37 PM the gavel sounded and the auctioneer called out “sold”.

Cosmo, on which the Uruguayan government had almost no information, walked away the auction’s winner. The Spanish company now has 30 days to pay the remaining $123.4 million USD and formalize the sale. The amount must be paid in cash. If the government doesn’t receive the rest in time Cosmo must forfeit its $13.6 million USD bank guarantee.

In addition to the $137 million USD Cosmo owes for the purchase, they will have to pay the cost of the auction: .05% of the total sale plus VAT tax.

The money Uruguay obtained at the auction will be used to pay the government’s $136.8 million USD debt to Scotiabank. Uruguay guaranteed Pluna’s original purchase of the 7 jets and was left with the debt when Pluna went bankrupt.

Cosmo has the right to use the airplanes “in whatever way suits their interests” and has no obligations of any kind to Pluna’s former employees (the government removed terms it had planned to place on all bidders). They also do not assume Pluna’s debt to Ancap ($28 million USD) or Banco Republica ($16 million USD).

Uruguay may be left without air connections

The final destination of Cosmo’s new jets continues to be a mystery. However, Uruguay’s government did not require them to remain in Uruguay and Sánchez’s statements indicate that they will end up in Spain.

Sergio Bañales the president of the Uruguayan Association of Travel Agencies said that Sánchez did not rule out at least one of the airplanes remaining in Uruguay to do “some type of operation”. Regardless, since Cosmo is a charter airline even if a plane remains in Uruguay it will have little effect on the country’s air connections.

During a post-auction press conference, the head of the trust overseeing Pluna’s liquidation, Javier Liberman, said he did not know Cosmo’s business plan and if the airplanes would be transferred to Europe. “In the auction’s requirements we asked for bidders to present a guarantee, which [Cosmo] presented on time and correctly, but we did not ask for a business plan to determine the winner of the auction”, Liberman explained.

The trustee did not want to report if other bidders deposited financial guarantee to participate in the auction. “We will not reveal this information [yet]. In another stage we will make public what is in the minutes”, said Liberman.

Cosmo Airlines

Cosmo was not one of the airlines the government was hoping would purchase the airplanes. During transportation minister Enrique Pintado’s post-auction press conference, he did not provide details on Cosmo or take questions from reporters.

Unlike Pintado, Mr. Bañales said he knew Cosmo and that “its focused on charter airplanes and works principally in Northern Europe… I have dealt with them through some business they shared with an Uruguayan company. [Cosmo] is a very serious company. I have been in contact with Antonio Álvarez” (Cosmo’s principal shareholder).

Uruguay’s air lane rights?

Cosmo has 30 days to negotiate with the government for the exclusive rights to Pluna’s old lanes. If Cosmo has no interest in moving into Uruguay, the government will be free to give these rights to whoever.

Politcal sources told the Uruguayan newspaper El País that the government can negotiate the sale of six other Pluna airplanes (currently being leased) to another company. These planes are more modern than the ones auctioned yesterday. Pluna had acquired them in 2010.

This Uruguay Business Reports article is a translation of a news article by Valeria Gil that appeared in the Uruguayan newspaper El País. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

Economy Minister is not worried about Oct. 1 auction of Pluna’s jets

Uruguay’s minister of Economy, Fernando Lorenzo, said that the executive branch is “calm” about the auction of seven planes which had belonged to Uruguay’s now defunct state airline Pluna which is scheduled for October 1rst.

On Thursday, Sept. 27 Lorenzo was asked about the auction. His answer: “The auction will be held next Monday. The auction will be a very important milestone on the road to the recovery of a new Uruguayan flag airline”.

The auction was originally scheduled for Wednesday, September 12th but was suspended at the last moment because of a lack of interest. Lorenzo was asked if the government had used the extra time to foment  more interest in the auction. He replied, “It isn’t up to us to say if there is interest or not. We will see what interest exists at the auction on Monday”.

The Pluna liquidation law requires the airline’s seven Bombardier airplanes to be auctioned with a base price of $136 million USD. The purchaser must also higher at least 250 of Pluna’s former employees. Many analyists blamed these requirements for the lack of participation.

Venezuelan state airline Conviasa will not attend October 1rst Auction

One of principal bidders was expected to be the Venezuelan airline Conviasa. The Uruguayan newspaper El País is reporting that the Conviasa will not be present on Oct. 1 because their priority is the Venezuelan presidential elections being held on October 7.

The auction will be held Monday Oct. 1 in the Rural del Prado.

This Uruguay Business Reports news story is a translation of an article that appeared in the Uruguayan newspaper El País. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

Pluna Auction News: Experts are pessimistic about postponed auction’s chances for success

Lawyers specialized in assessing investments predict it is “unlikely” that the Uruguayan government’s auction of Pluna’s aircraft will be successful unless the bidding conditions change. They also said that the failure of the first auction was “predicable” but the government won’t nationalize the airline.

After failing to attract enough bidders for an auction on Wednesday Sept. 12, the government is still trying to auction Pluna’s remaining seven Bombardier jets. The government hopes to make at least $136 million USD from the sale of the jets, enough money to cover the guarantee the government extended to Scotia bank which financed the purchase of the jets when they were acquired by the Leadgate Group, which was Pluna’s principal share holder until June.

The executive branch postponed Wednesday’s auction at the last-minute after three interested companies backed out. The auction is now scheduled for October 1. It will still be held at Carrasco International Airport.

The high costs ($19 million USD per airplane), and the requirement that purchasers negotiate routes with the government after the sale, are requirements that discouraged participation in the auction.

Yesterday, El País consulted four lawyers who specialize in assessing investments who said that it will be “difficult” for the October auction to be successful if they don’t change of the auction, which were established by law.

Ignacio De Posadas, partner in the firm Posadas, Posadas, & Vecino, said that it “was obvious” that the airplane auction was going to fail because the business requirements are “totally unviable”.

“The prices are absurd. Nobody is going to make a significant investment like this and have to negotiate about use afterwards. The law [governing the auction of Pluna’s assets] has generated a lot uncertainty and no one really understands the reason for postponing the auction because twenty days are not going to change anything” commented De Posadas.

De Posadas, who was the Economy minister during Luis Alberto Laca’s government, said that the government “should be thinking of something” to make sure that the auction now scheduled for October 1rst does not fail.

Regardless, De Posadas said that the solution suggested by some of placing the Pluna auction outside the jurisdicition of Uruguay’s competitive bidding law (la ley de concursos) “is bad” because “it generates a series of [potential] lawsuits” by people who see themselves as unfairly affected.

The lawyer Nicolás Herrera, partner in the firm Guyer & Regules, said that the auction is “an operation that is very complicated and difficult and perhaps not super attractive to investors” because of the “uncertainty” created by the restrictions and requirements for authorization on using the planes for flights outside the country.

Herrera believes that “without a change in conditions” it will be “difficult” for the auction on October 1rst to generate interest. “If there is a problem that is not the time and the conditions, the government can ask interested [companies] what would make [the auction] more attractive” he said.

“This is a very complicated situation and its difficult to solve with some type of magic, this is what occurs in these types of situations”, said the lawyer.

The lawyer Óscar Brum, a partner at Brum-Costa, considered the auction on Wednesday’s failure as “totally predictable” but now “the big questions is if the government is going to accept a lower price or maintain the same minimum” of $136 million USD.

Brum considers that the executive branch “made a bad decision” in liquidating Pluna and planning to auction its airplanes. “The most reasonable thing to do is reverse the company’s situation, lift it up and afterwards sell it in the same style of what they did with Banco Comercial”.

This Uruguay Business Reports news article is a translation of an article that appeared in the Uruguayan newspaper El Pais. The original article is available here. Uruguay Business Reports translation by Donovan Carberry.

Pluna News Brief: Uruguay’s transportation minister confirms that Pluma’s asset auction was postponed because three companies dropped out

Uruguay’s transportation minister Enrique Pintado explained the decision to postpone bidding on the seven Bombardier jests belonging to Uruguay’s now defunct flag carrier Pluna.

“The explanation that I gave is clear. Four bidders is very few, we want to promote greater participation in the auction” Enrique Pintado, Uruguay’s transportation minister said.

Previously  the government had annouced seven companies would submit bids for the jets.

Uruguay’s transportation minister Enrique Pintado, in a press conference, explained his reasons for suspending yesterday’s auction of Pluna’s planes.

“The explanation that I gave is clear. Four bidders is very few, we want to promote greater participation in the auction” Enrique Pintado, Uruguay’s transportation minister said.

The Uruguayan government had originally announced seven companies would submit bids on seven Bombardier jets belonging to Uruguay’s now defunct flag air carrier, Pluna.

Uruguay postpones auction of Pluna’s remaining assests to find more bidders

Although everything was ready at Montevideo’s Carrasco International Airport for the auction to sell off the remaining assets of Uruguay’s now defunct state airline, Pluna, a press release was issued this morning reporting that the auction had been postponed to “increase participation”. The auction is now scheduled to be held October 1rst.

Vice-president Danilo Astori was interviewed by radio Carve and he confirmed that the auction was postponement to find more buyers. “The objective is to secure the strongest competition for Pluna’s assests” he said.

“With additional time, will be able to increase the number of buyers… I am not in a position to reveal who will participate, primarily because I don’t know who.” Astori added.

The auction of the seven Bombardier airplanes starts at $136 million USD. In the event at that no bids are submitted, the auction will be declared empty. Then the Uruguayan government will have to design a plan B.

This Uruguay Business Reports news article is a translation of a news story that appeared in the Uruguayan newspaper El País. The original article is available here. Uruguay Business Reports translation by Donovan Carberry.

ANCAP will file legal charges over Pluna’s bounced checks

ANCAP’s board of directors resolved yesterday to order its legal department to file allegations of criminal and civil misconduct concerning checks Pluna issued to ANCAP which bounced. According to Juan Amaro, the ANCAP board member selected by the Partido Colorado, ANCAP’s board did not re-affirm a previously issued resolution to freeze legal complaints against Pluna’s board of directors for checks Pluna S.A. issued without funds to pay for.

Amaro also said that the Director of ANCAP, Raúl Sendic, confirmed there is a “commitment” from the executive branch which guarantees ANCAP will be paid in full.

ANCAP’s board also unanimously approved an “external audit” to evaluate the handling of Pluna’s now $28 million debt to ANCAP. Amaro proposed the audit: “the audit will clarify the financial procedures which lead to this massive liability as well as improve company’s [ANCAP’s] corporate image. The important thing is that ANCAP is not linked to the mismanagement which brought down the airline” said Amaro.

ANCAP is already moving forward with an internal investigation into why the company allowed Pluna S.A. to pay with checks deferred 180 days when the maximum was supposed to be 30 days.

 This Uruguay Business Reports news article appeared in the Uruguayan newspaper El Observador. The original article in Spanish can be found here. Uruguay Business Reports translation by Donovan Carberry.