The owner of London Southend Airport is mulling a deal that will secure the future of the Essex hub, but cut its stake in the airport to a minority interest.
Aviation business Esken revealed today it has negotiated a new deal with creditor Carlyle and Cyrus Capital Partners which would see London’s sixth-busiest airport apply for restructuring proceedings, and Esken’s stake reduced to below 50%.
Esken agreed a £200 million convertible loan with Carlyle in 2021, which could be turned to a 30% equity stake if the airport owner couldn’t pay. Last year, Carlyle argued that Esken had breached certain terms of the loan, and demanded immediate repayment of the full £200 million.
Now, the parties have “negotiated a recapitalisation proposal”, but Esken must still decide whether to go ahead with the plan voluntarily or whether to contest it in court.
Esken says it “is urgently reviewing and assessing the terms and potential financial impact of the recapitalisation proposal on the company and its wider stakeholders and will then decide whether to accept the terms of the recapitalisation proposal.”
It added: “There can be no certainty that any of these discussions will lead to a consensual agreement, but Esken believes that a consensual outcome would be in the interests of all parties and will take all reasonable steps to facilitate such an outcome. The company is also undertaking contingency planning, including exploring access to alternative funding to cover its liquidity needs.
“The recapitalisation proposal, if agreed to by the company or imposed on it by the courts, could have a material adverse impact on the group.”
London Southend’s Chief Executive Officer, John Upton, said: “This is great news for everyone connected with London Southend Airport – for our people, passengers, airline partners and local communities. Carlyle and Cyrus both have extensive experience across the aviation industry and deep knowledge of our Airport.
“Their commitment to our future delivers both certainty and stability and will enable us to accelerate our growth plans with their considerable investment capability and operational expertise.
“On behalf of all at the Airport, we would also like to thank Esken for its support and enabling this agreement to be reached.”
Carlyle and Cyrus Capital Partners said: “Carlyle and Cyrus are excited to work closely with John and the rest of London Southend Airport’s management team to capitalise on the many opportunities ahead. This transaction combines our financial strength and expertise with new funding to secure the airport’s long-term future for the benefit of all stakeholders and ensures the airport is well-positioned to thrive.”
Esken shares plummeted to 0.2p today, valuing the business at only £2 million. At one stage in 2017 - when Esken also owned other assets in sectors like energy and logistics - the shares were worth 268p.
Operations from the airport, where EasyJet offers flights to eight destinations, are continuing as normal.
