Southend airport is to pass into the control of the US private-equity group Carlyle after an agreement to settle a debt, in the latest takeover of a UK firm by a foreign company.
Esken, a company listed on the London stock market and formerly known as Stobart Group, announced that it has come to an agreement with Carlyle Global Infrastructure Fund (CGI) regarding the £193.75m debt owed by its subsidiary, London Southend airport.
According to the agreement, CGI will acquire 82.5% of the Essex-based airport, with Esken retaining a 17.5% stake. As a result, Esken’s shares will no longer be traded on the London Stock Exchange and its shareholders will not receive any compensation.
“Investors can anticipate a minimal return at the conclusion of the process,” stated Esken in a release to the London Stock Exchange.
The agreement, made with the airport’s board, involves a £5m bridge loan without collateral for a brief period. This is a part of the airport’s commitment to obtain £32m in new funding to support its future expansion.
According to Esken, they have chosen to restructure due to a shortage of funds to continue a prolonged legal dispute. This process will involve going through the court.
The statement stated, “It is expected that the court proceedings for the Esken restructuring plan will take several months. However, during this time, the funding for London Southend airport is assured and the board will begin the organized closure of the remaining group.”
Additionally, the agreement includes Cyrus Capital Partners – a private equity firm based in London. They currently have a bond worth £53m, which will reach its maturity date on 8 May. Through this deal, the Esken group will receive added financial flexibility.
The CEO of the airport, John Upton, had previously stated that Carlyle and Cyrus had significant expertise in the aviation industry and a thorough understanding of our airport.
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The announcement was made one day after Spirent Communications, a UK telecommunications company, agreed to a £1 billion acquisition by Viavi Solutions, a US competitor based in Arizona.
Recently, there has been a surge of bids for British businesses by foreign buyers looking to benefit from their low market value. Due to the devaluation of the British pound, as well as economic difficulties and ongoing Brexit repercussions, UK assets are perceived to be inexpensive.
Ten years ago, Southend underwent a massive redevelopment, with high hopes of becoming one of the fastest-growing airports serving London. Major airlines such as easyJet and Ryanair even established bases there. However, the sudden onset of the Covid-19 pandemic in 2020 put a stop to international travel.
In 2021, amidst the ongoing pandemic affecting travel, the company received a loan of £125m from Carlyle to stabilize its finances during the crisis. However, Carlyle accused Esken of violating the loan terms and demanded the return of £200m. The most recent agreement will resolve this conflict.
Source: theguardian.com
