US private equity firm Carlyle is poised to acquire an 82.5% stake in London Southend Airport (LSA) after reaching a deal to settle the airport's £193.75 million debt. The current owner, Esken, formerly known as Stobart Group, will retain a 17.5% stake in LSA. The agreement is designed to prevent a contested court process and settle the financial dispute between Esken and Carlyle Global Infrastructure Fund (CGI).
Esken's decision to accede to the recapitalization proposal marks a consensual resolution to the debt issue, ensuring the airport's future funding and avoiding potential challenges for all stakeholders. The restructuring plan includes Carlyle converting its £194 million loan into an 82.5% equity stake, providing a secure financial foundation for LSA.
Esken will also undergo its own restructuring, with creditor Cyrus Capital Partners converting a bond into equity. The shares of Esken will be delisted in London. To support the airport during the restructuring process, an initial £5 million of short-term funding will be provided, with a total commitment of £32 million in new funds to safeguard LSA's future.
While Southend Airport faced uncertainty amid the COVID-19 pandemic, the latest deal settles the financial dispute that arose when Carlyle claimed Esken had violated loan terms and sought a £200 million repayment. The resolution paves the way for the orderly wind-down of the remaining parts of the Esken group.
Esken acknowledged the potential for a protracted court battle and opted for the consensual agreement to secure the airport's future promptly. The restructuring plan for Esken is expected to undergo a court process lasting several months.
The future of London Southend Airport is crucial for the region, which saw challenges to passenger numbers during the pandemic. The deal provides a pathway for LSA to navigate these challenges, with Carlyle taking a majority stake and Esken retaining a strategic interest in the airport's future.
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