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  • Writer's pictureShernel Thielman

Carlyle Takes Majority Stake in London Southend Airport in Debt Settlement Deal

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.

Investment Disclaimer: The information provided in this article is for informational purposes only and does not constitute financial advice, investment recommendations, or an offer to buy or sell any securities. Readers are advised to conduct their own research and due diligence and consult with a qualified financial advisor before making any investment decisions. The author and the platform shall not be held responsible for any investment actions taken based on the information provided in this article.

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