London Southend airport’s parent company, Esken, has agreed to a restructuring and recapitalisation plan under which it will surrender ownership of the airport operator to investor Carlyle Global Infrastructure Fund.
Carlyle will convert a £193.75 million ($246.5 million) loan into an 82.5% stake in the operator, while Esken will hold the 17.5% balance through conversion of a £24.3 million debt due to its aviation subsidiary.
Esken agreed to the plan after a 4 March deadline was briefly extended.
The recapitalisation proposal aimed to resolve a dispute with Carlyle which had been seeking early repayment of a convertible loan after alleged technical breaches of the loan agreement.
Esken had sought to avoid costly litigation by pursuing a negotiated settlement.
It says its acceptance of the plan – which also involves bondholder Cyrus Capital Partners – means it will proceed “on a consensual basis” rather than a “contested court process”.
The agreement includes an initial £5 million of short-term bridge funding as part of a broader £32 million in new funding to “secure the future growth” of London Southend, adds Esken.
Esken will undergo a court process for restructuring, as part of the plan, which is likely to take several months. It will include delisting of its shares from the London stock exchange.
It states that any return for shareholders at the end of the process is “likely to be negligible”.
Cyrus will provide liquidity to Esken to meet working capital requirements during the process, enabling and “orderly wind-down” of the remaining group. But Esken points out that the future funding for the airport, as a result of the plan, is “secure”.
