London Southend airport’s parent company is examining a recapitalisation proposal aimed at resolving a dispute with investors over a convertible loan.
Carlyle Global Infrastructure Fund provided the loan but has alleged technical breaches of the loan agreement, and recently started pursuing early repayment – a situation which has put pressure on the airport operator and parent Esken.
The operator has disputed the justification for the early repayment demand, but Esken has sought to avoid litigation by pursuing a negotiated settlement.
This has resulted in the operator’s negotiating a recapitalisation proposal to secure the airport’s future, which would be funded by Carlyle Global Infrastructure Fund and Cyrus Capital Partners.
But the proposal would significantly reduce Esken’s shareholding in the airport operator to a minority interest.
Esken says it is “urgently reviewing and assessing” the potential impact of the proposal, before it decides whether to accept the terms.
The parent and its aviation subsidiary would need to agree to the terms by 4 March in order for it to proceed consensually.
Without their agreement, the recapitalisation would be implemented through a restructuring plan for which the airport operator would make a court application.
Esken says such a court process could result in shareholdings being cancelled and the airport’s undergoing a change of ownership. It states that it is considering whether the proposal is acceptable, or whether it should legally contest the restructuring.
