Southend Airport will be controlled by US private equity group Carlyle Group after agreeing a debt settlement deal, the latest takeover of a British company by a foreign firm.
London-listed aviation group Esken (formerly Stobart Group) said it had reached an agreement on a £193.75 million debt owed by its subsidiary London Southend Airport to Carlyle Global Infrastructure Fund (CGI).
Under the agreement, CGI will hold an 82.5% stake in Essex Airport, while Esken will retain a 17.5% stake. As part of the process, Esken’s shares will be delisted from the London Stock Exchange, leaving shareholders empty-handed.
“Any returns expected to shareholders at the end of this process are likely to be minimal,” Esken said in a note. Statement to the London Stock Exchange.
The deal, which has been agreed with the airport’s board, includes a short-term unsecured bridge loan of £5m to the hub as part of a £32m new funding commitment to secure its future growth.
Esken said it chose to restructure because it lacked the financial resources to fight a protracted court battle. Reorganization will require court proceedings.
It added: “The court proceedings over Esken’s restructuring plan are likely to take months to conclude, but in the meantime, London Southend Airport’s future funding is secured and the board will proceed with the orderly closure of the remaining group. .”
The deal also involves London-based private equity firm Cyrus Capital Partners, which holds a £53 million bond due on May 8 and will provide liquidity to Esken Group in the process.
The airport’s chief executive, John Upton, previously said Carlyle and Sellers have “extensive experience in the aviation industry and a deep understanding of our airport.”
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The news comes just a day after British telecoms company Spirent Communications accepted a £1 billion bid from US rival Arizona-based Viavi Solutions.
Foreign buyers have made a series of takeover bids for British companies, looking to take advantage of low valuations. British assets are considered cheap due to a weak pound, a struggling economy and the lingering impact of Brexit.
Southend underwent an ambitious redevelopment a decade ago and looks set to grow exponentially among airports serving London as airlines such as easyJet and Ryanair establish bases in London. But then the Covid-19 outbreak brought international travel to an abrupt halt in 2020.
In 2021, as the pandemic continued to put pressure on the travel industry, the company borrowed £125 million from Carlyle to secure its financial position through the crisis. Carlyle later claimed Esken had breached the terms of the loan and demanded the return of £200m. The latest agreement will resolve the dispute.
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