Southend airport ‘future secured’ as refinancing deal agreed

Majority ownership of Southend airport is changing hands with £32 million of new funding to secure its future growth.

Aviation group Esken today confirmed that a restructuring plan had been agreed following a recapitalisation deal with creditor Cyrus Capital Partners and US private equity firm Carlyle Global Infrastructure Fund (CGI).

This will see the conversion of a £193.75 million convertible loan due to CGI into an 82.5% stake in the airport.

A £24.3 million debt due by London Southend airport (LSA) to company subsidiary Esken Aviation will be converted into a 17.5% stake.

Esken said: “Funding of the proposal agreed with the board of LSA includes an initial £5 million of short-term unsecured bridge funding to the airport through to the conclusion of the process as part of a commitment of £32 million of new funding to secure the future growth of the airport.”

The company put the airport up for sale last year but court proceedings were issued by Carlyle last year, as it alleged that Esken breached certain terms of the loan.

Esken, formerly Stobart Group, said today that it had agreed to a recapitalisation of Southend airport on a consensual basis, “rather than through a contested court process, which could be potentially destructive for all stakeholders”.

It added: “The expectation is that any return for shareholders at the end of the process is likely to be negligible. 

“Cyrus will provide liquidity to the Esken group to meet its working capital needs during this process and to allow an orderly wind down of the remaining group.

“The court process for the Esken restructuring plan is likely to take several months to conclude but, in the meantime, the future funding of LSA is secure and the board will progress the orderly wind down of the remaining group. 

“Once the documents for the restructuring plan are finalised a further update will be provided when the process and timings will be set out fully.”

Hedge fund Cyrus rescued Flybe during the pandemic after a failed turnaround attempt by Virgin Atlantic but a slimmed down version of the regional carrier collapsed after nine months in January 2023.

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