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The owner of Southend airport is considering a deal to give up control of the business to US private equity giant Carlyle following a bitter dispute over its future.
London-listed Esken on Monday said it had received a proposal from Carlyle and hedge fund Cyrus Capital to provide up to £32mn of new funding to the struggling Essex airport, resolving an ongoing row over a loan made to the airport during the pandemic.
Under the terms of the deal, Esken’s shareholding would be reduced to a minority and Carlyle would become the majority owner of the airport. Esken said the airport’s board backed the deal.
Southend and its owner Esken were plunged into crisis in September when Carlyle filed High Court papers arguing that the company had breached the terms of a £125mn loan made to the airport in 2021.
Esken has said the accusations were unfounded, and its chair accused the private equity company of wanting to pick up the airport at a knockdown price. Carlyle said it had made multiple attempts to resolve the conflict.
The convertible loan gave the airport a nominal valuation of £400mn in 2021. But unlike its larger London rivals, Southend has struggled to recover from the impact of the pandemic as airlines abandoned it and retrenched to more established airports. Near deserted this winter, it expects 500,000 people to fly from it this summer, compared with 2mn in the year before the pandemic.
On Monday Esken said a deal between Southend and Carlyle would lead to new funding from both Carlyle and investment firm Cyrus Capital, a creditor to Esken, to “secure the future of the airport”. But Esken said its shareholding would be “significantly reduced to a minority interest”.
Esken has until March 4 to decide, and said it expected the airport to ask the courts to impose the recapitalisation plan if it did not agree.
It added that it “believes that a consensual outcome would be in the interests of all parties and will take all reasonable steps to facilitate such an outcome”.
Formerly known as Stobart Group, Esken shares fell 50 per cent to 19 pence on Monday, giving it a market capitalisation of less than £2mn. Before Monday’s proposed deal was announced, Esken was trying to sell Southend and another airfield in Carlisle, and then wind down and return money to shareholders.
