Esken considers deal to give up control of Southend Airport

The airport, which serves London, has struggled to bounce back after the pandemic.

Southend Airport has struggled to bounce back after the pandemic (Chris Radburn/PA) (PA Archive)

The owner of Southend Airport could cede control over the site in a deal with one of its major lenders which it said secures the future of the airport.

Esken, formerly known as Stobart Group, said that it was mulling a deal which would settle a dispute with a US private equity giant over a loan.

Amid the Covid pandemic in 2021, a highly difficult time for travel companies, Esken borrowed £125 million from Carlyle to secure the airport’s finances.

Southend had performed well before the pandemic but it has struggled to regain its shine since then, with recovery lagging behind London’s other airports. In 2020 easyJet announced it would close its base at the airport, although the airline has since returned and runs several flights from the airport.

Carlyle claimed that Esken had broken the terms of its loan and asked for £200 million back.

Esken, together with its advisers, is urgently reviewing and assessing the terms and potential financial impact of the recapitalisation proposal on the company and its wider stakeholders and will then decide whether to accept the terms of the recapitalisation proposal

Esken

On Monday Esken said that it had “negotiated a recapitalisation proposal with Carlyle”, which would serve “as a solution to the dispute.”

Esken now has until March 4 to decide whether it wants to accept the solution.

“Esken, together with its advisers, is urgently reviewing and assessing the terms and potential financial impact of the recapitalisation proposal on the company and its wider stakeholders and will then decide whether to accept the terms of the recapitalisation proposal,” the business said.

The deal would mean that Esken’s stake in London Southend Airport Company Limited (LSA) would be “significantly reduced to a minority interest”. But it would also include money to ensure the airport stays open.

“Funding of the proposal agreed with the board of LSA includes support from both (Carlyle) and (Cyrus Capital Partners) to secure the future of the airport,” the business said.

“There can be no certainty that any of these discussions will lead to a consensual agreement, but Esken believes that a consensual outcome would be in the interests of all parties and will take all reasonable steps to facilitate such an outcome,” Esken said.

“The company is also undertaking contingency planning, including exploring access to alternative funding to cover its liquidity needs.

“The recapitalisation proposal, if agreed to by the company or imposed on it by the courts, could have a material adverse impact on the group.”

Shares had fallen by about 43% around midday on Monday.