April 23, 2024

Southend Airport to be Acquired by US Private-Equity Group Carlyle in Debt Settlement Deal

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In the latest foreign takeover of a UK firm, Southend Airport is set to transition into the control of US private-equity group Carlyle after a debt settlement agreement. The London-listed aviation group Esken, formerly known as Stobart Group, disclosed that it has reached a deal over the £193.75 million debt owed by its subsidiary London Southend Airport to Carlyle Global Infrastructure Fund (CGI).

According to the agreement, Carlyle will acquire an 82.5% stake in the Essex-based 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 without any return.

Esken clarified that the restructuring was chosen due to a lack of financial resources to engage in a prolonged court battle. The restructuring process will undergo a court process, expected to take several months to conclude. Esken assured that the future funding of London Southend Airport is secure, and the board will proceed with the orderly wind-down of the remaining group.

The deal also involves Cyrus Capital Partners, a London-based private-equity firm holding a £53 million bond maturing on May 8. Cyrus Capital Partners will provide liquidity to the Esken group during the process. Additionally, a short-term unsecured £5 million bridge loan is included as part of a commitment of £32 million in new funding to support the airport’s future growth.

John Upton, the airport’s chief executive, emphasized Carlyle and Cyrus Capital Partners’ extensive experience in the aviation industry and deep knowledge of London Southend Airport.

This development follows a trend of foreign entities acquiring British companies attracted by low valuations, with UK assets perceived as affordable amid a weaker pound, economic challenges, and Brexit repercussions. The restructuring of Southend Airport signifies the impact of the COVID-19 pandemic on the aviation industry, and this deal settles a dispute over a loan agreement between Carlyle and Esken.

As foreign interest in UK firms continues, observers are keenly watching the economic landscape for further acquisition activity and potential implications for British businesses.

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