London Southend Airport Seeks Fresh Funds After Carlyle Calls Default Event - BLOOMBERG
FEBRUARY 05, 2024
BY Bloomberg News
(Bloomberg) -- The aviation group that controls London Southend Airport said it’s seeking fresh funds because its turnaround plan has been delayed by a dispute with stakeholder Carlyle Group.
Esken Ltd. “is monitoring the impact of such delays and assessing appropriate contingency planning, including exploring access to alternative funding to cover these delays,” it said in a statement Monday.
Carlyle’s infrastructure unit is demanding early repayment on a £194 million ($244 million) convertible loan it extended to Southend in 2021, claiming the airport had breached the financing terms. London Southend Airport “concluded that there is no default or event of default,” according to the Esken statement.
The standoff is thwarting a plan to stabilize the airport’s finances before it can be sold, Esken said. That includes the disposal of non-core assets, a potential outlay of £20 million from Esken’s largest shareholders and the amendment and extension of an exchangeable bond due in May.
“Following repeated and continuing defaults under our loan agreement since 2022, Carlyle can no longer wait patiently, putting the position of its investors and the ongoing success of London Southend Airport at risk,” a spokesperson for Carlyle said in an emailed statement to Bloomberg News, echoing comments made in January.
The airport has struggled to bounce back following the pandemic. The broader Esken group reported negative Ebitda in the six months through to August 2023 and had £27 million in available cash at the end of the period.
“Esken is financially distressed and is not in a position to support the airport’s full recovery and growth nor execute an orderly sale of the airport,” according to the Caryle representative.
Esken said it will be submitting a proposal to settle with Carlyle to avoid expensive litigation or damage the value of the company.
The group faces a “material adverse impact” if it is unable to move forward with either the original turnaround plan or secure alternative arrangements in coming months, Esken warned. Esken’s stock slumped 21% as of 3:54 p.m. in London, extending its 2024 slide to 58%.
(Updates share move in last paragraph. A previous version corrected company description in first paragraph.)