London Southend Airport is set to fall under the control of US private equity firm Carlyle Group as part of a complex restructuring deal.
The airport has been at the centre of a battle between the airport’s owner Esken, previously known as Stobart Group, and Carlyle – which is a significant lender to the group.
Esken is poised to lose ownership of the airport in a debt-for-equity swap involving Carlyle and hedge fund Cyrus Capital Partners, another lender.
Southend Airport has agreed to a proposed recapitalisation plan to cancel Caryle’s debt in return for the US fund taking ownership.
Carlyle, which is one of the world’s largest private equity firms, will become the majority owner of the airport, with Cyrus taking a minority stake. Esken will also have a small holding in the business.
Carlyle’s involvement in the business arises from a £125m loan granted to Southend three years ago.
The US private equity group claimed in September that Esken had broken the terms of the loan, which led to it demanding early repayment. The airport had rejected the claim.
Monday’s agreement includes a pledge to invest £32m of new funding into the airport, which caters to passenger and cargo.
Southend chief executive John Upton backed the deal, saying it was “great news for everyone connected with London Southend Airport”.
Esken said it was considering the deal but added that a “consensual outcome would be in the interests of all parties”.
Shares in Esken fell 50pc after the announcement as the restructure effectively wipes out the company’s ownership of Southend.
“Carlyle and Cyrus are excited to work closely with John and the rest of London Southend Airport’s management team to capitalise on the many opportunities ahead,” the two firms said in a joint statement.
“This transaction combines our financial strength and expertise with new funding to secure the airport’s long-term future for the benefit of all stakeholders and ensures the airport is well-positioned to thrive.”
