In addition to the funding being provided, CGI brings significant expertise in investing in and developing airports around the world. This, together with the experienced operational team at LSA will enhance Esken's offering for existing and prospective airline and logistics partners.
David Shearer – Executive Chairman, Esken said "CGI represents a true strategic development partner that will enable us to realise the full potential of LSA. Carlyle is a global investment firm with $260 billion under management.
The combination of the proven operational capability of the LSA management along with the airport development experience of CGI and its financial strength will provide a strong platform as we rebuild our commercial relationships with our airline and other partners into the recovery.
We aim to work closely together to develop a truly exciting London airport proposition. This transaction is structured to release £20 million of funding into LSA to support its recovery and development while providing £100 million of liquidity to the rest of Esken.
We also intend to finalise a new £20 million working capital facility and undertake a documented equity raise of around £40 million. When complete these actions will allow us to emerge from the pandemic positioned strongly for recovery."
Richard Hoskins – Managing Director, Carlyle Global Infrastructure said "We are delighted to partner with Esken Limited to support their vision for London Southend Airport. As one of London's favourite airports, London Southend is attractive for airlines due to its cost-efficient operations base as well as to passengers for the experience and convenience. We look forward to working with Esken and the team at London Southend to realise the airport's full potential."
Background to and reasons for the Transaction
A combination of factors has accelerated the need for a refinancing and additional liquidity is required both to fund Esken's short-term requirements and to enable it to build a strong foundation from which it can return the business to growth and deliver on its longer-term strategic ambitions for Esken's core operations: Energy and Aviation. Following the liquidation of Stobart Air announced on 12 June 2021, Esken now owns and operates two core businesses, being Stobart Energy and its aviation business comprising London Southend Airport as well as Stobart Aviation Services. Whilst the Board believes that these operations have the potential to generate significant value for Shareholders in a post-COVID environment, the recovery will need time and therefore require funding to underpin the business plans through the recovery period. The Board has concluded that while it was originally intended to monetise the Stobart Energy business within the two-year period following the 2020 Capital Raise, this is not the right answer from a shareholder value perspective.
London Southend Airport remains a key strategic asset in the globally important London airport market. That market is expected to recover over the next two to three years and capacity constraints will again become an issue for airlines. It has also developed a strong logistics operation which contributed meaningful revenues throughout the pandemic and this offers scope for further development and value creation. The airport will take longer to fulfil its full potential and will need further investment to capitalise on the long-term opportunity. Discussions with strategic aviation partners have taken place over the last two years, but the uncertainty created by the pandemic meant that Esken had been unable to structure a transaction until now.
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