A deal to bring in new investors to recapitalise London Southend airport is “not expected’ be impacted by the firm behind the site entering administration.
Aviation group Esken confirmed that administrators from AlixParners had been appointed after a company restructuring plan “ceased to be commercially viable”.
Esken, formerly Stobart Group, agreed two weeks ago to hand over a majority stake in the Essex airport to private equity investor Carlyle Group Infrastructure Fund to settle a loan of almost £194 million.
Carlyle and investment firm Cyrus Capital Partners confirmed a plan in February to recapitalise the airport, including the provision of up to £32 million in new funding.
Esken said yesterday (Thursday): “Placing the company into administration does not breach the recapitalisation support agreement, as announced on March 6, and therefore is not expected to have any impact on the recapitalisation proposal being implemented in relation to London Southend airport, which will continue to remain fully operational and funded under that proposal.”
The group said at the time that it was attempting a restructure that could take several months.
But Esken revealed that this would now not be going ahead due to concerns over the way the law is applied in Guernsey where the firm is registered.
“Further to the announcement on March 6, the company has concluded – following detailed advice from advisers – that implementation of the proposed restructuring plan in relation to the company has ceased to be commercially viable,” Esken said.
It “has therefore concluded that there is unacceptable risk associated with the court process to achieve the proposed outcome, which could also take considerable time to execute.
“Therefore, after detailed consideration of the company’s current financial situation, and absent any further viable proposals to deliver a stable solution to the challenges faced by the company, the board has now regrettably concluded that the company should be placed into administration in order to protect the interests of stakeholders.”
Esken shares on the London Stock Exchange were suspended and administrators appointed.
EasyJet is the main carrier operating from Southend after returning with a limited network after the pandemic. Destinations served this summer include Alicante, Malaga, Faro, Amsterdam, Paris and Palma.
Balkan Holidays is also to run summer flights to Bourgas in Bulgaria.
The airport handled almost 2.3 million passengers on routes to about 40 destinations in pre-Covid 2019.