Southend-3
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Under the loan agreement, Carlyle was supposed to approve capital expenditure by the company above a certain level, a person familiar with the terms said. After one outlay, the US investor deemed Esken to be in breach.
“There have been many repeated and continuing defaults of the convertible loan agreement by London Southend Airport since 2022,” Carlyle said. “Carlyle will take all necessary steps to vigorously defend its investment in light of the defaults that have occurred.”
Esken this week announced to the London Stock Exchange that it had investigated Carlyle’s claims and believed there had been no default.
Carlyle maintains it just wants to get its money back. “Carlyle has made numerous proposals to Esken and the airport to secure the airport’s long-term future, including up to £32mn of new funding,” the firm said.
For Esken, the airport remains the last remnant of an empire that once spanned haulage, energy and infrastructure. The company’s market capitalisation has shrivelled to £4.3mn. Another investment in Carlisle airport has also been battered by the pandemic. It plans to wind down and return money to shareholders after the airports are sold. Shearer said if he was able to do that, then he would look back on the chapter with “a degree of pride”.
“My sole objective is to make sure the airport doesn’t close. But if Carlyle decided to adopt a scorched earth policy, who knows what might happen?"
“There have been many repeated and continuing defaults of the convertible loan agreement by London Southend Airport since 2022,” Carlyle said. “Carlyle will take all necessary steps to vigorously defend its investment in light of the defaults that have occurred.”
Esken this week announced to the London Stock Exchange that it had investigated Carlyle’s claims and believed there had been no default.
Carlyle maintains it just wants to get its money back. “Carlyle has made numerous proposals to Esken and the airport to secure the airport’s long-term future, including up to £32mn of new funding,” the firm said.
For Esken, the airport remains the last remnant of an empire that once spanned haulage, energy and infrastructure. The company’s market capitalisation has shrivelled to £4.3mn. Another investment in Carlisle airport has also been battered by the pandemic. It plans to wind down and return money to shareholders after the airports are sold. Shearer said if he was able to do that, then he would look back on the chapter with “a degree of pride”.
“My sole objective is to make sure the airport doesn’t close. But if Carlyle decided to adopt a scorched earth policy, who knows what might happen?"
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Surely, when the courts make their ruling as to whether Esken must pay up for whatever breach(es) might have occurred within this loan agreement, if they can't make said payment then they'll have to go into administration and CGI will more than likely buy the airport from the administrators at a reduced price to what Esken/LSA are currently seeking for it, no?
Surely, when the courts make their ruling as to whether Esken must pay up for whatever breach(es) might have occurred within this loan agreement, if they can't make said payment then they'll have to go into administration and CGI will more than likely buy the airport from the administrators at a reduced price to what Esken/LSA are currently seeking for it, no?
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Yes, indeed, a pre-pack administration is probably the way it'll end up going - unless of course Esken decide to lodge an appeal to any forthcoming court ruling.
As I understand things, I believe CGI are expecting the loan to be repaid by/on 16th Feb, which is this coming Friday, so I guess we'll find out more in the coming few weeks.
A question of course is whether Carlisle Lake District Airport will be included (I'm assuming it will...?), although I appreciate that this should probably be discussed separately over on the CAX thread.
As I understand things, I believe CGI are expecting the loan to be repaid by/on 16th Feb, which is this coming Friday, so I guess we'll find out more in the coming few weeks.
A question of course is whether Carlisle Lake District Airport will be included (I'm assuming it will...?), although I appreciate that this should probably be discussed separately over on the CAX thread.
What on earth are Carlyle going to do with SEN once they (presumably) take ownership ? They just wanted to make money on the loan, not become a facilities management company with legal responsibility for niche specialities like ATC.
If a borrower defaults on their home mortgage, the lender will (eventually) repossess and sell the house at auction to recover the value of the mortgage loan. There's a ready, liquid and well established market allowing an efficient and quick auction. There isn't for airports. Furthermore, Carlyle can't just board it up and hire a few security guards - there are obligations about continuing to allow use by customers, which all comes at a cost.
If a borrower defaults on their home mortgage, the lender will (eventually) repossess and sell the house at auction to recover the value of the mortgage loan. There's a ready, liquid and well established market allowing an efficient and quick auction. There isn't for airports. Furthermore, Carlyle can't just board it up and hire a few security guards - there are obligations about continuing to allow use by customers, which all comes at a cost.
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I take it that if CGI were to takeover ownership, they'd have to honour any existing agreements that are in place with the airlines that currently serve the airport - if they're forced to cancel flights & rebook all the passengers onto flights from other nearby airports at short notice, the airlines won't be best pleased and will likely want to make a claim against CGI for a breach[es] of contract...?!
I believe the freehold of the site is owned by Southend-on-Sea City Council and it's on a long-lease agreement to Esken, so CGI will effectively inherit that and will then need to decide whether to try and renegotiate the terms of said agreement with the Council - same applies to CAX too as the freehold is owned by Cumberland Council.
If CGI did buy LSA (and I'm sure that is by no means the only possible outcome at this stage) they have to operate it as an airport. It's not as if they would be acquiring a freehold site for other potential uses. I'm sure they would take all steps to ensure 'operations as usual' and a seamless take-over.
As the purchase cost to them would probably be well below its potential value outside of a 'fire sale', it might make an attractive proposition with the opportunity to turn a good profit on the deal in a few years time.
As the purchase cost to them would probably be well below its potential value outside of a 'fire sale', it might make an attractive proposition with the opportunity to turn a good profit on the deal in a few years time.
If CGI did buy LSA (and I'm sure that is by no means the only possible outcome at this stage) they have to operate it as an airport. It's not as if they would be acquiring a freehold site for other potential uses. I'm sure they would take all steps to ensure 'operations as usual' and a seamless take-over.
As the purchase cost to them would probably be well below its potential value outside of a 'fire sale', it might make an attractive proposition with the opportunity to turn a good profit on the deal in a few years time.
As the purchase cost to them would probably be well below its potential value outside of a 'fire sale', it might make an attractive proposition with the opportunity to turn a good profit on the deal in a few years time.
Southend council will need to be extremely strict to keep flights going. I'm sure housebuilders will soon be in touch to ask about Carlyle's plans
Won't do them any good as the Lease stipulated the site must be operated as an airport and SCC are very keen to keep it as such so no possibility of housebuilding.
Last edited by Expressflight; 12th Feb 2024 at 07:08. Reason: changed SBC to SCC due City status.
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Why should we be certain that Carlyle will operate SEN on a flights-as-usual basis for a few years unless they absolutely have to ? See Peel at Doncaster-Sheffield.
Southend council will need to be extremely strict to keep flights going. I'm sure housebuilders will soon be in touch to ask about Carlyle's plans
Southend council will need to be extremely strict to keep flights going. I'm sure housebuilders will soon be in touch to ask about Carlyle's plans
Most loan agreements between companies will have a technical grace period of a few days somewhere in the legal agreement. This is to allow for something unexpected and out of the borrower's control that prevents payment being made on the right day - e.g. their bank has a computer systems failure (yes, it does occasionally happen). A lender can send a formal notice of technical default, but there's very little a lender can really do until the technical grace period has expired. I'd expect to wait at least a few days or a week before there are any real fireworks
Is this anything to worry about from a Southend perspective ?
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Aeroitalia website shows the Southend - Bergamo route starting on 25 March 2024 and ending on 29 March 2024. As an aside, Aeroitalia has cut a few Italian domestic routes for dates after 30 March from their website today
Is this anything to worry about from a Southend perspective ?
Is this anything to worry about from a Southend perspective ?
Carlyle has proposed, and Esken are considering, a restructuring plan for London Southend Airport Ltd. that would recapitalise the company. There is a deadline of 4th March 2024 for Esken to agree to this. The result would be that Esken's shareholding in LSA would be considerably reduced to a minority holding. Carlyle and Cyrus Capital Partners would fund the plan to secure the future of LSA.
The London Stock Exchange has this morning issued an RNS announcing this proposal. This proposal puts on hold of course the demand for immediate repayment of Carlyle's loan.
Last edited by Expressflight; 19th Feb 2024 at 07:01.
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I would just add that, “Esken believes that a consensual outcome would be in the interests of all parties and will take all reasonable steps to facilitate such an outcome.”