REG - Esken Limited - Update on LSA & Carlyle Global Infrastructure Fund

EskenAnnouncement

19/02/2024 07:00

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RNS Number : 5231D  Esken Limited  19 February 2024

This announcement contains inside information for the purposes of article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of domestic law by
virtue of the European Union (Withdrawal) Act 2018.

19 February 2024

ESKEN LIMITED

("Esken" or the "Company")

Update on LSA and Carlyle Global Infrastructure Fund

Further to the announcement issued on 5 February 2024, Esken, the aviation
group, announces that the board of the Company's wholly owned subsidiary,
London Southend Airport Company Limited ("LSA"), together with its advisors,
has negotiated a recapitalisation proposal with Carlyle Global Infrastructure
Fund ("CGI") which will be funded by CGI and Cyrus Capital Partners ("Cyrus")
(the majority holder of the exchangeable bond) as a solution to the dispute in
respect of the convertible loan between CGI and LSA.

In order for the recapitalisation proposal to proceed on a consensual basis,
Esken and its wholly owned subsidiary Esken Aviation Limited ("EAL") (as the
parent and intermediate holding company to LSA) would have to accede to this
proposal by 4 March 2024. Esken, together with its advisors, is urgently
reviewing and assessing the terms and potential financial impact of the
recapitalisation proposal on the Company and its wider stakeholders and will
then decide whether to accept the terms of the recapitalisation proposal.

The recapitalisation proposal includes a commitment by LSA to make an
application to court for a restructuring plan under part 26A of the Companies
Act 2006, absent Esken and EAL agreeing to the terms of the recapitalisation
proposal. Esken understands that the terms of the proposed recapitalisation
proposal, whether implemented via a restructuring plan or consensually, would
amongst other things result in EAL's shareholding in LSA being significantly
reduced to a minority interest. Funding of the proposal agreed with the board
of LSA includes support from both CGI and Cyrus to secure the future of the
airport.

A restructuring plan is a court process which can, if the court so decides and
various other criteria are met, amongst other things cancel existing
shareholdings and issue new shares to different parties so as to achieve a
change in ownership of LSA. Esken is considering whether the terms of LSA's
recapitalisation proposal are acceptable or whether it will contest LSA's
restructuring plan through the courts.

The uncertainty that CGI's demand for repayment by LSA has created, has
stalled any progress on (i) the disposal of non-core assets (ii) the potential
£20 million funding facility from certain of Esken's larger shareholders into
EAL and (iii) the amendment and extension of the exchangeable bond, all as
referred to in previous announcements, until the position becomes clear.

In parallel with its assessment of the recapitalisation proposal for LSA,
discussions are continuing with Cyrus, as majority holder of the exchangeable
bond, to understand the impact of such recapitalisation proposal on the
exchangeable bond and which may include a restructuring of Esken. These
discussions include the provision of additional liquidity to Esken and its
subsidiaries.

There can be no certainty that any of these discussions will lead to a
consensual agreement, but 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. The Company is also undertaking contingency planning,
including exploring access to alternative funding to cover its liquidity
needs. The recapitalisation proposal, if agreed to by the Company or imposed
on it by the courts, could have a material adverse impact on the Group.

 

Enquiries:

Esken Limited c/o Teneo

 

Teneo

Olivia Peters

+44 7902 7701008

esken@teneo.com

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