REG - Esken Limited - Proposed Disposal of Esken Renewables
01/11/2023 08:45
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RNS Number : 0280S Esken Limited 01 November 2023
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.
1 November 2023
ESKEN LIMITED
("Esken" or the "Company")
Proposed Disposal of Esken Renewables
Proposed Transfer from Premium Listing to Standard Listing
Esken, the aviation and renewable energy group, is pleased to announce that it
has agreed the conditional disposal of its wholly owned subsidiary, Esken
Renewables Limited ("Esken Renewables"), (the "Disposal").
Key terms of the Disposal
· The proposed disposal of the entire issued share capital of Esken
Renewables to Pioneer Balmoral UK Limited (the "Purchaser"), a vehicle fully
owned and funded by the sustainable infrastructure fund, Pioneer
Infrastructure Partners SCSp, managed by Pioneer Point Partners LLP
("Pioneer");
· Consideration for the entire issued share capital of Esken Renewables
of £77.6 million, plus the Intercompany Loan Reimbursement, expected to total
£6.9 million, which represents an equity value of £84.5 million, to be
satisfied in cash. This reflects an enterprise value of £107.7 million, with
adjustments made for cash and debt like items;
· Net proceeds of the Disposal are expected to total £78.5 million
(which includes the Intercompany Loan Reimbursement and is net of transaction
costs), which will be used to immediately repay the £55 million of committed
funding drawn under the Facilities Agreement and associated costs (based on
the Company's latest calculation, the amount to settle will be £70.6 million
in total). The balance of the net proceeds will be used: (i) to further
contribute approximately £3.6 million to the Group's defined benefit pension
scheme; and (ii) to provide additional working capital in the short term;
· The Disposal will provide Esken with increased financial stability to
support the previously announced managed sale of London Southend Airport
("LSA"). While early in the process, the Board has been encouraged by the
initial level of interest from a range of parties who recognise the long-term
strategic value of LSA;
· Completion of the Disposal is conditional on inter alia: approval by
Shareholders at the General Meeting; the Deed of Settlement and Variation
being duly executed by Esken Renewables and Tilbury Green Power Limited
("TGP"); and the satisfaction or waiver of the Cash Sweep Condition; and
· The Disposal is expected to complete in early December 2023.
David Shearer, Executive Chairman of the Company commented:
I am pleased to be able to announce the sale of our Renewables business today.
It is almost a year since the Board announced that we would undertake a
strategic review of the core operations of the Group. Since then, we have
worked with advisers on a comprehensive process to find the right strategic
partner for the Renewables business going forward. I am pleased that, in
Pioneer, we have found such a partner and wish the proposed new owners, as
well as the management team and staff, good luck for the future.
The sale of Esken Renewables is a positive outcome set against a persisting
challenging market with an increase in interest rates over the last 12 months
that has supressed M&A activity. Following this sale, and subsequent
repayment of our debt facility, our focus will now primarily turn to
addressing the maturity and terms of the Exchangeable Bond, and to the sale of
LSA, to facilitate a managed process to realise value for Shareholders.
Proposed Transfer and Executive Remuneration Scheme
In addition, the Board intends to transfer the Company's listing from the
Premium Listing segment of the Main Market of the London Stock Exchange to the
Standard Listing segment (the "Proposed Transfer").
The Board also intends to introduce a new Executive Remuneration Scheme which
will facilitate certain incentive entitlements for its Executive Directors,
that fall outside the scope of the Company's current remuneration policy, and
seeks shareholder approval to implement the Executive Remuneration Scheme.
The Disposal, the Proposed Transfer and the implementation of the Executive
Remuneration Scheme, are all subject inter alia to approval of Shareholders at
the General Meeting. A circular, convening the General Meeting, will be
published and notified to Shareholders shortly (the "Circular").
Enquiries:
Esken Limited C/o Teneo
Canaccord Genuity
Adam James, Emma Gabriel (Sponsor and Broker)
Chris Robinson, Ben Spencer (Financial Adviser)
0207 523 8000
Teneo
Olivia Peters / Giles Kernick
020 7353 4200
esken@teneo.com
TB Cardew, PR Advisers to Pioneer Point Partners
Tom Allison
T: +44 (0) 7789 998 020
Henry Crane
T: +44 (0) 7918 207157
Important Notices
Information regarding forward-looking statements
This announcement contains statements which are, or may be deemed to be,
"forward-looking statements" which are prospective in nature. All statements,
other than statements of historical fact, are forward-looking statements. They
are based on intentions, beliefs or current expectations and projections about
future events, and concerning, among other things, the business, results of
operations, prospects, growth and strategies of, the Company, the Group, Esken
Renewables or the Continuing Group, and are therefore subject to risks and
uncertainties which could cause actual results to differ materially from the
future results expressed or implied by the forward-looking statements. Often,
but not always, forward-looking statements can be identified by the use of
forward-looking words such as "plans", "expects", "is expected", "is subject
to", "budget", "scheduled", "estimates", "forecasts", "goals", "intends",
"anticipates", "believes", "targets", "aims", "hopes", "continues" or
"projects". Words or terms of similar substance or the negative thereof, are
forward-looking statements, as well as variations of such words and phrases or
statements that certain actions, events or results "may", "could", "should",
"would", "might" or "will" be taken, occur or be achieved. Such statements are
qualified in their entirety by the inherent risks and uncertainties
surrounding future expectations.
Forward-looking statements include statements relating to: (a) future capital
expenditures, expenses, revenues, earnings, economic performance,
indebtedness, financial condition, dividend policy, losses and future
prospects; (b) business and management strategies and the expansion and growth
of the Company's, the Group's, Esken Renewables' or the Continuing Group's
operations; and (c) the effects of economic conditions on the Company's, the
Group's, Esken Renewables' or the Continuing Group's business.
Such forward-looking statements involve known and unknown risks and
uncertainties that could significantly affect expected results and are based
on certain key assumptions. Many factors may cause actual results, performance
or achievements of the Company, the Group, Esken Renewables or the Continuing
Group to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. Important
factors that could cause actual results, performance or achievements of the
Company, the Group, Esken Renewables or the Continuing Group to differ
materially from the expectations of the Company, the Group, Esken Renewables
or the Continuing Group include, among other things, general political,
business and economic conditions, industry and market trends, competition,
changes in government and changes in law, regulation and policy, including in
relation to taxation, as well as political and economic uncertainty
(including, but not limited to, the Ukraine-Russia conflict), stakeholder
perception of the Company, the Group, Esken Renewables or the Continuing Group
and/or the sectors or markets in which it operates. Such forward-looking
statements should therefore be construed in light of such factors. Any
information contained in this announcement on the price at which shares or
other securities in the Company have been bought or sold in the past, or on
the yield on such shares or other securities, should not be relied upon as a
guide to future performance.
Neither the Company nor any of its Directors, officers or advisers provides
any representation, assurance or guarantee that the occurrence of the events
expressed or implied in any forward-looking statements in this announcement
will actually occur. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as at the date of this
announcement.
Other than in accordance with its legal or regulatory obligations, neither the
Company nor the Sponsor is under any obligation to, and each of the Company
and the Sponsor expressly disclaims any intention or obligation to, update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
No profit forecast
Unless otherwise stated within this announcement, no statement in this
announcement is intended as a profit forecast or a profit estimate and no
statement in this announcement should be interpreted to mean that earnings,
earnings per share or income, for the Company, the Group, Esken Renewables or
the Continuing Group, as appropriate, for the current or future financial
years will necessarily match or exceed the historical published earnings,
earnings per share or income for the Company, the Group, Esken Renewables or
the Continuing Group, as appropriate.
Rounding
Percentages in tables have been rounded and accordingly may not add up to 100
per cent. Certain financial data have also been rounded. As a result of this
rounding, the totals of data presented in this announcement may vary slightly
from the actual arithmetic totals of such data.
Cautionary statement
This announcement is not intended to, and does not constitute, or form part
of, any offer to sell or an invitation to purchase or subscribe for any
securities or a solicitation of any vote or approval in any jurisdiction.
Shareholders are advised to read carefully the formal documentation in
relation to the Disposal once it has been despatched. Any response to the
Disposal should be made only on the basis of the information in the formal
documentation to follow.
This announcement has been prepared for the purpose of complying with the
applicable law and regulation of the United Kingdom and information disclosed
may not be the same as that which would have been disclosed if this
announcement has been prepared in accordance with the laws and regulations of
jurisdictions outside the United Kingdom.
Important information relating to financial adviser
Canaccord Genuity Limited (the "Sponsor"), which is authorised and regulated
in the United Kingdom by the Financial Conduct Authority, is acting solely for
the Company, and for no-one else, as sponsor, broker and financial adviser in
connection with the Disposal and the Proposed Transfer and will not be
responsible to anyone other than the Company for providing the protections
afforded to its clients or for providing advice to any other person in
relation to the Disposal and the Proposed Transfer, the content of this
announcement or any other matters described in this announcement. To the
fullest extent permitted by law, neither the Sponsor nor any of its affiliates
assumes any responsibility whatsoever for or makes any representation or
warranty express or implied, in relation to the contents of this announcement,
including its accuracy, completeness or verification or for any other
statement made or purported to be made by it, or on its behalf and nothing
contained in this announcement is, or shall be, relied upon as a promise or
representation in this respect whether as to the past, present or future, in
connection with the Company, the Group, Esken Renewables, the Continuing
Group, the Disposal or the Proposed Transfer. The Sponsor and its affiliates
accordingly disclaim to the fullest extent permitted by law all and any duty,
responsibility and liability whether arising in tort, contract or otherwise
which it might otherwise be found to have in respect of this announcement or
any such statement or otherwise.
Publication on website
A copy of this announcement will be available for inspection on the Company's
website at: www.esken.com. For the avoidance of doubt, the contents of this
website are not incorporated into and do not form part of this announcement.
Inside information
This announcement contains inside information. The person responsible for
arranging this announcement on behalf of Esken is Adam Davidson, General
Counsel and Company Secretary.
Proposed disposal of Esken Renewables Limited, proposed transfer from Premium
Listing to Standard Listing and certain proposals for executive remuneration
Introduction
The Board today announces the proposed disposal by its subsidiary, Esken
Holdings Limited (the "Seller"), of the entire issued share capital of Esken
Renewables to Pioneer Balmoral UK Limited, a vehicle fully owned and funded by
the sustainable infrastructure fund, Pioneer Infrastructure Partners SCSp,
managed by Pioneer Point Partners. The consideration for the entire issued
share capital of Esken Renewables is £77.6 million, plus the Intercompany
Loan Reimbursement, expected to total £6.9 million, which represents an
equity value of £84.5 million, to be satisfied in cash. This reflects an
enterprise value of £107.7 million, with adjustments made for cash and debt
like items.
In addition, the Company announces its intention to transfer the Company's
listing from the Premium Listing segment of the Main Market of the London
Stock Exchange to the Standard Listing segment.
The Board also intends to introduce an Executive Remuneration Scheme which
will facilitate certain incentive entitlements for its Executive Directors
that fall outside the scope of the Company's current remuneration policy.
The Disposal, the Proposed Transfer and the implementation of the Executive
Remuneration Scheme are all subject to approval of the Company's shareholders
at the General Meeting. The Circular, convening the General Meeting, will be
published and notified to Shareholders shortly.
Pursuant to an agreement between the Purchaser and the Seller in relation to
the Disposal (the "Disposal Agreement"), the Seller has conditionally agreed
that it will dispose of Esken Renewables to the Purchaser. Esken Renewables
is the United Kingdom's largest supplier of waste wood fuel, with contracts in
place to supply c.1.7 million tonnes of waste wood fuel to dedicated biomass
plants across the United Kingdom. The Disposal will be satisfied in cash and
the net proceeds of the Disposal are expected to be £78.5 million (which
includes the Intercompany Loan Reimbursement and is net of transaction costs).
The sale of Esken Renewables constitutes a class 1 transaction pursuant to the
Listing Rules and as such requires the approval of Shareholders at a General
Meeting. The Proposed Transfer and the proposed Executive Remuneration Scheme
also require prior approval of Shareholders at a General Meeting. A notice of
the General Meeting, at which Shareholder approval will be sought for, inter
alia, the Disposal, the Proposed Transfer and the Executive Remuneration
Scheme, will be set out in the Circular.
Background to and reasons for the Disposal
As previously announced, Esken conducted a strategic review of its operating
businesses, which concluded that it was in the best interests of all
stakeholders to secure the long-term potential of these businesses and deliver
value for Shareholders through a managed disposal process.
The Board is now pleased to announce the proposed conditional disposal of
Esken Renewables.
The Board believes that the Disposal will allow Esken Renewables to benefit
from having a long-term strategic owner to support its growth ambitions
through the expertise, resources and access to capital of the Purchaser. It
will also crystallise value for Shareholders and precipitates the repayment
and closure of the debt drawn under the Facilities Agreement and will thus
significantly reduce the Continuing Group's debt financing costs going
forwards. It will also be used for working capital in the short term.
The Board believes that the Disposal is in the best interests of the Company
and its Shareholders for the following reasons:
· It is in line with the strategy to deliver value to Shareholders;
· Following an extensive competitive sales process in a difficult
market, the Disposal has been achieved at a purchase price which unlocks value
for Shareholders and will allow for the repayment and closure of the committed
funding under the Facilities Agreement;
· It supports the Continuing Group's strategy to reduce existing
indebtedness;
· It provides for an immediate injection of cash into the Continuing
Group to facilitate the managed reduction of the Continuing Group's support
functions, to contribute to the Group's defined benefit pension scheme, and to
fund working capital and other financial obligations in the near term; and
· It provides for increased financial stability of the Continuing Group
so as to support:
(i) the finalisation and entry into a potential £20 million funding
facility from certain of Esken's larger Shareholders into Esken Aviation, as
holding company of the LSA Group ("Potential £20 million LSA Facility");
(ii) the entry into binding documentation for the disposals of the
non-core assets of Pollington and Port of Weston, in which the Group has
entered into a non-binding heads of terms for aggregate cash consideration of
£8.5 million (the "Heads of Terms for Pollington and Port of Weston");
(iii) a potential renegotiation of the terms and/or deferral of the
maturity of the Exchangeable Bond beyond 8 May 2024; and
(iv) a managed sale process of the Continuing Group's remaining core
operating division (being the LSA Group) as well as its non-core assets, with
a view to ultimately returning remaining available value to Shareholders.
Information on the Purchaser
The Purchaser is a vehicle fully owned and funded by the sustainable
infrastructure fund, Pioneer Infrastructure Partners SCSp, managed by Pioneer.
Summary of key terms of the Disposal
The Seller has agreed to sell the entire issued share capital of Esken
Renewables for consideration of £77.6 million plus the Intercompany Loan
Reimbursement, expected to total £6.9 million, which represents an equity
value of £84.5 million, to be satisfied in cash. This reflects an enterprise
value of £107.7 million, with adjustments made for cash and debt like items.
The net proceeds of the Disposal are expected to be £78.5 million (which
includes the Intercompany Loan Reimbursement and is net of transaction costs).
The Seller has given certain warranties and indemnities to the Purchaser,
further details of which will be set out in the Circular.
Completion is conditional upon, inter alia: the passing of the Disposal
Resolution at the General Meeting to be convened by the Company; the Deed of
Settlement and Variation being duly executed by Esken Renewables and TGP,
being the settlement of certain matters and variation of the fuel supply
agreement with one of Esken Renewables' key customers; and the satisfaction or
waiver of the Cash Sweep Condition.
In the event that the Disposal is not approved at the General Meeting prior to
the Longstop Date, being eight weeks from the date of the Disposal Agreement,
the Purchaser would be entitled to a break fee under the Disposal Agreement up
to a maximum aggregate amount of £276,000.
Financial Information on Esken Renewables
The financial information on Esken Renewables contained in this paragraph has
been extracted, without material adjustment, from the financial information
table on Esken Renewables for the three years ended 28 February 2023
(Historical Financial Information Relating to Esken Renewables), full details
of which will be contained in the Circular.
2023 2022((4)) 2021((4))
(£'000) (£'000) (£'000)
Revenue................................................................ 93,748 79,650 75,019
Adjusted EBITDA((2)) ................................................ 18,340 20,399 10,108
Profit / (loss) before tax((3))...................................... 7,927 3,690 (704)
Notes:
(1) The income statements presented above are unaudited.
(2) Adjusted EBITDA represents profit/(loss) before interest, tax on
profits, depreciation amortisation, impairments and the addback of certain
intra-group costs.
(3) Includes impairments, which totalled £(1.0) million in the financial
year ended 28 February 2023, £(6.8) million in the financial year ended 28
February 2022, and £nil in the financial year ended 28 February 2021.
Excludes intra-group branding charges, which totalled £(1.0) million in the
financial year ended 28 February 2023, £(0.6) million in the financial year
ended 28 February 2022, and £(0.8) million in the financial year ended 28
February 2021.
(4) Values inclusive of prior year adjustment made as part of the 2023
audit - see the Group's annual report and accounts for the financial year
ended 28 February 2023 available on Esken's website (www.esken
(http://www.esken) .com) for further details.
As at 28 February 2023, Esken Renewables had audited total assets of £97.6
million and net assets of £33.5 million.
After 28 February 2023, as part of the Disposal, the Group will transfer
certain of its properties (being its office, processing site and estate access
road in Widnes) to Esken Renewables, as these are properties that were and
continue to be used predominantly by Esken Renewables rather than any other
member of the Group. These transfers release the Group from the ongoing lease
liability for the Widnes office and processing site, and remove the Group's
ongoing maintenance liability in relation to the Widnes estate access road.
Financial effects of the Disposal and use of proceeds
Financial effects of the Disposal
As Esken holds 100 per cent. of Esken Renewables, the Group's consolidated
accounts include Esken Renewables.
Following Completion, the Continuing Group will no longer receive the
profitable contribution that Esken Renewables currently makes to the Group's
financial results. Further information on the financial effects of the
Disposal, including pro-forma financial information, will be set out in the
Circular. In the Group's forthcoming interim results for the six month period
ending 31 August 2023, which are due to be published by 30 November 2023,
Esken Renewables will be reclassed as a disposal group held for sale and a
discontinued operation.
Use of proceeds
The net proceeds of the Disposal are expected to be £78.5 million (which
includes the Intercompany Loan Reimbursement and is net of transaction costs).
The net proceeds receivable by the Seller will be used by the Continuing Group
to immediately repay the £55 million of committed funding drawn under the
Facilities Agreement and associated costs (based on the Company's latest
calculation, the amount to settle will be £70.6 million in total). The
balance of the net proceeds will be used: (i) to further contribute
approximately £3.6 million to the Group's defined benefit pension scheme,
which the Board expects to be sufficient to fund the scheme through buy-in,
buy-out and wind up; and (ii) to provide additional working capital in the
short term.
The residual net cash of the Disposal, together with any consideration from
the anticipated disposal of certain of the Continuing Group's non-core assets,
will increase the financial stability of the Continuing Group in the short
term thus supporting it: (i) to finalise the Potential £20 million LSA
Facility into Esken Aviation to provide certain funds as necessary to support
the recovery of LSA and allow a managed sale process; (ii) to enter into
binding documentation for the disposals of the non-core assets of Pollington
and Port of Weston; and (iii) to potentially renegotiate the terms and/or
deferral of the maturity of the Exchangeable Bond beyond the current maturity
date of 8 May 2024.
Group Strategy of the Continuing Group
Following the Disposal, the Continuing Group will comprise: (i) Esken
Aviation, principally comprising the LSA Group; and (ii) non-core assets.
The strategy of the Continuing Group (which assumes the Disposal will
complete) is as follows:
· to provide support, including, inter alia, by means of the Potential
£20 million LSA Facility into Esken Aviation currently being negotiated by
the Board, for the ongoing recovery of passenger growth at LSA while
continuing the managed sale process to secure a new owner for the LSA Group;
· to dispose of its remaining non-core assets;
· to potentially renegotiate the terms and/or deferral of the maturity
of the Exchangeable Bond beyond the current maturity date of 8 May 2024, and
to subsequently repay and close out the Exchangeable Bond when it becomes due;
· to settle all remaining outstanding liabilities; and
· in time, once sufficient assets have been realised, to seek a managed
sale process of any of the remaining assets of the Continuing Group and return
remaining value to Shareholders.
The Board is discussing heads of terms with certain of Esken's larger
Shareholders in respect of a Potential £20 million LSA Facility into Esken
Aviation, as holding company of the LSA Group. If Esken is successful in
securing this facility, the proceeds are intended to provide funding support
for the operations at LSA including capital expenditure. The Potential £20
million LSA Facility is expected to receive a priority return and repayment
from the proceeds of the sale of the airport after redemption of the Group's
convertible debt facility, provided by Carlyle Global Infrastructure Fund L.P
("CGI") (the "Convertible Debt Facility") at that time. Upon completion of the
Disposal, the Board will seek to finalise the Potential £20 million LSA
Facility and enter into a binding agreement. It is currently envisaged that
this would occur once the Continuing Group has completed the Proposed
Transfer. The Board is also seeking to bring forward the commitment of a
tranche of this facility in the near term. At this stage, there can be no
guarantee that the Potential £20 million LSA Facility or any tranche thereof
will be agreed.
Esken has entered into the non-binding Heads of Terms for Pollington and Port
of Weston for cash consideration of £3.5 million and £5.0 million,
respectively. It is currently envisaged that the Board would enter into
binding documents and complete the disposals in respect of these non-core
assets shortly after the Continuing Group has completed the Proposed Transfer.
There can be no guarantees that the disposals will complete within any time
frame or at all, or, if they do, on what terms, but it is intended that the
proceeds will be used for additional working capital and to extend the
liquidity headroom of the Continuing Group.
With the benefit of, amongst other things, the Potential £20 million LSA
Facility, the disposal of non-core assets for £8.5 million in aggregate in
the near term, and the potential renegotiation of the Exchangeable Bond, it is
anticipated that the Continuing Group will continue to operate as a going
concern (noting that the Group's 2023 Annual Report and Financial Statements
contained a material uncertainty in respect of going concern to which the
auditor drew attention by way of emphasis without modifying their report).
As previously announced, the Board has concluded that the interests of all
stakeholders would be best served by seeking a new owner for the LSA Group
through a managed sale process. The LSA Group would benefit from a long term
strategic owner with access to capital to support its growth ambitions given
the increase in passenger demand in the London market, while offering
stability and certainty to its staff, customers and suppliers.
The process to seek a new owner for the LSA Group is underway. While early in
the process, the Board has been encouraged by the initial level of interest
from a range of parties who recognise the long-term strategic value of LSA.
However, the certainty, value and timing of any such disposal of the LSA Group
cannot be determined at this stage. The market for aviation has improved
significantly recently with strong passenger demand experienced and a return
to pre-pandemic passenger levels by other London airports during the summer
season which, as a result, are increasingly capacity constrained, impacting
both airline and passenger growth. Negotiations continue with multiple
prospective airlines to meet the continued passenger demand and, in turn,
accelerate the trajectory of LSA on its journey back to at least 2.2 million
passengers (2019 level) in the medium term and then to approximately 5 million
beyond, given the Board's estimate of LSA's capability to handle that level
of passengers, with a compelling investment case for the incremental capital
expenditure required.
Assuming that the Company successfully concludes (i) the Disposal, (ii) the
sale of the LSA Group, (iii) the disposal of the non-core assets of the
Continuing Group and addresses the dedicated ground handling team at LSA (if
not sold as part of an LSA Group disposal), (iv) the closure of the
Exchangeable Bond, and (v) settlement of any of the Continuing Group's
material remaining liabilities, the Board's intention would be to return
remaining value to Shareholders, seek to delist the Company from the London
Stock Exchange and to conclude the winding down of the Continuing Group.
Proposed Transfer
The Board is mindful that, following the Disposal, the Continuing Group will
be smaller and that the strategy to sell its remaining assets, including the
LSA Group, and repay or settle outstanding liabilities will further reduce the
size of the Continuing Group.
The Board also wishes to reduce ongoing costs for the Continuing Group and
believes that a transfer of listing from a Premium Listing to a Standard
Listing will assist in that, as it will reduce some of the Company's ongoing
costs of compliance. Whilst the Proposed Transfer will mean that the Company
will no longer be required to comply with the super-equivalent provisions of
the Listing Rules that apply to companies with securities admitted to the
Premium Listing segment of the Official List, the Board's intention is that
there will be no material governance changes as a result of the Proposed
Transfer.
Under the Listing Rules, the Proposed Transfer requires prior approval of
Shareholders by way of special resolution. Shareholders will therefore be
asked to vote on a special resolution relating to the Proposed Transfer at the
General Meeting (the "Transfer Resolution"). If the Proposed Transfer does not
occur because the Transfer Resolution does not pass, the Company's Premium
Listing will continue. The date of the Proposed Transfer must not be less than
20 business days after the passing of the Transfer Resolution at the General
Meeting. Details of the impact of the Proposed Transfer on the Company and its
continuing obligations under the Listing Rules will be set out in the
Circular.
Executive Remuneration Scheme
The Company has reflected on the remuneration required to retain its Executive
Directors for the period during which it intends to implement its strategy for
the Continuing Group. It has concluded that certain incentive arrangements
need to be put in place which fall outside the scope of the Company's current
remuneration policy. It has further concluded that the existing long term
incentive plan in place in the Company, where performance is assessed over a
number of years, is no longer appropriate given the strategy to dispose of the
Continuing Group's assets and return remaining value to Shareholders. These
proposals relate to both future annual bonuses, and future long-term incentive
arrangements, and are intended to directly align the management incentive
arrangements with returns to Shareholders from the disposal processes referred
to above and to aid in the retention of key personnel to oversee
implementation of the Continuing Group's strategy.
Under the Listing Rules, the Executive Remuneration Scheme requires prior
approval of Shareholders by way of an ordinary resolution. Shareholders will
therefore be asked to vote on a resolution relating to the Executive
Remuneration Scheme at the General Meeting, (the "Remuneration Resolution").
Further details on the Executive Remuneration Scheme will be set out in the
Circular.
Current trading, trends and prospects of the Continuing Group
Following the Star Handling Disposal, being the ground handling operations at
Manchester and Stansted airports, the aviation related businesses of the Group
are now entirely focused on the recovery at LSA. The airport has benefitted
during the summer season from the industry's strong passenger demand which has
seen the other London airports return to pre-pandemic passenger levels. The
partnership with easyJet has seen the schedule grow from three to eight
destinations with increasing frequency and strong load factors being
experienced. This has encouraged easyJet to add additional routes with
Alicante, Amsterdam, Geneva and Paris and most recently added, Grenoble to
operate through the winter this year.
Against this positive backdrop, discussions continue on an expanded summer
schedule for 2024 with a number of airlines who recognise the growing capacity
constraints at other London airports and the strong offering from LSA in terms
of operating cost and passenger experience. For instance, a new route to
Bourgas, in partnership with Balkan Airlines, will start in summer 2024. These
new routes and airline partnerships are encouraging signs that LSA's recovery
is now underway. While signs are encouraging, the aviation industry as a whole
has not yet fully recovered from the effects of the pandemic. As an
extension to the growth in scheduled routes, the Jet Centre continues to play
an important role. The Directors intend to pursue new prospects following the
Jet Centre open day in June.
The Board believes it now has a base from which to progress the process to
seek a new owner for the LSA Group. The decision taken by the Board to sell
the LSA Group, in order to crystallise shareholder value and secure the right
long-term partner best placed to support future growth, has been reinforced by
this market momentum. While early in the process, the Board has been
encouraged by the initial level of interest from a range of parties who
recognise the long-term strategic value of LSA. The Board will be focussing
its engagement over the months ahead, with the objective of achieving the best
outcome for stakeholders.
In light of the strategic review triggering the managed sale of the LSA Group,
the estimated repayment date of the Group's Convertible Debt Facility,
provided by CGI, has been brought forward. As required by IFRS 9, the Group
has recalculated the amortised cost of the financial liability leading to a
one-off adjustment through profit or loss, in addition to the monthly interest
charges. The Convertible Debt Facility has a maturity date of 2028; however, a
sale event before this maturity date crystallises early repayment of the
facility in full (principal plus all interest amounting to £193.75 million in
total). This increased interest is a non-cash item and the debt liability will
be settled when the LSA Group is sold. There are no changes to the terms of
the Convertible Debt Facility. The increased one-off non-cash interest charge
is anticipated to total approximately £29.4 million and will be included
within the Group's forthcoming interim results.
On 26 September 2023, Esken received notification that documents filed by CGI
in the High Court have been served on LSA, claiming certain technical breaches
by LSA with respect to the Convertible Debt Facility. LSA does not agree with
CGI's claimed interpretation of the Convertible Debt Facility and intends to
defend the action vigorously. Esken will continue with its sale process to
find the right long-term owner for the airport.
Non-core assets
Following the completed disposal on 3 August 2023 of the investment in Mersey
BioEnergy for cash consideration of £9 million, discussions continue to
progress the remaining non-core assets with a view to realising value for
Shareholders. Further to this, the Group has recognised an impairment of
approximately £5.3 million on its non-core asset at Pollington, reflecting a
reduction in the assessment of the assets net realisable value in light of
ongoing negotiations, in respect of which Esken has now entered into
non-binding heads of terms, over a potential disposal of Pollington and also
Port of Weston (being the Heads of Terms for Pollington and Port of Weston).
The remaining aircraft of the original eight leased by Propius following the
demise of the group of companies known as "Stobart Air" was due to be returned
to the lessor in October 2023. However, due to supply chain challenges, the
return is likely to be delayed by a few months. Landing gear overhaul on one
of the previously returned aircraft agreed with the lessor will then bring to
a conclusion all guaranteed lease payments and return condition obligations in
connection with Propius. The final outcome is expected to remain within the
amounts previously provided in Esken's annual report and accounts for the
financial year ended 28 February 2023 being approximately £25 million and as
at 31 August 2023 is expected to be approximately £5 million.
In line with the stated strategy for managed disposals and the ultimate wind
down of the Continuing Group, the Board has undertaken a consultation with
staff at Continuing Group level and commenced the implementation of a phased
redundancy plan to reduce central costs as disposals are completed, with a
£2.2 million provision for redundancy costs to be included in the Group's
forthcoming interim results.
Group cash and cash equivalents as at 31 August 2023 was £26.9 million,
comprising approximately £7.0 million held within Esken Renewables and
approximately £3.0 million of ring-fenced cash held in LSA and its
subsidiaries (all figures unaudited).
Current trading, trends and prospects of Esken Renewables
The challenges Esken Renewables experienced during the financial year ended 28
February 2023 regarding biomass plant outages have continued into the current
financial year. Plant performance has been behind expectations, with Esken
Renewables exercising the contractual take or pay provisions within its supply
contracts where applicable. The performance of the plants has now improved,
with all major plants currently having returned from any prolonged unplanned
outages.
Gate fees have also been subdued during the first half of the year, although
these are continuing to show signs of improvement, with Esken Renewables being
well stocked ahead of the upcoming winter period.
These issues have been compounded by one-off settlements that have been agreed
with specific plants in relation to contractual negotiations, in parallel with
discussions to seek change of control consents for the Disposal with the same
counterparties, which have impacted year to date profitability. Esken
Renewables has also been impacted by temporary deviation from the exclusive
supply agreement to a key customer, resulting in a reduction in volumes
supplied. The recent resolution of these discussions resulted in a return to
exclusivity in mid-October 2023.
General Meeting
The Disposal, the Proposed Transfer and the Executive Remuneration Scheme are
conditional upon, inter alia, the passing at the General Meeting of the
Disposal Resolution, the Transfer Resolution and the Remuneration Resolution
respectively.
The Disposal Resolution, the Transfer Resolution and the Remuneration
Resolution are independent resolutions and none is conditional upon the
passing of the other Resolutions. If any of the Resolutions are passed, it
will be implemented whether or not the other Resolutions are passed.
The Circular is expected to be posted by the Company to its Shareholders
shortly which will contain a notice convening the General Meeting.
Irrevocable Undertakings
The Company has received an irrevocable undertaking to vote in favour of the
Disposal Resolution and the Transfer Resolution at the General Meeting in
respect of 285,077,383 Ordinary Shares (representing, in aggregate,
approximately 27.8 per cent. of the issued ordinary share capital of the
Company).
Importance of vote
Shareholders will be asked to vote in favour of the Disposal Resolution at the
General Meeting in order for the Disposal to proceed. If the Disposal
Resolution is not passed by Shareholders, the Disposal cannot complete and the
Company will not receive the net proceeds of the Disposal. The Directors
believe that successful completion of the Disposal is required, absent
mitigating actions, to fund the Continuing Group's short-term working capital
requirements and position the Continuing Group to deliver its medium-term
Group strategies.
Attention is drawn to the fact that completion of the Disposal is conditional
upon, amongst other things: the Disposal Resolution being passed at the
General Meeting; the Deed of Settlement and Variation being duly executed; and
the satisfaction or waiver of the Cash Sweep Condition.
a. Impact of completion of the Disposal being delayed or the Disposal not
completing - Liquidity
As at 28 February 2023, the Group had cash balances of £50.3 million.
Included in this cash figure was £5.3 million of cash ringfenced in LSA and
its subsidiaries. Group cash and cash equivalents as at 31 August 2023 was
£26.9 million, comprising approximately £7.0 million held within Esken
Renewables and approximately £3.0 million of ring-fenced cash held in LSA and
its subsidiaries (all figures unaudited). Whilst the Group continues to
tightly manage its cash resources, the current position is that the Group
needs to complete the Disposal prior to mid December 2023, complete other
significant asset disposals or obtain alternative sources of funding, in order
to continue trading.
The Company's auditor included a paragraph in the independent auditor's
reports in respect of each of the financial statements for the years ended 28
February 2022 and 28 February 2023 stating that there is material uncertainty
in respect of the Company's ability to continue as a going concern.
If the Disposal fails to complete by mid December 2023, this is expected to
lead to severe liquidity issues and ultimately the administration of the
Group, absent mitigating actions. The severe liquidity issues, if no
mitigating actions are taken, will lead to a funding shortfall in respect of
the LSA Group, which is expected to occur from 22 December 2023.
Such a funding shortfall in respect of the LSA Group would, in turn, permit
CGI to accelerate the repayment of the Convertible Debt Facility in an amount
of £193.75 million, and thus would also likely lead to a significant or total
loss of the Group's investment in LSA.
A failure to pay any debt over £10 million when due and payable (including by
way of acceleration) by LSA would also trigger an event of default in relation
to the Exchangeable Bond, which would result in the Exchangeable Bond becoming
due and repayable if the trustee of the Exchangeable Bond (acting on
instructions) so declares.
As a result, the Company (as guarantor of the Exchangeable Bond) and key
trading companies in the Group would no longer be able to operate as a going
concern. In such circumstances, the Board or the Group's lenders may resolve
to place the Company and such key trading companies into an administration
process (or equivalent local law procedures), as noted below.
b. Impact of completion of the Disposal being delayed or the Disposal not
completing - Facilities Agreement and consequent effects
If the Disposal fails to complete by mid December 2023, in addition to the
funding shortfall in respect of the LSA Group from 22 December 2023, the Group
will, in mid December 2023 likely breach its covenants under the Facilities
Agreement, absent any mitigating actions. If the Disposal was to be delayed,
the Directors would have a limited amount of time to raise additional funds,
to allow the Group to continue trading. In such circumstances, the lender
under the Facilities Agreement will have no obligation to waive the likely
covenant breach and may not consent to continue to provide funding to the
Group - this may mean that the Group would be unable to meet its liabilities
as they fall due.
In respect of those financial covenants, an event of default would occur in
mid December 2023 by reference to the prior month covenants assessment of the
Facilities Agreement (absent any mitigation). In an event of default, the
lenders under the Facilities Agreement would be entitled to demand immediate
repayment of all principal amounts outstanding under the Facilities Agreement
(£55 million has been drawn as at 31 August 2023) and associated costs (based
on the Company's latest calculation, the aggregate amount to settle is £70.6
million).
Unless the Group is able to agree short-term relief with the lenders under the
Facilities Agreement in order to explore alternative funding options to
refinance the Facilities Agreement, or dispose of all or part of the business
of the Group in order to generate sufficient funds to repay the Facilities
Agreement, the Directors do not expect that the Group would be able to obtain
the funds necessary to pay all due amounts under the Facilities Agreement in
such circumstances. Administration (or equivalent local law procedures) would
therefore become a reasonably likely outcome for the Company, and the key
trading companies in the Group, at that time.
Such a funding shortfall in respect of the LSA Group, would, in turn, permit
CGI to accelerate the repayment of the Convertible Debt Facility in an amount
of £193.75 million. A failure to pay any debt over £10 million when due and
payable (including by way of acceleration) by LSA would trigger an event of
default in relation to the Exchangeable Bond. Enforcement action of the
transaction security granted in favour of the lenders under the Convertible
Debt Facility and the Exchangeable Bond could occur thereafter. Shareholders
would likely lose the benefit of all or a substantial part of their investment
in the Company and the LSA Group as a result.
c. Mitigating actions
The Directors have a number of potential mitigating actions available to them
in the event that the Disposal does not successfully complete by mid December
2023. These primarily comprise: i) disposals of non-core assets, including
potentially bringing forward the Heads of Terms for Pollington and Port of
Weston for aggregate consideration of £8.5 million; (ii) seeking the
potential entry into waivers and/or amendments with the relevant lenders under
the Facilities Agreement, the Convertible Debt Facility and/or the
Exchangeable Bond, to the extent deemed appropriate; (iii) seeking to bring
forward the disposal of the LSA Group; and/or (iv) seeking additional equity,
debt and/or other financing arrangements.
There is, however, a material risk that the aforementioned potential
mitigating actions will not be achievable in the required timeframe to avoid
administration (or equivalent local law procedures) in the event that the
Disposal does not successfully complete by mid December 2023. In addition, as
the Group has already implemented significant cost savings, the Directors
believe that no further significant cost savings are likely possible.
A reasonable worst case scenario if the Disposal does not complete by mid
December 2023, and the lenders under the Facilities Agreement consent to waive
the likely covenant breaches of the Facilities Agreement, is that the Group
will, absent any alternative solution, face liquidity constraints in mid
February 2024 in addition to the Group facing a forecast funding shortfall
within the LSA Group from 22 December 2023.
Consequently, as noted above, if (i) the Disposal does not successfully
complete by mid December 2023, or (ii) the lenders under the Facilities
Agreement do not provide a waiver in respect of the likely covenant breaches
in mid December 2023 in respect of the Facilities Agreement and no further
funding is available, such as from the aforementioned mitigating actions, the
Directors expect that administration (or equivalent local law procedures) of
the Company and of certain key trading companies in the Group, including the
LSA Group, and permit the potential enforcement of the transaction security
granted in favour of the relevant lenders under the Facilities Agreement, the
Convertible Debt Facility and the Exchangeable Bond. Were the lenders to take
such action, Shareholders would likely lose all or a substantial part of their
investment in the Company as a result.
Accordingly, it is critical that Shareholders vote in favour of the Disposal
Resolution, as the Directors consider the Disposal to represent the best
possible transaction for Shareholders as a whole in the current circumstances.
Even if the Disposal is approved by Shareholders, as further disclosed in the
'Working Capital' paragraph below, management's forecasts show a working
capital shortfall in mid February 2024, based on the residual net cash
received from the Disposal and the ongoing funding requirements of the
Continuing Group, absent any mitigating actions. This shortfall widens on 8
May 2024 as a result of the requirement to repay the Exchangeable Bond on that
date (and assuming no refinancing or extension of the Exchangeable Bond).
Under the assumptions of the reasonable worst case scenario, and prior to any
mitigating actions, it is expected that this funding shortfall would continue
to increase on a 12 month horizon and further continue thereafter.
Working Capital
(a) Background to regulatory approach to working
capital disclosure
The requirement of the FCA's Listing Rules in regards this class 1 disposal is
for the Company to make a statement that there is sufficient working capital
available to the Continuing Group for its present requirements or, if not, how
it proposes to provide for the additional working capital needed.
There is guidance in relation to working capital from the FCA contained in
Primary Market Technical Note 619.1 that sits alongside the Listing Rules. The
technical note makes it clear that an issuer has a binary choice - namely
that, if it cannot make a 'clean' working capital statement, then it has to
make a 'qualified' working capital statement. There is no middle ground. The
analysis of sufficiency of working capital is also required to take into
account a wide range of variables and sensitivities to cover a reasonable
worst case scenario.
Accordingly, the working capital disclosure set out below has been included in
consequence of Primary Market Technical Note 619.1.
(b) Working Capital
It is anticipated that Company will make the following statement in the
Circular, that in Company's opinion, taking into account the debt facilities
available to the Continuing Group and the net proceeds of the Disposal, the
working capital available to the Continuing Group is not sufficient for its
present requirements, that is for at least the next 12 months from the date of
the Circular.
(c) Directors' perspectives
The above qualified working capital statement is in respect of an anticipated
working capital shortfall of the Continuing Group in mid February 2024, based
on the residual net cash received from the Disposal and the ongoing funding
requirements of the Continuing Group, absent any mitigating actions. This
shortfall widens on 8 May 2024, as a result of the required repayment of the
Exchangeable Bond on this date (and assuming no refinancing or extension of
the bond).
As detailed in the paragraph entitled Use of Proceeds above, the net proceeds
of the Disposal will predominantly be used to (i) meet the repayment of the
full monies borrowed under the Facilities Agreement and associated costs which
becomes mandatory upon Completion (which would otherwise have become due in
December 2025); (ii) contribute into the Group's defined benefit pension
scheme; and (iii) in the short term to provide additional working capital.
The Exchangeable Bond is currently due to be repaid on 8 May 2024. The cash
outflow for the Exchangeable Bond, with nominal value of £53.1 million, is
dependent on the value of the offsetting listed share collateral held at the
date of maturity, valued at £7.2 million, as at 31 August 2023, which can
either be sold or included as part of the payment by the Group to Exchangeable
Bond holders by way of an in-specie distribution. The Facilities Agreement (of
which £55 million has been drawn down and an additional £30 million is
uncommitted) will cease to be in effect and will no longer be available to the
Continuing Group following its repayment upon Completion of the Disposal.
Esken's aviation related businesses have £3.0 million of ring-fenced cash, as
at 31 August 2023, in the LSA Group. The Continuing Group intends to provide,
primarily by way of the Potential £20 million LSA Facility, funding support
for the operations at LSA including capital expenditure. Due to the structure
of the Convertible Debt Facility, the LSA Group has become a ringfenced asset
and so the LSA Group cash balances are not accessible for use by the remainder
of the Continuing Group.
The Directors have run stress tests and various downside sensitivities on the
Company's business plan to result in a reasonable worst case scenario.
This scenario analysis indicates that the Continuing Group will have a working
capital shortfall in mid February 2024, based on the residual net cash
received from the Disposal and the ongoing funding requirements of the
Continuing Group, absent any mitigating actions. This shortfall widens on 8
May 2024, as a result of the required repayment of the Exchangeable Bond on
this date (and assuming no refinancing or extension of the bond). Under the
assumptions of the reasonable worst case scenario, and prior to any mitigating
actions, it is expected that this funding shortfall would continue to increase
on a 12 month horizon, and continue thereafter.
Mitigating Actions
Upon Completion, the Directors intend to take various mitigating actions to
improve the Continuing Group's liquidity and which will, in the opinion of the
Directors, provide adequate liquidity headroom so as to retain the Company as
a going concern (noting that the Group's 2023 Annual Report and Financial
Statements contained a material uncertainty in respect of going concern to
which the auditor drew attention by way of emphasis without modifying their
report).
(i) The Board is in active discussions to seek to dispose of certain of
the Continuing Group's non-core assets, which may give rise to cash proceeds
of up to £10.5 million (to be received prior to February 2024). Contributing
to this amount, the Board has entered into the non-binding Heads of Terms for
Pollington and Port of Weston for aggregate consideration of £8.5 million.
The Board may seek to bring forward the disposals of the Continuing Group's
other non-core assets, if at an appropriate value, to generate additional
proceeds to supplement its liquidity profile;
(ii) Upon Completion of the Disposal, the Board will seek to finalise and
enter into a binding agreement with respect to the Potential £20 million LSA
Facility. It is currently envisaged that this would occur once the Continuing
Group has completed the Proposed Transfer. The Board is also seeking to bring
forward the commitment of a tranche of this facility in the near term. In the
event that the Potential £20 million LSA Facility is made available, the
proceeds would be used to provide funding support for the operations at LSA
including capital expenditure;
(iii) In conjunction with other mitigating actions, the Company intends to
commence a process to seek a potential renegotiation of the terms and deferral
of the maturity of the Exchangeable Bond to such future date as to ensure the
sufficiency of working capital of the Continuing Group beyond the current
maturity date of 8 May 2024;
(iv) The Board has begun a sale process in respect of the aviation related
businesses of the Group, primarily the LSA Group; and/or
(v) The Company would review all future funding and refinancing options,
which could include, but is not limited to, additional equity, debt and/or
other financing arrangements so as to ensure the sufficiency of working
capital of the Continuing Group. It is currently anticipated by the Directors
that the mitigating actions in this paragraph (v) would only be undertaken in
the event that the mitigating actions in paragraphs (i) to (iv) above are not
sufficiently successful.
As is customarily the case, there can be no certainty that an agreement will
be reached for any of the above mitigating actions, either in sufficient time
or at all, or as to the terms and/or quantum of any such transaction(s). It
should also be noted that none of the aforementioned mitigating actions are
solely within management control. However, the Directors currently consider
that, assuming a successful renegotiation of the Exchangeable Bond, and as
assisted by the potential disposal of certain of the Continuing Group's
non-core assets and the entry into the Potential £20 million LSA Facility,
the anticipated net proceeds from the intended LSA Group disposal will, and in
sufficient time, sufficiently exceed the funding shortfall of the Continuing
Group under the reasonable worst case scenario.
In the event that the aforementioned mitigating actions are not able to be
sufficiently employed, in time or at all, to generate further working capital
for the Continuing Group's requirements, the Company and key trading companies
in the Group would no longer be able to operate as a going concern, in which
case the Board may resolve to place the Company and such key trading companies
into an administration process (or equivalent local law procedures).
Attention is also drawn to the paragraph entitled "Importance of your vote"
above, which sets out the consequences of the Disposal Resolution not being
approved by Shareholders at the General Meeting, the Deed of Settlement and
Variation not being duly executed or the Disposal otherwise failing to
complete, in which event, there would be no Disposal proceeds and therefore no
paydown of the Facilities Agreement, and as such a covenant breach in respect
of the Facilities Agreement is anticipated to occur in mid December 2023
(absent any mitigation), in addition to a potential funding shortfall in the
LSA Group from 22 December 2023. In such circumstances, the Group's lenders
may seek to put the Company and key trading companies in the Group into an
administration (or equivalent local law procedures).
Definitions
The following definitions apply throughout this announcement, unless the
context requires otherwise:
"Board" or "Directors" the board of directors of the Company
"Carlyle" Carlyle Global Infrastructure Opportunity Fund L.P.
"Cash Sweep" the extraction by the Seller of cash at bank or in hand of Esken Renewables
prior to Completion, up to a maximum amount of £5 million
"Cash Sweep Condition" the extraction by the Seller of cash at bank or in hand of Esken Renewables
prior to Completion of £5 million
"CGI" CGIOF River S.À R.L. and its group companies, including its parent
undertaking Carlyle Global Infrastructure Opportunity Fund L.P.
"Circular" the circular to Shareholders in respect of the Disposal, the Proposed Transfer
and the Executive Remuneration Scheme, which is expected to be published
shortly
"Company" or "Esken" Esken Limited (incorporated and registered under the laws of Guernsey with
registered number 39117)
"Completion" completion of the Disposal
"Continuing Group" the Group following the Disposal
"Convertible Debt Facility" the convertible loan facility entered into between Esken Aviation and CGI
dated 2 July 2021
"Deed of Settlement and Variation" deed of settlement and variation in respect of the fuel supply agreement for
the Tilbury Biomass project dated 23 March 2015, as amended by a deed of
variation dated 25 September 2017 and a settlement deed and deed of variation
dated 19 November 2020, to be executed by the Company and TGP either (i) in
the agreed form (subject to any amendments required of a typographical nature
or which are otherwise immaterial to the obligations and rights of Esken
Renewables) or (ii) in a form agreed by the Purchaser (acting reasonably) in
writing
"Disposal" the proposed disposal of the entire issued share capital of Esken Renewables
"Disposal Agreement" the conditional agreement between (1) the Purchaser and (2) the Seller in
relation to the Disposal
"Disposal Resolution" the resolution relating to the Disposal to be set out in the notice of General
Meeting at the end of the Circular
"Esken Aviation" Esken Aviation Limited (registered number 10756283) whose registered office is
at Third Floor, 15 Stratford Place, London, England, W1C 1BE
"Esken Renewables" Esken Renewables Limited (registered number 07042490) whose registered office
is at Third Floor, 15 Stratford Place, London, England, W1C 1BE
"Exchangeable Bond" £53.1 million of secured guaranteed exchangeable bond placed by the
Exchangeable Bond Issuer
"Exchangeable Bond Issuer" Esken Finance plc (registered number: 11701416) whose registered office is at
Third Floor, 15 Stratford Place, London, United Kingdom, W1C 1BE
"Executive Directors" each of David Shearer, Executive Chairman and Nick Dilworth, Chief Operating
Officer, Chief Financial Officer and Executive Director, Esken Renewables
"Executive Remuneration Scheme" or "VCP" the Esken Value Creation Plan 2023
"Facilities Agreement" the facilities agreement entered into by the Company and certain of its
subsidiaries as borrowers and original guarantors on 9 November 2022
"FCA" the Financial Conduct Authority
"General Meeting" the general meeting of the Company, notice of which will be set out in the
Circular
"Group" the Company and its subsidiary undertakings from time to time
"Heads of Terms for Pollington and Port of Weston" the non-binding heads of terms for disposals of the Group's non-core assets at
Pollington and Port of Weston for cash consideration of £3.5 million and
£5.0 million respectively
"Intercompany Loan Reimbursement" reimbursement of the intercompany loan owed by Esken Renewables to Esken by
way of (i) the Cash Sweep and/or (ii) repayment of the intercompany loan
balance in excess of £5 million
"Listing Rules" the Listing Rules maintained by the FCA from time to time pursuant to Part VI
of the Financial Services and Markets Act 2000
"London Stock Exchange" London Stock Exchange plc
"Longstop Date" the date that is eight weeks from the date of the Disposal Agreement and
defined as the "Longstop Date" in the Disposal Agreement
"LSA" London Southend Airport
"LSA Group" London Southend Airport Company Limited, Thames Gateway Airport Limited,
London Southend Solar Limited and London Southend Jet Centre Limited
"Main Market" the Main Market of the London Stock Exchange
"Mersey BioEnergy" Mersey BioEnergy Holdings Limited (registered number 09209582) whose
registered office is at C/O Bioenergy Infrastructure Limited 1650 Arlington
Business Park, Theale, Reading, United Kingdom, RG7 4SA
"Official List" the official list maintained by the FCA in accordance with Section 74 of the
Financial Services and Markets Act 2000
"Ordinary Shares" ordinary shares of £0.10 each in the capital of the Company
"Pioneer" Pioneer Infrastructure Partners SCSp, an alternative investment fund,
registered in Luxembourg (number B247320), managed by Pioneer Point Partners
LLP (registered number OC339088)
"Potential £20 million LSA Facility" entry into a potential £20 million funding facility from certain of Esken's
larger Shareholders to Esken Aviation, as holding company of the LSA Group
"Premium Listing" a listing of securities in the premium listing segment of the Official List
"Propius" Propius Funding Limited (registered number: 14431338) whose registered office
is at Third Floor, 15 Stratford Place, London, United Kingdom, W1C 1BE
"Proposed Transfer" the proposed change in the Company's listing category from a Premium Listing
to a Standard Listing
"Purchaser" Pioneer Balmoral UK Limited (registered number 15049609), whose registered
office is at Forum 4 Parkway, Whiteley, Fareham, Hampshire, United Kingdom,
PO15 7AD
"Remuneration Resolution" the resolution relating to the Executive Remuneration Scheme to be set out in
the notice of General Meeting at the end of the Circular
"Resolutions" the resolutions to be set out in the notice of General Meeting at the end of
the Circular, being the Disposal Resolution, the Transfer Resolution and the
Remuneration Resolution
"Seller" Esken Holdings Limited (registered number 07246663), whose registered office
is at Third Floor, 15 Stratford Place, London, England, W1C 1BE, a subsidiary
of the Company
"Shareholders" holders of Ordinary Shares
"Skytanking" Skytanking UK Ltd (registered number: 14342927) whose registered office is at
5th Floor 10 Finsbury Square, London, United Kingdom, EC2A 1AF
"Sponsor" Canaccord Genuity Limited, which is authorised and regulated by the Financial
Conduct Authority
"Standard Listing" a listing of securities in the standard listing segment of the Official List
"Star Handling Disposal" the sale of the entire share capital of Skytanking Aviation Services Eng
Limited (registration number: 10818963 and previously named "Star Handling
Limited") by Esken Aviation to Skytanking on 15 May 2023
"TGP" Tilbury Green Power Limited
"Transfer Resolution" the resolution relating to the Proposed Transfer to be set out in the notice
of General Meeting at the end of the Circular
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