Esken starts wind down process with ‘negligible’ returns for shareholders
Esken has settled its long running dispute with Carlyle Group over the funding of London Southend Airport and is to start the formal winding down of the once dominant logistics and energy group formerly known as Stobart Group.
In a statement to the Stock Market this morning Esken’s board said they had a agreed to a restructuring plan Cyrus Capital Partners, the majority holder of the exchangeable bond of £53.1 million which matures on 8 May 2024, following a recapitalisation proposal agreed with Carlyle in February 2024.
The terms of the recapitalisation proposal for LSA involves a conversion of the convertible loan of £193.75 million due to CGI into an 82.5% stake in LSA and a similar conversion of the £24.3 million debt due by LSA to Esken Aviation Limited, a wholly owned subsidiary of the Company, into a 17.5% stake.
Funding of the proposal agreed with the board of LSA includes an initial £5 million of short-term unsecured bridge funding to the airport through to the conclusion of the process as part of a commitment of £32 million of new funding to secure the future growth of the airport.
The proposed restructuring plan will require a court process and is expected to complete after Airport deal and any return for shareholders will be “negligible”.
Cyrus will provide liquidity to the Esken group to meet its working capital needs during this process and to allow an orderly wind down of the remaining group.
The board also said it didn’t have access to the financial resources to sustain it through what would have involved a protracted court battle and their responsibility to its creditors took precedent.
The court process for the Esken restructuring plan is likely to take several months to conclude.
The turmoil and demise of the business started in June 2018, when Stobart Group removed long standing chief executive Andrew Tinkler from the board. Thus began a long-running and costly legal battle between the two parties.
In May 2020 the company sold the intellectual property rights to the Eddie Stobart and Stobart brand names for £10m to Eddie Stobart Logistics.
Early in 2021 the group announced it would change its name to Esken.
