London Southend airport owner Esken insists it will defend a legal challenge from Carlyle Global Infrastructure Fund which is alleging technical breaches of a convertible loan agreement between the two.
Carlyle entered a seven-year convertible loan pact with London Southend in July 2021. The deal involved a proposed £125 million loan which could be converted into around 30% equity in the airport.
The loan was drawn the following month.
Esken has previously disclosed that it is looking to divest the airport, and is seeking a suitable strategic owner for the facility, which is located about 55km east of the UK capital.
“This process, which is currently underway, would, if successful, see an early redemption of the [Carlyle] convertible loan,” it says.
Esken’s board believes it would also “realise value” for shareholders, and that the airport’s value is above the redemption value of the loan. It argues that a managed sale is “in the interests” of both Esken and Carlyle shareholders.
But Esken says Carlyle has filed legal documents in the UK’s High Court, claiming “certain technical breaches” by the airport’s operator regarding the loan agreement.
Esken states that it “does not agree” with Carlyle’s claimed interpretation of the loan agreement and will support London Southend airport in “vigorously” defending the legal action, adding that it will also continue the sale process to find a new long-term owner.
Esken says it has been “encouraged” by levels of initial interest in the airport. It adds that discussions are taking place to expand the summer 2024 network from London Southend, following the opening of more routes by EasyJet.