Yahoo Finance Southend Airport sale faces setback as private equity giant sues over £125m loan
The proposed sale of London Southend Airport has been dealt a blow after a key backer launched legal action over a dispute relating to a £125m loan.
Carlyle Group has accused the regional airport of breaching an agreement struck in 2021, which saw the US private equity giant inject £125m in return for a proposed 30pc stake.
However, relations have soured amid accusations that London Southend, owned by Esken, has overspent during its recovery from Covid.
This has resulted in an alleged breach of the loan agreement, Carlyle has claimed, which has prompted it to seek earlier repayment before the current deadline of 2028.
It comes as Esken, formerly known as the Stobart group, tries to sell the Essex airport more than a decade after it was bought for £21m in 2008.
The legal battles also mark the airport’s latest headache as it battles to recover from lockdown restrictions during Covid.
A 90pc fall in passenger numbers led to Ryanair, Wizz Air and EasyJet all withdrawing from the airport, with business director Nigel Mayes admitting in 2022 that the airport took a “hammering”.
It has since regained EasyJet as a customer, which has helped to stabilise the airport’s finances and clear the way for a potential sale. Last week, it also welcomed Aeroitalia, which will soon operate direct flights from Southend to Milan Bergamo.
Esken has not yet put a price on the business, nor have any suitors publicly expressed an interest.
However, the prospect of a long-running legal battle with Carlyle could cast a shadow over a proposed takeover.
It is understood that the amount owed to Carlyle stands at £193.7m.
An Esken spokesman said London Southend denies breaching the agreement and will fight the claim vigorously.
The company said: “LSA remains entirely focused on contracting with airlines to meet passenger demand as part of its recovery back to pre-pandemic passenger numbers of 2.2m and then to approximately five million in the medium term.
“Esken as owners of LSA remain focused on continuing with the disposal process to crystallise value for shareholders and secure the right long-term partner to support LSA’s future growth.”
Carlyle Group declined to comment.
