Esken Ltd (LSE:ESKN, OTC:ESKNF), the infrastructure company and owner of London Southend Airport (LSA), saw its share plunge around 20% on Monday, having warned of funding delays due to an ongoing dispute with a loan provider.
Last month, the group warned LSA could be required to pay more than £200 million to Carlyle Global Infrastructure Fund (CGI) by mid-February over an alleged technical breach of a convertible loan agreement.
Now, having spoken with legal advisors, LSA is confident “there is no default or event of default which gives CGI a current right to accelerate the loan, make demand or take enforcement action pursuant to the convertible loan agreement”.
Therefore, the airport is disputing CGI’s claims, but to avoid the costs of litigation and “unnecessary value destruction for stakeholders”, it will look to settle.
Due to the situation, Esken said it has been forced to delay progress on its sale of some non-core assets and securing a £20 million funding facility for its aviation division.
Amendments and extensions to the group’s exchangeable bond have also been disrupted.
Through the three actions, Esken had initially expected to be fully funded by the end of 2025, giving it the scope to conclude its sale process of LSA.
Management is now assessing the impact of these delays while trying to source additional funding sources.
However, they warned that failure to resolve the dispute with CGI could lead to a “material adverse impact” on the whole company.