Aviation and energy infrastructure group Esken, formerly known as Stobart Group, has signed a deal to sell its entire shareholdings in Aer Lingus Regional operator Stobart Air (Dublin International) as well as Carlisle Lake District Airport (CLDA) owner Stobart Air (United Kingdom) to Ettyl Limited, a little-known Isle of Man-based company backed by private investors.
Esken will sell its interests in Everdeal 2021 Limited and Everdeal Employees 2019 Limited, holders of shares in the Irish part of Stobart Air, for GBP2 pounds (USD2.80) on completion plus up to GBP7.5 million (USD10.5 million) contingent on trigger events through July 1, 2024, the group outlined in a filing on April 20. The sale of the entire shareholdings in Stobart Air (UK) and CLDA will be for a total cash consideration of GBP15 million (USD21 million) plus the value of any cash on the balance sheet.
The sale is subject to a number of conditions, including consent from various stakeholders and lenders under an Esken bank facility, but it is expected to complete by early May 2021.
UK-based Esken had been trying to find a buyer for its Ireland-based production carrier Stobart Air and the affiliated Propius Leasing by the end of February, but it said that a combination of the impact of extended lockdowns and Aer Lingus’ decision in November to award preferred bidder status for the franchise extension to another party, Emerald Airlines (Ireland), had made the process protracted.
In a complex series of transactions, Esken summarised in its disclosure that the sale of Stobart Air “is expected to result in a loss on disposal of approximately GBP8 million” (USD11.2 million) but that disposal of Stobart Air (UK) and Carlisle Airport, for proceeds of GBP15 million (USD20.1 million), “is expected to generate a profit on disposal in excess of GBP10 million” (USD14 million).
The holding underlined that it would make a payment on completion of up to GBP9.4 million (USD13.1 million) and would be responsible for the settlement of pre-completion liabilities totalling GBP25.8 million (USD36.1 million), comprising unpaid creditors and maintenance reserves. Ettyl will retroactively take responsibility for operational cash outflows from April 1, 2021.
Esken said it would take back 100% ownership of Propius for the symbolic sum of GBP1 (USD1.40), retaining responsibility for its continuing lease obligations until April 2023, after which it is anticipated that Propius will become a dormant company. Any continuing use of the aircraft will then become a matter between Ettyl and the lessor directly. The group was understood to have liabilities of about USD100 million attached to Stobart Air via Propius.
In cash terms, the impact of the disposals and settling outstanding liabilities is expected to see a maximum outflow from Esken of GBP49 million (USD68.6 million) over the three years to the end of February 2024.
In a trading update released on March 11, Esken had revealed that as a result of “strict financial discipline,” as of the end of February it had GBP77.4 million (USD108.4 million) in cash and undrawn bank facilities available.
David Shearer, Esken’s executive chairman, stressed that “Stobart Air remains a critical part of connectivity between Ireland and the United Kingdom” and that the future of the business and its 480 employees had been secured under a new owner “with ambitions to grow its network of routes.” He added: “The sale of the airline presents a significantly better financial outcome than that resulting from a closure.”
He said that “the completion of these transactions will allow [Esken] to focus on the core operations of Stobart Energy and London Southend Airport, along with the aviation services business,” adding that its operations at Carlisle Airport had been peripheral to its focus on London Southend.
