Esken Share Discussion Threads

[y1phr1] 24/6/2021 17:31

9 percent drop today more next week I expect.

[simmsc] 21/6/2021 23:14

I'm currently down 27% in this one. My worst investment since the pandemic started.

[mayers] 21/6/2021 22:41

I'm not entirely certain what that means, john09. I presume you are suggesting that on past management performance a share offer should be at below 20p The previous offer at 40p certainly preceded a fall in the share price rather than a rise. I cashed in some time ago as I had no confidence that the management was able to run the company effectively. Developments as perhaps you suggest seem hostile to airlines opening up and indeed restrictions may get worse, such that the share price may fall below 20p.

[john09] 21/6/2021 21:15

No chance 20p

The market has changed in recent weeks and this one has raised too often

[y1phr1] 21/6/2021 21:13

Could be a good entry point

[lpavlou] 21/6/2021 21:07

20p would be my guess at the rights issue price

[red ninja] 18/6/2021 14:41

I don't suppose it's a suprise at all :-

"It also warned it might have to raise more funds through equity as part of its recovery."

What price will it be able to raise at ?

[fenners66] 18/6/2021 14:20

"The group said the impact of the pandemic has been both greater and over a longer period than anticipated for its energy and aviation divisions."

They didn't see it coming..... Again !

[red ninja] 18/6/2021 13:25

The Business Desk :Esken plots a route to recovery following collapse of its airline disposal :-

"Aviation and energy group Esken, formerly Stobart Group, is in talks to secure a funding injection for its London Southend Airport business.

It revealed, late this afternoon (June 14) that is is in the final stages of agreeing the deal with Carlyle Global Infrastructure Opportunity Fund with regards to a long term strategic funding transaction relating to the development of its London Southend Airport (LSA) asset.

Under the proposed terms of the partnership, Carlyle would provide £120m of funding, net of Carlyle costs, via a loan, convertible at Carlyle’s option into an equity stake of 29.99% in LSA, which would release £100m of liquidity into the rest of the Esken Group.

In a trading update this morning, the Carlisle-based group said this will support the airport’s recovery from the pandemic, and provide financial support for the group to meet its obligations with its banks as its funding facilities near maturity next year.

It also warned it might have to raise more funds through equity as part of its recovery.

The trading update follows the announcement over the weekend that the group had started steps to appoint a liquidator to its Stobart Air operations following the collapse of a deal to sell it, and its Carlisle Airport asset, to Isle of Man-based Ettyl.

Esken said it will now retain Carlisle Airport, but will explore strategic options for the site, including potential alternative commercial opportunities.

The group said the impact of the pandemic has been both greater and over a longer period than anticipated for its energy and aviation divisions.

It said Stobart Energy will return to pre-COVID-19 levels in the current financial year and opportunities are being explored for additional supply contracts.

The prime asset in the aviation business is London Southend Airport (LSA). The group said it will continue to invest in the airport, as the industry embarks on a recovery from the impact of the pandemic.

Esken said it has been in discussions over the past nine months with Carlyle and is now in the final stages of agreeing documentation."

[fenners66] 15/6/2021 23:16

I was surprised it recovered ground yesterday , seems to have been more realistic today.

Gotta go back to those stupid dividends in 2018-19, cash that was clearly needed as a buffer before profitability , as I said then there was a lot that could go wrong between then and making a profit , now the question is , will it ever ?

[lpavlou] 15/6/2021 21:33

The problem with the rights issue is the broker trotting off to see the funds to garner support at a price point and is poor PI's being in the dark whilst they tip off their traders. Wouldnt surprise me if the rights price is as low as 20p. However can't see this being underwritten as the broker was left with a large position last time round

[casholaa] 15/6/2021 21:21

There are airplanes in the skies, you can see them on flightradar. But what with the Delta variant and most countries behind with vaccinations, it's taking longer to resume business I suppose. I exited at a loss. I'm not prepared to throw anything more at it just now.

[gaffer73] 15/6/2021 20:02

Yeah, not looking too good here. With lockdown extended and travel restrictions to stay for a while holiday season will be over. If things improve next year it could be a good recovery buy but that's not guaranteed. It's disappointing because we were told the freight business was keeping things running.

[lpavlou] 15/6/2021 17:35

700m was when the airport was still growing passenger numbers. 400m when it has been shut for most of the past year, isn't too bad. However I bet one of the conditions to the new loan is the requirement for an equity raise so they have sufficient cash to invest and survive

[casholaa] 15/6/2021 15:56

Risk/reward - I'd be very tempted to take a punt at 15p.

[mayers] 14/6/2021 23:09

Good thinking lpaviou. Then at a further discounted price there is the risk that the hedge fund will offer a modest increase and take it into private equity, Why else accumulate 28% of share capital. This is what happened with TalkTalk. There seems no way of winning in this scenario after the PIs have been fleeced. How could we ever trust this management after the boardroom squabbles and their squandering the results of previous equity raise?

[lpavlou] 14/6/2021 21:25

The Carlisle deal puts a value of 400m on Southend airport. However the deal is structured as a loan, so they can always ask for the loan to be repaid rather than take the airport stake. This tells me the banks are not interested in funding them any further so the only other option is a deeply discounted equity raise. If nothing else, this will also them to survive another year to allow the airport traffic to build up

[essential] 14/6/2021 13:21

Toscafund buying more?

[fenners66] 14/6/2021 09:46

"but the drawing of any amounts under this facility in excess of £15 million beyond 30 June 2021 is subject to certain conditions. Esken is currently in discussions with its banks in relation to the satisfaction and/or waiver of such conditions in order to ensure continued access to the facilities."

Not surprised you want to wait.

If they get an agreement , will it result in another massive dilution to shareholders stake in the remaining business?

[y1phr1] 14/6/2021 08:22

There's my 26p think I shall wait till end of June now.

[simmsc] 13/6/2021 00:35

Sounds to me like if the LSA strategic partnership is agreed and approved, there may not be a need to do an equity raise.

[dr biotech] 12/6/2021 22:51

LONDON, June 12, 2021 /PRNewswire/ -- Esken, the aviation and energy infrastructure group, issues the following update ahead of publishing its preliminary results for the year ended 28 February 2021 due by the end of June.

Stobart Air and Carlisle Lake District Airport (together 'the transactions')

Esken is providing an update on the sale of Stobart Air ('SA') and Carlisle Lake District Airport ('CLDA') to Ettyl Limited ('Ettyl') under the conditional contracts entered into on 20 April 2021. On 28 May 2021 and as reported to the market, Ettyl advised that its original funding package to support the transaction was no longer available and that it was in discussions on alternative funding options. It is now clear that Ettyl is unable to conclude the transactions on the original terms or to obtain an alternative funding package within the required timescale. Esken has therefore exercised its right to terminate the contracts for the transactions with immediate effect. In the absence of any alternative purchasers or sources of funding for the SA business within the timescales required, Esken has advised the Board of SA that it will not continue to provide financial support to the business going forward. As a result of this the Board of SA has terminated its franchise agreement with Aer Lingus, will cease trading and is taking steps to appoint a liquidator.

The Board of Esken has undertaken certain contingency planning measures and has agreed in response to these developments that it will continue to fund the lease obligations on the 8 ATR aircraft through to termination of the leases in April 2023 under the terms of its pre-existing guarantee. Esken confirms that it will take immediate steps to seek sublease arrangements for the aircraft with alternative operators to mitigate the impact on the Group.

Esken also remains responsible for certain obligations to Aer Lingus under the franchise agreement which were also the subject of a pre-existing guarantee and have become payable following termination of the franchise agreement. These obligations and the guarantees entered into in early 2017 were the reason that the Group reacquired the airline and its related leasing company in April 2020. This enabled the Group to manage and seek to mitigate the impact of these liabilities following the administration of Connect Airways Limited.

In the announcement on 20 April 2021, Esken set out the cash flow impact on the Group on the assumption that the transactions concluded. The following table reflects the amended position over the period to the end of the leases assuming that the Group is unable to sublease the aircraft.




Since April 2020 Esken has taken all steps to minimise the cash requirement of SA while seeking to find a purchaser recognising the importance of the airline to connectivity between the UK & Ireland, the 480 jobs involved and the fact that a sale would be a better outcome for shareholders. Esken has been successful in reducing the impact of its pre-existing obligations and in agreeing terms under which it has control of residual obligations through to expiry. However, the continuing impact of the pandemic which has resulted in almost no flying since April 2020 and the decision taken by Aer Lingus to award preferred bidder status to another party for the franchise agreement beyond its expiry in December 2022 significantly hampered the exhaustive steps taken to secure a future for the business and its staff.

Esken will retain the ownership of CLDA rather than it being sold for £15 million (reflected in the cash impact above) but will actively explore strategic options for the use of this asset in discussion with stakeholders including potential alternative commercial opportunities for the airport.

Strategic Update

The impact of the pandemic has been both greater and over a longer period than anticipated at the time of the capital raise in June 2020. This has led the Board to undertake a further review of the strategy and the medium-term funding requirements for the Group. This concluded that the Group holds two attractive businesses which can generate significant value for shareholders as markets recover post COVID-19. The key strategic objective will therefore be to drive shareholder value from these assets with any decision on the realisation of value being deferred until the businesses recover fully from the pandemic and become mature cash generative business units. While it was previously intended at the time of the capital raise to seek to monetise the Energy business by June 2022, the Board has concluded that this is not the right option for shareholder value.

Stobart Energy is a recovering cash generative business with a strong market position and long-term supply contracts. It is anticipated that financial performance will return to pre COVID-19 run rate levels in the current financial year. Opportunities are being explored for additional supply contracts and to broaden the base of the market offering within the energy from waste space where existing operational expertise can be applied. The business offers the opportunity to generate returns from an asset with infrastructure characteristics and a compelling environmental benefit by recycling waste wood to produce energy rather than it going to landfill.

In the Aviation business the prime asset is London Southend Airport ('LSA') which prior to the pandemic offered passenger services to over 40 destinations to a market of c.8 million people living within one hour travel time to the Airport. Whilst aviation has been one of the hardest hit sectors by the pandemic the fundamental long term value drivers of the Airport remain sound. This has been recognised through strategic partnership discussions in relation to LSA which are covered below.

Esken will continue to invest in the infrastructure of the Airport in step with passenger demand recovery allowing LSA to meet the needs of airline partners for an efficient cost effective London airport and offering a safe and enjoyable passenger experience. In addition there is an opportunity to develop the logistics offering both with the existing global logistics partner and other related businesses. Given the award of the Thames Freeport status in the Estuary and proximity to East London, the Airport is well placed to capitalise on accelerated airfreight growth and movements.

In line with the previously stated strategy Esken will actively look to exit from all other non-core infrastructure assets owned by the Group having a net book value of c. £39 million at 28 February 2021. When this process is complete Esken will become a focussed Group with two operating businesses.

Strategic Partnership for LSA

Over the last nine months Esken has been in discussions with a strategic financial partner in relation to the development of LSA as aviation recovers from the pandemic. This partner has significant investment experience in the airport sector globally and will deploy its resources alongside the operational management team at LSA through the COVID-19 recovery phase and future development of the Airport. Esken is now in the final stages of agreeing the documentation for a strategic funding transaction into LSA which would release significant liquidity into the Group while underpinning the funding requirement of the Airport in the medium term. The transaction would be conditional on obtaining shareholder approval. Further details are expected to be announced at the time of the issue of the full year results anticipated by the end of June. Esken nevertheless cautions that no guarantees can be given at this stage that the transaction will be forthcoming.

Funding and liquidity update

The Group raised £100 million by way of a capital raise in June 2020 together with additional bank facilities of £40 million ("Facility B") to enable Esken to navigate the impact of the pandemic expected at that time whilst maintaining the operational integrity of its core businesses. The Group's bank facilities totalling £120 million expire at the end of January 2022 and Esken has been in continuing dialogue with its banks in relation to the repayment of these facilities as well as its medium term funding requirements to meet its ongoing working capital needs. It was a term of Facility B that in order to continue to draw on that facility Esken must satisfy the banks as to its ability to repay the facilities by the due date. The Group has drawn £10 million of its £40 million additional facility but the drawing of any amounts under this facility in excess of £15 million beyond 30 June 2021 is subject to certain conditions. Esken is currently in discussions with its banks in relation to the satisfaction and/or waiver of such conditions in order to ensure continued access to the facilities.

The strategic funding proposal in relation to LSA would, if completed, enable Esken to repay the outstanding bank facilities and would significantly reduce the funding requirement of the business to underpin its business plan and meet its legacy obligations and working capital needs. Esken is, and will be, in discussions with its banks and other stakeholders in relation to this requirement, including potentially a modest equity issue on an accelerated basis and expects to conclude these discussions prior to the issue of its financial results for the year to 28 February 2021. Esken cautions that no guarantees can be given at this stage that the discussions with its banks or in respect of an equity raise will result in agreement or a transaction being concluded.

Trading Update

Esken is also providing a further update on its current operating performance following its trading statement on 11 March 2021.

The two core businesses of Aviation and Energy are currently returning to operations in different phases as a result of the continued impact of Government travel advice.

The Energy Division has continued to see the business operate at the expected levels now that the availability of waste wood from the construction industry has returned to pre-COVID-19 levels. The business has continued to see gate fees move in line with the expected increases as we move into the summer seasonality and increased wood supply from the construction sector. The business is trading in line with management's expectations for FY22 and continues to develop the business to post covid-19 levels as all plants are fully operational compared to FY20 and FY21.

The challenging Aviation sector travel advice and limited availability of travel routes has meant the continuation of a slower recovery for LSA. However, there has been a return to some passenger flying though this will continue to be at low levels whilst Green routes are limited. The management team remain focused on maintaining the tight cost control demonstrated throughout this period and remain prepared for the increased level of activity once routes open up and travel returns. The business remains resilient through the continued Global Logistics Operation which has now returned to similar levels to last year following the early reduction in operations due to planned Brexit risk mitigation in January and February 2021.

Stobart Aviation Services is also seeing the slower return to flying through this summer but as with LSA it has taken steps to ensure the cost base is reflective of this reduced level of activity and is ready in anticipation of the return of travel at the bases it serves.

David Shearer – Executive Chairman said

"It is disappointing for all stakeholders that we have been unable to conclude the sale of Stobart Air as a going concern despite the tireless efforts of my executive colleagues, the management team of the Airline and the team of advisors who have supported them. I am acutely aware of the impact this will have on the staff, customers and the businesses associated with the Airline but the continuing impact of the pandemic in terms of lockdown and limited travel has prevented us from achieving a better outcome."

"Our focus now is to secure the position for the rest of the Group and ensure that we have the necessary resources to support the recovery plans for our two core businesses as we anticipate the return to normal activity levels in a post COVID world. The discussions on future financing including the strategic partnership for LSA are continuing and I fully expect to bring these to a positive conclusion when we announce our year end results by the end of June.

[dr biotech] 12/6/2021 11:48

Strategic investment in LSA could be interesting. Last time around they almost sold a stake which valued the airport at 600m. Can't imagine its worth that now, but still may give a boost. Question is how competetant is the management, they have it all to prove.