(Alliance News) - Esken Ltd on Tuesday said it has signed an agreement for the sale of Stobart Air Unlimited Co and Stobart Air UK Ltd to Ettyl Ltd.
Stobart Air operates regional flights under a franchise agreement for Air Lingus and Stobart Air UK owns Carlisle Lake District Airport. Ettyl is an Isle of Man-based company backed by private investors.
Esken, an infrastructure, aviation and energy company formerly known as Stobart Group Ltd, said Ettyl will acquire Esken's economic interests in Everdeal 2021 Ltd and Everdeal Employees 2019 Ltd, who are both shareholders in Stobart Air Unlimited. Ettyl will buy Esken's interests for a token GBP2, plus the value of any cash on the balance sheet payable at completion.
Esken said Ettyl also will pay a contingent consideration for Stobart Air Unlimited of GBP7.5 million upon and to the extent of the occurrence of certain trigger events up to July 1, 2024.
Also as part of the Stobart Air Unlimited, Esken will make a payment on completion of up to GBP9.4 million. It said it also will be responsible for the settlement of pre-completion liabilities totalling GBP25.8 million, of which GBP19.1 million are the subject of pre-existing parent company guarantees.
Esken also will take back 100% ownership of airline leasing company Propius for a token GBP1, and Esken will be responsible for the existing lease obligations of Propius until April 2023.
Meanwhile, for Stobart Air UK, Ettyl will acquire Esken's entire shareholding for GBP15 million in cash, plus the value of any cash on the balance sheet.
The sale of the businesses is expected to complete by early May 2021.
"This has been a difficult and protracted process to conclude given the impact of the pandemic on air travel. Stobart Air remains a critical part of connectivity between Ireland and the UK, and I am pleased that we have managed to secure the future of that business and its 480 staff under a new owner with ambitions to grow its network of routes. The sale of the airline presents a significantly better financial outcome than that resulting from a closure," said Esken Executive Chair David Shearer.
"Our operations at CLDA were peripheral to the main focus of our Aviation business at London Southend Airport and we have taken this opportunity to tidy up our portfolio of businesses at a fair value in current markets allowing us to minimise future cash burn and avoid management distraction," he added.
Shares in Esken were down 4.0% at 33.78 pence in London on Tuesday.
By Zoe Wickens; zoewickens@alliancenews.com
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