Esken, formerly Stobart, mulls ‘sale or partial sale’

Widnes-based Esken Limited, the aviation and renewable energy group formerly known as Stobart Group, announced that it is considering “a sale or partial sale” of one or both of its aviation and renewables divisions “to secure the long term potential of these businesses and deliver value for Esken shareholders.”

Esken employs about 1,500 staff at its London Southend Airport, Stobart Aviation Services and Esken Renewables divisions.

Esken shares are down about 55% year to date to around 6p to give the firm a stock market value of about £63 million.

The news on the potential sale came as Esken published unaudited interim results for the six months to August 31, 2022.

Revenue from continuing operations increased 12.5% to £58.1 million. EBITDA fell 55.1% “to a profit of £2.5m” and loss before tax from continuing operations widened to £12.7 million from £12.5 million.

Esken has also called an extraordinary general meeting (EGM) of shareholders for November 29 “for the purposes of passing a resolution to approve the incurrence of borrowings beyond the limits in our Articles.”

Esken said: “The Articles of incorporation of the company limit its borrowings to four times its adjusted capital and reserves.

“In order to augment the liquidity position of the company, the level of borrowing is shortly expected to exceed the current limit set out in the Articles and would exceed it if the proposed financing was utilised.

“The Articles allow for debt to be incurred in excess of the borrowing limits set out therein with the approval of an ordinary resolution of shareholders.   

“We have, therefore, today issued a Notice of Extraordinary General Meeting (EGM) to shareholders for the purposes of passing a resolution to approve the incurrence of borrowings beyond the limits in our Articles.

“The company’s ability to draw down the funds made available under the proposed financing is dependent upon the passing of that resolution.”

Esken executive chairman David Shearer said: “I am pleased that we have been able to conclude our debt financing, encompassing £50m of committed funds, with £40m uncommitted, despite challenging market conditions.

“Upon shareholder approval of an increase in our borrowing limits, the £50m of committed funds will bring stability and allows us to clear our residual legacy liabilities.

“Our renewables business has proved resilient in what have been challenging conditions with unplanned biomass plant outages, reduced waste wood availability and rising costs.

“We expect biomass plant performance to improve in the winter months, and Esken Renewables has secured new supply agreements and implemented annual contract indexation revisions.

“This is expected to lead to improved margins, and we have restated our guidance of £22m EBITDA for FY 2022.

“Our aviation business has continued its recovery but at a slower pace than we would have wished due to continuing disruption throughout the industry with many airlines focussing on short term performance ahead of strategic positioning.

“The medium-term case for London Southend Airport remains compelling and our refreshed airport leadership team is well placed as the market returns to normality.

“As a board we have decided to initiate an updated strategic review of our operating businesses.

“This review will consider all options for the operating businesses and may conclude that it is in the best interests of all stakeholders to progress a sale or partial sale of one or both of the renewables or aviation divisions to secure the long term potential of these businesses and deliver value for Esken shareholders.”