Shares in infrastructure group Stobart (STOB) soared 7% to 41.2p in early trade this morning after it confirmed reports regarding a potential sale of a stake in its main asset, London Southend Airport.
Sky News reported last night that AviAlliance, a German company which operates airports in Athens, Budapest and Puerto Rico, has tabled a bid to acquire a 25% stake in London Southend.
Stobart this morning confirmed it has been in ‘detailed discussions for several months’ regarding an initial minority investment from a potential ‘strategic airport development partner’, with the talks indicating a value for London Southend of between £700m and £800m.
The Sky News report says that AviAlliance values the airport closer to £700m while Stobart values it nearer £800m.
Even at the lower range though, a sale of a 25% stake would generate proceeds of £175m for Stobart, well above its current market cap of £144m.
However, Stobart added that ‘no acceptable terms’ have yet been agreed, with discussions put on hold following the coronavirus outbreak.
It’s also money that would be very useful for Stobart. One of its main customers at Southend was Flybe, the collapsed airline in which Stobart held a sizeable stake while budget airlines EasyJet (EZJ) and Ryanair (RYA), who have cancelled the majority of their flights, also operate from the airport.
‘ADDITIONAL LIQUIDITY REQUIRED’
As well as today’s statement, Stobart also issued a trading update for the year to 29 February.
It warned that given the current market conditions, ‘additional liquidity is likely to be required’ and that it is ‘actively reviewing the most appropriate sources of funds to cover the period during which the airport is affected by the COVID-19 virus.’
It added that it has ‘moved swiftly to take measures to conserve cash’ and reduce its cost base to provide ‘further resilience through this period’.
