Battersea Power Station owner Real Estate Opportunities said it had received “significant interest from investors” looking to take a crucial enabling stake in the iconic south
Treasury Holdings owned REO said negotiations with creditors over its financial restructuring was progressing well.
However it confirmed that if a £150m loan note and accrued interest was not repaid to former Battersea owner Victor Hwang’s Oriental Property by 31 May 2011 Oriental would have the option to convert the debt into 75% of the equity in its proposed new listed Battersea Power Station holding company. Shareholders in the new vehicle would then have a year to acquire that interest.
REO received consent for its £4.5bn redevelopment of Battersea Power Station from the Mayor of London and Wandsworth council at the end of last year, and the scheme is awaiting backing from the Secretary of State.
Construction on site for the first phase is scheduled to start in early 2012 with completion in 2016 but it remains contingent on a series of resolutions.
In the period from 30 October, the group confirmed it had signed a memorandum of understanding with Ireland’s so-called bad bank NAMA on its business plan and restructured its balance sheet, announced on 24 December last year.
Ray Horney, chairman of REO, said: “We are pleased with the progress we have made in recent months. The planning application for BPS is progressing well, while we are also making good progress towards balance sheet restructuring.
“We look forward to updating the market on further progress in due course.”
REO said that, as announced on 24 December, negotiations with its creditors regarding the terms of a financial restructuring are progressing well.
Subject to approval from the various creditor groups, the detailed terms of the restructuring deal are as follows:
Battersea Power Station would be transferred by REO to a new holding company. The demerger of Battersea Power Station will “facilitate the successful conclusion of the group’s global third party investment road show through which it is seeking to attract a long term equity partner into the demerged vehicle”.
the group would effect debt for equity swaps with the holders of the 7.5% convertible unsecured loan stock and zero dividend preference shares. CULS holders would receive 21.2% of the equity in the new Battersea Power Station holding company and 15.9% of the enlarged equity of REO. ZDP holders would receive 12.1% of the equity in the new holding company and 9.1% of the enlarged equity of REO.
Ordinary shareholders (including Treasury Holdings) would receive 5% of the equity in the new holding company and warrants in respect of a further 5% and would, after the issue of ordinary shares to CULS and ZDP holders, retain 75% of the enlarged equity of REO.
As an incentive to manage the development of Battersea Power Station, Treasury Holdings would be awarded a management fee representing 7.7% of the equity in the new holding company.
The remaining equity in the new holding company, amounting to approximately 54%, would be retained by REO and its subsidiaries
REO would be released from various financial obligations relating to the Battersea Power Station group, including guarantees of senior facilities and the £150m loan note issued to Oriental Property Limited.
If the £150m loan note and accrued interest is not repaid on 31 May 2011, Oriental Property Limited would, subject to certain exceptions, have the option to convert the debt into 75% of the equity in the new Battersea Power Station holding company.
Shareholders in the new holding company would have the right to acquire that interest prior to 1 June 2012 for an amount equal to the sum due to Oriental Property Limited under the loan note together with interest.
The portfolio was last valued in August 2010, by Treasury Holdings, in their capacity as investment advisers, at a value of €1,050m.
The group posted stable annualised income of €40.2m, during a period of rental value deflation.
REO said it was encouraged by the significant progress made in recent months in respect of the planning permission granted for the Battersea Power Station project and the signing of the Memorandum of Understanding with Nama on the Group’s business plan, while negotiations towards a successful restructuring of the Group’s balance sheet have reached an advanced stage.
It said it remained confident that the group is positioned to benefit from predicted stability and growth in the wider Irish and
paul.norman@estatesgazette.com
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