REO: Lenders continue to 'support' Battersea Power Station sale process

By Paul Norman - Friday, August 19, 2011 10:18

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Battersea Power Station owner Real Estate Opportunities this morning said “final discussions” to find an equity partner to bring forward development of the iconic site with the support of its lenders were near to conclusion. The discussions come as a crucial debt maturity deadline looms.

REO, which is majority owned by Irish group Treasury Holdings, has been conducting an international roadshow, advised by Cushman & Wakefield, to find a 50:50 equity partner to bring forward a £5bn redevelopment of the iconic London site.

In preliminary results for the year ending 28 February and published in June REO said it had renegotiated its £260m loan facilities relating to Battersea Power Station with both Lloyds Banking Group (previously Bank of Scotland) and the National Asset Management Agency (previously Bank of Ireland), extending the existing facility to 31 August 2011.

Separately, Oriential Properties had agreed to extend the final £150m payment instalment on its Oriental loan notes to 31 August “and beyond if still required”. The loan was arranged when REO bought Battersea Power Station from the company four years ago.

At the time REO said it was close to identifying a development partner for Battersea Power Station from a shortlist of potential investors in a move that would raise a capital injection that would enable it to repay and/or refinance the Oriental Loan Notes and the existing Battersea Power Station loan facilities and facilitate the procurement of development finance.

It has now emerged that the lenders have appointed Ernst & Young to review the sales process that REO has undertaken.

In a statement a spokesman this morning said its lenders continued to support the process which was close to conclusion: “In late 2010, Real Estate Opportunities started a global roadshow to decide on which equity partner(s) it wished to work with to fund the post planning permission development of Battersea Power Station. The search for such a partner was compliant with the strategy REO adopted since it acquired BPS in 2006, i.e. it would fund site acquisition, expansion and the obtaining of planning permission.

“A number of offers have now been received and final discussions to conclude the investment process are currently taking place. The lending banks, Lloyds Banking Group and NAMA, are currently supporting this process. Ernst & Young are advising the lending banks in regard to BPS including specific advice in respect of the Investment process including the review of the incoming proposals.

“There have been no new valuations of the Battersea Power Station since February 2011 when it was valued at £500m.”

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