April 11, 2011 11:26 pm

Battersea Power Station restructures debt

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The ownership of Battersea Power Station will be restructured as part of a strategy to help relieve the debt position of the Aim-quoted company that owns the London landmark.

A new vehicle called BPSSV will be created to control Battersea Power Station, which is due to be turned into a large mixed-use property development. A debt and equity restructuring will see 54 per cent of this vehicle taken by REO, the Aim-quoted company.

REO’s majority owner, Treasury Holdings, the Irish company, will control about 41 per cent, including its ownership through REO. The majority of the rest of the ownership will be ceded to holders of loan stock and zero dividend preference shares.

REO has drawn up plans to turn Battersea Power Station into a huge office and residential scheme. There have been several failed attempts to redevelop the site under numerous owners since the power station was decommissioned.

A valuation at the end of last year gave the project a value of £498m, assuming planning permission is granted for the company’s plans.

Treasury has drawn up a list of third party investors to fund the development of the scheme. It is looking for a 50 per cent partner, with interest coming from a range of investors including sovereign wealth and private equity groups.

The restructuring will be voted on at an extraordinary meeting of shareholders. There is £110m of convertible unsecured loan stock that will be given 16 per cent in REO and a 21 per cent in Battersea, while holders of £136m of zero dividend preference shares will receive 9 per cent share in REO and 12 per cent share in Battersea.

Oriental Property, which is still owed £150m following the £400m sale of Battersea to REO, will be paid £4.5m for not taking action in relation to the non-payment of interest and other covenant breaches. It will also extend its loans should the senior lenders agree to defer the date for repayment of the Battersea Power Station facilities beyond 31 August 2011. NAMA, the Irish national ‘bad bank’ of distressed property loans, will agree not to call a €95m loan for a year.

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