Nama, Lloyds to seek buyer for Battersea Power Station

 

STATE ASSETS agency Nama and Lloyds Bank are likely to seek a buyer for Battersea Power Station after a court yesterday gave them and another creditor control of the landmark London site.

The British high court yesterday appointed accountants Ernst Young as administrator to subsidiaries of Battersea Power Station Shareholder Vehicle, which own the site, at the request of Nama and Lloyds, who were supported by a third creditor, Oriental Holdings.

Irish company Real Estate Opportunities (REO), whose biggest shareholder is the John Ronan and Richard Barrett-owned Treasury Holdings, has a 54 per cent stake in the Battersea Power Station company.

Following the hearing, Nama said that “unlocking the sale process” is the key issue for creditors. The agency’s spokesman added that creditors believe that appointing an administrator represented their best chance of selling the power station and surrounding site. “We saw it as the best way of freeing up the process. The company had been given a lot of time but was making no real progress.”

Lloyds spokesman Emile Abu-Shakra said, with no firm offers on the table, administration would ensure the sales process was put back on track.

Battersea Power Station Shareholder Vehicle owes €380 million to Lloyds and Nama, two-thirds of which is due to the British bank.

The debt fell due for repayment last August, but the creditors held off on demanding the cash to give REO an opportunity to find an investor to buy into the power station company and the €6.4 billion redevelopment plan for the property.

Last month, after refusing an offer from Malaysian investor SP Setia to buy out the secured debt at a 15 per cent discount, Lloyds and Nama began the process that led to yesterday’s appointment of Ernst Young as administrator.

REO issued a statement yesterday pointing out that the administration order applies only to the Battersea Power Station companies and not to its other assets, which are located in Ireland.

Russian oligarch Roman Abramovich was interested in purchasing at least part of the property as a site for a new stadium for Chelsea, the English Premiership football club that he owns. He held talks with the creditors, but made no direct offer. Some sources suggest that administration may revive his interest.

Along with recovering its debt, Nama has other interests in the sale and redevelopment of Battersea. Other creditors, such as Ballymore Properties, have sites and developments nearby, and progress with the power station project would help to boost the overall area.

REO bought Battersea in November 2006 for close to €600 million, using money borrowed from Bank of Scotland and Bank of Ireland. Nama took over the latter’s debt last year.

REO spun off the Battersea Power Station company as part of a restructuring in April. A group of its bondholders own the 46 per cent that it does not control.

Administration is a rescue system used in British commercial law that is focused on getting the best result possible for creditors.

Battersea power station significant dates and events

1935Battersea power station’s first plant is completed.

1953Second plant completed and comes on stream.

1983Battersea power station ends electricity generation.

1986Local authorities approve Alton Towers Ltd’s theme-park plan for the site.

1987Central Electricity Generating Board sells Battersea to businessman John Broome for £1.2 million and work begins on the site.

1993Hong Kong-based Parkview Developments buys the site and its associated £70 million debt from Bank of America for £10 million.

2006REO – Real Estate Opportunities – buys Battersea from Parkview for almost €600 million, using money borrowed from Bank of Ireland and Bank of Scotland, among others.

2010Nama acquires Bank of Ireland’s share of the Battersea loans. REO wins permission for a €6 billion redevelopment of the site and spins the company off to a new shareholder vehicle.

2011Court appoints administrator to Battersea at request of Nama and Lloyds.