REO to miss €4.6m repayment as talks continue over €2bn debt load
Real Estate Opportunities (REO), the company controlled by Johnny Ronan's Treasury Holdings, will not make payments to its lenders next week of £3.8m (€4.6m) as talks on its future continue.
The company, which owns the famous Battersea Power Station in London, has debts of £1.7bn (€2bn) with a range of lenders, among them NAMA and the Lloyds Banking group. NAMA is reviewing business plans for REO and Treasury Holdings.
REO said yesterday "significant progress'' had been made towards a financial restructuring, but gave no details. The progress has been made with the holders of the company's various loan notes, but these proposals now have to be broached with other lenders.
Next Tuesday REO was due to make a payment to investors who hold the convertible loan notes in the company, with an interest payment due of £3.8m. But this will be skipped as the negotiations continue over its debt load. Plans are also afoot to spin off the Battersea power station into a separate quoted company.
The company is facing serious financial challenges, with debt of £1.7bn, and a property portfolio of £1.1bn. There is a huge deficit in shareholder's fund in the company of £722m.
A large amount of debt belonging to REO matures next year and in a recent update to the market, the company said: "The group does not have the ability to repay those instruments on their maturity in May 2011".
Apart from the £3.8m payment, REO is also facing a £5m payment for other loan notes, according to the last update it gave the market.
Advisors Talbot Hughes McKillop are advising REO in the debt talks.
This is the same company also representing the Quinn Group in its talks with creditors.
NAMA took possession of REO loans in May.
The loans amounted to £815m and were originally advanced by Irish Nationwide, Anglo Irish Bank, AIB and Bank of Ireland.
REO has talked up its chances of NAMA approving its business plan.
"We remain confident that NAMA will be supportive of the REO portfolio, due to the quality and location of the group's development sites as well as its income-producing assets."