REO warns creditors over vote on revamping firm's debt
Published 14/04/2011 | 05:00
Real Estate Opportunities (REO), in which Treasury Holdings has a majority stake, has warned creditors that if they don't vote in favour of the company being restructured it may start an "insolvency process".
A meeting of creditors is due to take place on May 5 in Jersey with those holding convertible loans in REO allowed to vote on a new debt package for the company, including the postponement of certain debt payments.
These holders are warned about the consequences of a 'No' vote in a document released on REO's website.
The warning is given to those holding convertible unsecured loan stock (CULS) in REO. "If the resolution is not passed at the meeting of CULS holders, the company will be unable to implement the restructuring," states the circular.
"In these circumstances, the company would be obliged to repay over £400m (€450m) of third-party indebtedness on May 31 and it is highly likely the company would need to initiate an insolvency process."
In that case, the holders of the bonds would be unlikely to receive any payment, explained the circular.
The resolutions are expected to be passed by a large margin with many creditors already declaring their hand in support of the restructuring.
NAMA is also a creditor to the firm and it has provided working capital to the company, founded by developers Johnny Ronan and Richard Barrett.
The company said its Irish group would continue to be reliant on NAMA and other lenders for support.
In May 2010, REO submitted a "comprehensive business plan" in relation to the Irish group to NAMA for review.
"Following NAMA's initial evaluation of the business plan, the company has a non-binding arrangement with NAMA," states the document.
"The directors' expectation is that this arrangement will form the basis for further negotiations, that NAMA will continue to monitor the Irish group's performance to ensure that it adheres to certain targets and that, in due course, binding facility agreements will be entered into," it adds.
This week it was announced that the value placed on the Battersea Power Station project in London, owned by REO, has risen by 13pc to £498m in less than a year.
REO has outlined a restructuring package for its debt, which will see creditors giving the company forbearance as it seeks to spin off Battersea into another vehicle.
Many of its loans are in breach of covenants, but lenders are willing to work with the company. Some of the lenders could be paid a forbearance fee under certain scenarios.