Wednesday 21 February 2018

NAMA backing not sufficient for REO

Donal O'Donovan

Donal O'Donovan

REAL Estate Opportunities (REO) has been forced to continue negotiations with investors owed £150m (€173m) after failing to secure a debt restructuring deal on October 1, despite the support of NAMA.

The deadline has now been extended until October 10.

The debt relates to the proposed re-development of the Battersea Power Station in London.

REO was forced to negotiate with lenders after the fall in real estate values in the UK meant it had breached the terms of its debt.

REO owes the £150m to two classes of bondholders, with a further £252.55m owed to NAMA and Lloyds/Bank of Scotland.

The £252.55m of loans was originally provided by Bank of Ireland and Bank of Scotland.

REO is an offshoot of Treasury Holdings, a NAMA name. The Bank of Ireland loans have been transferred to NAMA, while Bank of Scotland became part of Lloyds under the UK's bank rescue.

The banks have agreed to forgive the covenant breach and to extend their loan until August next year, but their support is conditional on bondholders also signing up to a deal.

The loan extension would allow the developer time to find a new investor to continue the scheme.

If that succeeds it would see the debt repaid in full after the agreed delay, a better result for lenders than taking the keys and working out the assets themselves.

Banks have been supportive of REO, but will be reluctant to sign up to a loan extension that takes their own due date past May next year -- when the bonds are due to be repaid -- until the due date for bonds is also extended.

Irish Independent

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