By Chris Spillane and Neil Callanan – Dec 12, 2011
The owner of Battersea Power Station, the London landmark slated for a 5.5 billion-pound ($8.6 billion) redevelopment, was put into administration by a U.K. judge after it failed to repay senior creditors.
Judge Geoffrey Charles Vos in London today granted a request by creditors led by Lloyds Banking Group Plc (LLOY) and Ireland’s National Asset Management Agency to appoint an administrator to sell the site. The group will try to recover the entire 502 million pounds owed by the project’s owners by selling the site, two people familiar with the matter said earlier this month.
“We came to the conclusion — with the other lenders — that such a move would offer the best means of getting the sales process for the site back on track, and through that moving on with the regeneration of the site,” NAMA spokesman Ray Gordon said by telephone.
The 38-acre (15-hectare) site was valued at 500 million pounds, developer and controlling shareholder Real Estate Opportunities (REO) Plc said on Oct. 26. REO was given planning consent a year ago for the redevelopment of the site, which is 2.2 miles (3.5 kilometers) by car from the Houses of Parliament. Existing plans include a commitment to contribute more than 200 million pounds toward extending a London Underground line.
Ernst & Young was appointed to administer investment units of Battersea Power Station Shareholder Vehicle Ltd. including REO Power Station Ltd. REO Site Assembly Ltd., REO 88 Kirtling St. Ltd. and REO 8 Brooks Court.
REO’s assets in Ireland aren’t affected by the administration order, the company said today in a statement.
REO fell about 19 percent to a record low of 33 pence in London, cutting the company’s market value to 1.1 million pounds. Trading volume was three times the daily average for the past three months.
Creditors called in loans to Battersea Power Station Shareholder Vehicle on Nov. 29. Chelsea Football Club Ltd., owned by Russian billionaire Roman Abramovich, hired developer Almacantar SA to help it find a place for a new stadium and said one of the options was at the Battersea site.
“After several months of discussions and still no acceptable offers on the table, administration is the only means we have to ensure that a sales process is put back on track,” Lloyd’s spokesman Emile Abu-Shakra said in a statement. “Without a financially stable owner, the site’s future remains unclear and that’s a situation we want to avoid.”
Pink Floyd Cover
Battersea Power Station, featured on the cover of Pink Floyd’s 1977 album “Animals,” was designed by Giles Gilbert- Scott, who also devised the red public telephone box, and built in two stages, according to its website. The plant supplied a fifth of London’s electricity in the early 1950s, according to the Battersea Power Station Community Group website.
“The uncertainty over Battersea Power Station redevelopment has been known for some time,” a spokesman for the London mayor’s office said after creditors called in the REO loans. “We are totally confident that new investors will come forward to take over the Battersea Power Station development.”