Creditors of Battersea Power Station asked a court to put the landmark property’s owner into administration the day after U.K. Chancellor of the Exchequer George Osborne backed a London Underground extension to boost the area’s development.
A group led by Lloyds Banking Group Plc and Ireland’s National Asset Management Agency will ask an English court on Dec. 12 to have administrators appointed for various units of Battersea Power Station Shareholder Vehicle Ltd., according to a statement yesterday. The lenders are owed 502 million pounds ($786 million).
London Mayor Boris Johnson and Osborne donned hardhats and visited Berkeley Group Plc’s St. James’s Riverlight project next to the power station site on Nov. 28 to highlight regeneration in the Nine Elms neighborhood south of the River Thames. In his budget statement the next day, the chancellor backed a proposed extension of the Underground’s Northern Line to Battersea and announced a plan to create an enterprise zone in the area to ease planning restrictions for businesses.
Developer Real Estate Opportunities had planned to build 3,400 homes and 330,000 square meters (3.5 million square feet) of commercial space at the power station, a protected historical landmark that was closed 28 years ago. With four 350-foot-high smokestacks, the station is Europe’s largest brick building and it featured on the cover of Pink Floyd’s 1977 album “Animals.”
The proposed subway extension is key to the redevelopment of the neighborhood, located across the river from the borough of Kensington & Chelsea. Engineering consultant Parsons Brinckerhoff estimated the cost of the transport link three years ago at 380 million to 633 million pounds. The U.S. plans to move to a new embassy in the Battersea area in 2017.
Lenders applied to a Jersey court yesterday to put the Battersea companies into administration, a form of bankruptcy protection. The companies “are not in a position to satisfy these demands for repayment,” Jersey-based Real Estate Opportunities Plc, which owns 54 percent of Battersea Power Station Shareholder Vehicle, said in the statement.
Battersea’s creditors rejected a 262 million-pound bid last week from SP Setia Bhd., Malaysia’s biggest public traded property developer by sales, to purchase the senior debt related to the London landmark.
Another of the creditors seeking the appointment of administrators is Oriental Property Ltd., controlled by Victor Hwang, a Hong Kong entrepreneur who previously owned the power station. He provided 150 million pounds of loans to help Irish property entrepreneurs Richard Barrett and John Ronan acquire the project five years ago.
Barrett and Ronan, who control Real Estate Opportunities through their company Treasury Holdings, have relied on the support of Lloyds and NAMA to proceed with a 5.5 billion-pound redevelopment of the site. REO sought a partner to back the project after obtaining planning consent in November last year. Ownership of the 38-acre site transferred to Battersea Power Station Shareholder Vehicle following a debt-for-equity swap involving some of the creditors.
Real Estate Opportunities “remains in discussions” to sell its controlling stake in the site, it said yesterday. “There is no certainty that any such transaction will be effected,” it added.
REO shares fell 19 percent today to 0.75 of a penny at 9:24 a.m. in London. That values the company at 2.5 million pounds. Real Estate Opportunities’ other assets, mainly properties in Ireland, are unaffected by the administration sought for Battersea Power Station, the company said.
Battersea Power Station was designed by Giles Gilbert-Scott, who also devised the red public telephone box, and built in two stages, according to its website. The power station provided a fifth of London’s electricity supply in the early 1950s, according to the Battersea Power Station Community Group website.
The building, with marble floors in its turbine room, got heritage protection in 1980 for its architectural merit. Its grade II listing is for buildings of exceptional interest and of outstanding importance, according to the criteria of the government department that approves protection.