Ernst & Young appointed to redevelopment project with £502m debt

The Battersea Power Station redevelopment scheme has crashed into administration with debts of more than £500m.

Alan Hudson and Alan Bloom at Ernst & Young were this morning appointed administrator to the scheme, which is being carried out by Real Estate Opportunities (REO) and backed by Victor Hwang’s Oriental Property.

Four subsidiaries of Battersea Power Station Shareholder Vehicle Ltd, the holding company of the project formed after a restructuring in April, together owe £502m to Lloyds Banking Group, Ireland’s National Asset Management Agency (NAMA), and Oriental Property.  

Of that £324m is owed to the senior lenders Lloyds and Nama, and £178m to Oriental Property. The company admitted in November that the subsidiaries were “currently not in a position to satisfy these demands for repayment.”

High Court judge Geoffrey Vos this morning placed  REO Power Station Ltd, REO Site Assembly, REO 8 Brooks Court and REO 88 Kirtling Street into administration following a demand from Lloyds subsidiary the Bank of Scotland for repayment.

REO said in a statement the administration does not apply either to the whole of REO or to Battersea Power Station Shareholder Vehicle Ltd.

It added that REO’s other assets, which are situated in Ireland, are unaffected by this development. REO owns 54% of Battersea Power Station Shareholder Vehicle Limited.

The administrators will now seek to sell the site in order to recover the debts. Alan Bloom, joint administrator, said: “Battersea Power Station is an iconic building and the associated parcels of land under Administration are attractive assets with a great deal of development opportunity.  

“With such a large piece of prime real estate development land there are many stakeholders and during the Administration process we will be working very closely with all parties.”