Ogier Jersey has been at the heart of the restructuring of Jersey investment fund Real Estate Opportunities Plc and its subsidiaries (“REO”) which completed this morning. REO’s investment portfolio includes the iconic Battersea Power Station development project in central London (“BPS”) and various investments in Ireland, the majority of which are in Dublin city centre, with a recent aggregate valuation of £1.05 billion. The Company's investment and development portfolio includes land, properties and developments in all of the major sectors of the property market including office, retail, residential and industrial. REO is listed on the main board of the London Stock Exchange.
The collapse of the Irish and European property markets following the onset of the economic downturn in 2008 adversely affected REO’s asset values, impacting REO’s ability to finance future developments and repay its existing liabilities. As at 31 August 2010, REO’s portfolio was valued at circa £1 billion, but with total indebtedness of over £1.7 billion had net liabilities of circa £750 million.
In respect of REO’s prime asset in the UK, BPS, Wandsworth Borough Council resolved to grant new planning permission on 11 November 2010 that will allow the site to be developed on a commercially viable basis. The planning permission includes a proposal for an extension to the Northern Line Underground which will service the Nine Elms corridor and the proposed new US Embassy. The financial restructuring is the critical first step to enable BPS to raise development funding as a stand alone entity.
Key features of the restructuring transaction include:
• The demerger of BPS and approximately £465 million of related loans into a new “clean” structure (BPSSV), including an extension to the maturity date.
• The equitisation of approximately £250 million of convertible unsecured loan notes and zero dividend preference share obligations into equity in both BPSSV and REO. At the same time, approximately £210 million of intercompany obligations were equitised, in exchange for equity in BPSSV.
• The release of and / or provision of forbearance from certain guarantees provided by REO to support other Group indebtedness.
This complex series of interlocking transactions required in depth legal advice from Ogier on regulatory matters, companies law, banking, capital markets and corporate restructuring.
Ray Horney, REO’s Chairman said "Ogier combines a very high level of client service and responsiveness with high quality, full service technical advice delivered in a commercial manner and we would like to thank the Ogier team for the dedication and quality they have shown on this deal."
Dan Richards, lead partner at Ogier for REO said “we were delighted to win this mandate from REO twelve months ago on the basis of our long term relationship with key members of the REO team, our experience and the full spectrum, legal and fiduciary professional services that we provide. This has been a very complex, innovative and challenging restructuring and we are very pleased to have been the lead advisers to REO in Jersey together with Ashurst and Talbot Hughes McKillop as lead legal and restructuring advisers in London. I’d like to thank our integrated legal and fiduciary administration team for their enthusiasm and round-the-clock commitment in delivering this transaction for REO in Jersey.”
The transaction involved a restructuring of REO’s contractual obligations to all its external stakeholders as well as a restructuring of the Group’s balance sheet and equity. Finance parties, Lloyds Banking Group and the Irish Government’s National Asset Management Agency, were advised by Linklaters and Carey Olsen. The restructuring advisers for Oriental Properties Limited were Clifford Chance and Mourant Ozanne. The restructuring advisers of REO’s convertible unsecured loan notes were SNR Denton in London and a separate Ogier team lead by Matthew Swan.