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Battersea Power Station to float on London stock market

Battersea Power Station is to be listed on the stock market under plans drawn up by the Irish developer of the site.

The landmark is one of London's most recognisable buildings but has been effectively derelict since 1983 after a series of plans to revamp it all failed.

In order to finance a £4.5bn redevelopment of the area, Real Estate Opportunities (REO) wants to demerge the asset into a new vehicle and bring in a 50pc partner.

REO has been hit hard by the financial crisis, with results showing yesterday its liabilities of £1.9bn are £722m larger than its assets and again warning there were "material uncertainties" about its ability to continue as a going concern.

The company's shares fell 40pc to 10p as REO also reported its Irish and UK property portfolio had declined in value by 43pc over the last 14 months.

The REO director leading the Battersea project, Rob Tincknell, dismissed fears the financial issues facing REO could disrupt the regeneration of the power station. About £815m of REO's debt, including £226m due in August 2011 linked to the Battersea project, has been acquired by Ireland's National Asset Management Agency and covenant waivers have been granted. REO said in its results that further waivers were likely and there was a "reasonable expectation that the group will be able to meet its liabilities as they fall due for the foreseeable future".

Mr Tincknell added: "We have the support of banks. We don't own £250m of fields outside Dublin, unlike some."

The demerger of Battersea, which is valued at £388m, will make the development project more attractive to a partner and enable restructuring of liabilities towards "new longer term, development based arrangements".

REO is undertaking a global roadshow designed to attract an equity partner, holding talks with sovereign wealth funds, international real estate funds and pension funds. A business plan laid out in the company's results says it aims to bring in an partner "providing all project financing" from January 2011.

Before that, REO will need to secure planning permission for the 8m sq ft redevelopment, which includes offices, shops and homes. The Battersea scheme was submitted last year and should be heard by a planning committee in September. REO said it was "very optimistic" about securing planning permission.

Date posted: 2 July 2010