Posting of Circulars and Notice of EGM (7068E)

TIDMREOP

RNS Number : 7068E

REO Securities Limited

11 April 2011

11 April 2011

REO Securities Limited

(the "Company")

Posting of Circulars and Notice of Extraordinary General Meetings

REO Securities Limited (the "Company") is a wholly owned subsidiary of Real Estate Opportunities plc ("REO" or the "Group").

Further to the Group's previous announcement on 24 December 2010 regarding the status of negotiations on the Group's balance sheet restructuring, the Group announces that it is today despatching circulars and notices of extraordinary general meetings (together, the "Circulars") to Ordinary Shareholders and to holders of the 7.5% convertible unsecured loan stock ("CULS") and zero dividend preference shares ("ZDPs"). Capitalised terms used in this announcement shall, unless the context requires otherwise, bear the meanings given to them in the Circulars.

The Circulars to holders of CULS and ZDPs contain a description of the proposed Restructuring, which is subject to approval at the extraordinary general meetings and certain procedural conditions precedent being satisfied, and can be summarised as follows:

-- Battersea Power Station, related bank loans, the Group's obligations under the Oriental Loan Notes and other related assets and liabilities will be transferred to a new holding company, BPSSV, or one of its subsidiaries;

-- the REO Group's liability to pay CULS Holders an aggregate of GBP100.9 million of principal and GBP9.5 million of accrued interest as at 31 May 2011 (including interest not paid on 31 August 2010 and 28 February 2011) will be satisfied by effecting a debt for equity swap pursuant to which CULS Holders will be issued with approximately 70.8 million REO Shares (in aggregate representing approximately 15.9 per cent. of REO's enlarged ordinary share capital immediately following completion), approximately 212 million BPSSV Shares (representing approximately 21.2 per cent. of BPSSV's share capital immediately following completion) and BPSSV Warrants in respect of approximately 159 million BPSSV shares (representing approximately 12.2 per cent. of BPSSV's share capital on a fully diluted basis);

-- the Group's liability to pay the holders of the ZDP Shares an aggregate of GBP136 million by way of capital on 31 May 2011 will be satisfied by effecting a debt for equity swap pursuant to which ZDP Holders will be issued with approximately 40.5 million REO Shares (representing approximately 9.1 per cent. of REO's enlarged ordinary share capital immediately following completion), approximately 121 million BPSSV Shares (representing approximately 12.1 per cent. of BPSSV's share capital immediately following completion) and BPSSV Warrants in respect of approximately 91 million BPSSV shares (representing approximately 7 per cent. of BPSSV's share capital on a fully diluted basis);

-- the debt due by companies within the Battersea Group to other companies in the wider Group (amounting to GBP208 million as at 31 August 2010) will be satisfied by effecting debt for equity swaps, as a result of which BPSSV Shares representing a total of approximately 54 per cent. of BPSSV's issued share capital immediately following completion will be issued to companies in the Group;

-- Treasury Holdings will, by way of a management incentive fee, be issued with approximately 77 million BPSSV Shares (representing approximately 7.7 per cent. of BPSSV's issued share capital immediately following completion) and BPSSV Warrants in respect of 25 million BPSSV shares (representing approximately 1.9 per cent. of BPSSV's share capital on a fully diluted basis);

-- the Group will be issued approximately 50 million BPSSV Shares (representing approximately 5 per cent. of BPSSV's issued share capital immediately following completion) and BPSSV Warrants in respect of approximately 25 million BPSSV shares (representing approximately 1.9 per cent. of BPSSV's share capital on a fully diluted basis). The Group will distribute these BPSSV Shares and BPSSV Warrants in specie to Shareholders (including Treasury Holdings) subject to the Company passing a resolution to amend its articles of association to permit distributions in specie;

-- Oriental has agreed to a standstill arrangement with the Group whereby Oriental has agreed not to take enforcement action in relation to the non-payment of interest and other covenant breaches under the Loan Notes until 31 August 2011 or earlier if the standstill arrangement is terminated. Oriental has also agreed to release the Group from its obligations under the Loan Notes on terms that a subsidiary of BPSSV assumes liability to repay the debt. It has also been agreed that, if the Senior Lenders agree to defer the date for repayment under the Battersea Power Station Facility Agreements beyond 31 August 2011, Oriental will also defer the date for repayment of the Loan Notes accordingly. Oriental will be entitled to a forbearance fee of GBP4.5 million in consideration for entering into the standstill agreement payable on 31 August 2011 or such later repayment date if the Battersea Power Station Facility Agreements are extended;

-- the Group will be released from its guarantees of the Battersea Power Station Facility Agreements (under which the aggregate liability (including forbearance fees and interest rate swaps) at completion of the Restructuring is expected to be approximately GBP300 million) and will be provided with the necessary Senior Lender consents to implement the Restructuring; and

-- the Group will be granted forbearance by NAMA under which, for a 12 month period following Completion, NAMA will agree not to call under the guarantee provided by the Group in relation to a Euro 95 million facility advanced in relation to certain of the Group's assets in Ireland.

The Group has received irrevocable undertakings to vote in favour of the Restructuring at the upcoming extraordinary general meetings from 61% of CULS holders and 58% of the holders of ZDP shares respectively.

The Restructuring also has the support of REO's directors and Treasury Holdings, who together hold 67.4 per cent of the ordinary shares.

The previous announcement on 24 December 2010 stated that, if its GBP150 million loan note and accrued interest is not repaid on 31 May 2011, Oriental Property Limited would, subject to certain exceptions, have the option to convert the debt into 75% of the equity in the new Battersea Power Station holding company. Also, shareholders in the new holding company would have the right to acquire that interest prior to 1 June 2012 for an amount equal to the sum due to Oriental Property Limited under the loan note together with interest - both of these provisions are no longer applicable.

The Circulars to holders of CULS and ZDPs also contain a summary valuation report prepared by King Sturge as of 31 December 2010 for the Battersea Power Station property. This shows a valuation of GBP498 million, assuming planning permission is received.

The Circular to shareholders contains notice of an extraordinary general meeting convened to approve amendments to the Memorandum and Articles of Association to allow the Group to effect distributions in specie, to introduce shareholders' pre-emption rights and to convert REO into a no par value company.

If the Restructuring becomes effective, it is expected that the listings of the CULS and ZDPs on the Official List (standard category) will be cancelled on the Effective Date, expected to be 12 May 2011.

A copy of each Circular and related forms of proxy have been submitted to the National Storage Mechanism and will be available for inspection shortly at www.hemscott.com/nsm.do.

A copy of each Circular will also shortly be made available on REO's website at www.realestateopportunities.co.uk.

For further information, please contact:

Real Estate Opportunities plc

Ray Horney, Chairman

Tel: + 44 (0)1273 775 225

Matrix Corporate Capital

Paul Fincham

Tel [phone]

Goodbody Stockbrokers

Linda Hickey, Corporate Broking

Tel [phone]

Finsbury

Gordon Simpson / Arif Shah

Tel: [phone]

Murray Consultants

Ed Micheau

Tel: + 353 1 498 0300

This information is provided by RNS

The company news service from the London Stock Exchange

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