Bloomberg News

Battersea Station, Japan Air, Australian Care Homes: Bankruptcy

December 16, 2011

(This report may include items about ratings downgrades or news not about companies in bankruptcy.)

Dec. 13 (Bloomberg) -- The owner of Battersea Power Station, the London landmark idled for the past 28 years, was put into administration by a U.K. judge after its owners failed to repay senior lenders owed more than 500 million pounds ($780 million).

Judge Geoffrey Vos in London granted a request by creditors led by Lloyds Banking Group Plc and Ireland’s National Asset Management Agency to appoint an administrator to sell the site. The creditors will try to recover the entire 502 million pounds owed by the project’s owners by selling the site or the debt, two people familiar with the matter said earlier this month.

Ernst & Young was appointed as the administrator for investment companies of Real Estate Opportunities Plc including REO Power Station Ltd. and REO Site Assembly Ltd.

The 38-acre (15-hectare) site was valued at 500 million pounds, controlling shareholder Real Estate Opportunities said Oct. 26. REO was given planning consent a year ago for a 5.5 billion-pound redevelopment of the site. Existing plans include a commitment to contribute more than 200 million pounds toward extending a London Underground subway line.

On Nov. 29, the creditors called in loans to the project’s owner, Battersea Power Station Shareholder Vehicle Ltd. REO said the next day that it was still in talks to sell its 54 percent stake. It didn’t identify the potential buyers.

Japan Air Turnaround Body to Hire Banks for Global Share Sale

The Enterprise Turnaround Initiative Corp. of Japan is seeking to hire banks for a global offering of shares in Japan Airlines Co., the carrier it turned around after the nation’s biggest bankruptcy of a non-financial company.

The government-affiliated agency plans to select the banks for the airline’s relisting by mid-January, according to a statement on its website today. ETIC in July announced the banks it had selected to help sell the carrier’s shares in Japan.

JAL, which exited bankruptcy protection in March, is adding planes after slashing routes, aircraft and staff to boost earnings after three years of losses in four forced it to seek help. ETIC, which owns most of the airline’s shares, is mandated to sell its stake by January 2013, three years after it took over the carrier.

The agency in July chose SMBC Nikko Securities Inc., Daiwa Securities Capital Markets Co., Nomura Securities Co., Mizuho Securities Co. and Mitsubishi UFJ Morgan Stanley Securities Co. for the domestic share sale.

ETIC has about 97 percent of voting rights in the carrier after injecting 350 billion yen ($4.5 billion) of capital.

Australian Property Custodian Holdings Will Be Liquidated

Australian Property Custodian Holdings Ltd., the operator of retirement homes whose chairman is former federal health minister Michael Wooldridge, will be liquidated, after a second meeting of creditors was held Nov. 23, the company said in a statement to the Australian Stock Exchange today.

Sino-Forest Will Default on Bonds, Miss Earnings Report Deadline

Sino-Forest Corp., the timber producer fending off fraud allegations, said it will default on its bonds and miss a self- imposed deadline to report earnings as it considers putting itself up for sale.

Sino-Forest won’t make a $9.78 million interest payment on its 2016 convertible notes that’s due Dec. 15, the Hong Kong-and Mississauga, Ontario-based company said in a statement. There’s no assurance if or when the earnings results will be released, it said.

The company’s shares tumbled in June after Carson Block, a short seller, said it had exaggerated its timber assets in China. Sino-Forest may consider going private, selling a stake, or seeking a merger to raise funds, Chief Executive Officer Judson Martin said in a Nov. 23 interview.

“Maybe the creditors could force this into liquidation and try and claim whatever they can from this as a result of this breach,” John Stephenson, who helps manage $2.7 billion at First Asset Investment Management Inc. in Toronto, said in a telephone interview. “It’s just another chapter in this sad tale.”

Sino-Forest’s shares have been suspended from the Toronto Stock Exchange since August by Canada’s main securities regulator, which began an investigation. The Royal Canadian Mounted Police also has started a probe.

“The board has determined that it must consider all strategic options available,” Sino-Forest said. “The company may consider obtaining other sources of capital, including through the recapitalization of the company or the sale of some or all of its business.”

Report Into RBS Collapse Blames Bank Managers, FSA Oversight

Royal Bank of Scotland Group Plc’s board made “poor decisions” and failed to carry out proper due diligence on its acquisition of ABN Amro Holding NV, according to a report into the near collapse of the lender in 2008.

The bank relied too much on short-term wholesale funding, a weakness that was missed by the U.K. banking regulator, the Financial Services Authority said in a report on its website. The watchdog listed seven primary reasons for the bank’s failure, including uncertainties over the quality of the lender’s assets and lack of capital.

The report “describes the errors of judgment and execution made by RBS executive management which, in combination, resulted in RBS being one of the banks which failed amid the global crisis,” Adair Turner, the FSA’s chairman, said in a statement.

RBS reported a 24.1 billion-pound ($37 billion) loss for 2008, the largest in U.K. corporate history, and required a 45.5 billion-pound taxpayer rescue, the world’s biggest banking bailout, after the acquisition. The FSA came under pressure to publish the probe into RBS finances after it cleared former RBS Chief Executive Officer Fred Goodwin of wrongdoing.

“Taxpayers should never have had to rescue RBS,” Philip Hampton, the bank’s chairman, said in an e-mailed statement. “The FSA’s views are an important contribution to the debate on how banks should be managed and regulated in the future.”

Goodwin pushed through the world’s biggest bank takeover, the 72 billion-euro ($96 billion) purchase of Amsterdam-based ABN Amro with partners Banco Santander SA of Spain and Belgium’s Fortis even after global money markets froze in 2007. The acquisition saddled RBS with bad debt and depleted its cash reserves.

Deutsche Bank’s DWS Aims to Liquidate ImmoFlex Fund by May 2014

Deutsche Bank AG’s DWS Investment GmbH unit said it plans to liquidate its DB ImmoFlex fund by May 2014.

DWS plans to file for closure of the fund on Nov. 16, 2012, to allow investors access to available liquidity, the company said in an e-mailed statement.

DWS said in May it had frozen the withdrawal and issuance of shares from the fund, citing “extraordinary circumstances.”

--With assistance from Neil Callanan, Simon Packard, Gavin Finch, Ben Moshinsky in London, Liezel Hill in Toronto, Christopher Donville, Joe Schneider in Sydney, Taku Kato, Chris Cooper in Tokyo. Editor: Christopher Scinta

To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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