REAL ESTATE Opportunities (REO) has negotiated a cessation until May of next year of the payment of interest and principal on a £150 million (€171 million) loan note issued to a Hong Kong property investor.

The loan note was given to businessman Victor Hwang as part of the company’s consideration for the Battersea Power Station in London, which it hopes to develop.

Loans totalling £850 million which REO has with Irish banks have been transferred to the National Asset Management Agency (Nama). The company is backed by developers Richard Barret and John Ronan and their Treasury Holdings group, which itself has had loans transferred to Nama.

In a statement issued yesterday, the AIM-listed company said a further announcement setting out “agreed financial restructuring terms” for the group would be made in due course.

The company has a £225 million facility associated with the power station with Bank of Scotland and Bank of Ireland as well as a £37.5 million site assembly facility with Bank of Ireland.

Last month, it announced that the banks, and Nama, had agreed to extend the facility to August 2011 if it could negotiate a compromise agreement in relation to the loan note.

Yesterday, it said the deal with Mr Hwang provides a basis for a wider compromise agreement which would be contingent on the completion of detailed documentation and approval from the banks, Mr Hwang and the company’s various classes of shareholders.

The company wants to separate the Battersea building from the rest of its property portfolio and transfer it to a listed vehicle.

Prior to doing so it wants to secure planning permission for its proposed development of the former power station. Battersea power station is Europes largest brick building.

In June, REO reported a loss of £872 million for the 14 months to February after its Irish properties lost half their value.

Its plan for Battersea is the second largest ever submitted for a central London site.

The site was bought from Mr Hwang for €595 million in November 2006.