Huge O&Y write-downs exclude Canary Wharf

OLYMPIA & YORK, as expected, reported huge losses for its last financial year, but surprisingly said it was too early to include a write-down for Canary Wharf, the London Docklands project placed under administration in May.

The Cdollars 2.1bn ( pounds 930m) loss for the year to January included Cdollars 1.4bn in write-downs, leaving O&Y's Canadian parent company with an appraised value of Cdollars 2.3bn in excess of its liabilities. Analysts had expected a Canary Wharf write-down of more than Cdollars 2bn, virtually wiping out the book value of the world's largest property company. The company's total assets were put at Cdollars 22.05bn versus liabilities of Cdollars 22.19bn, creating a shareholders' deficiency of Cdollars 139m.

'Clearly, the O&Y current financial status is very difficult,' Gerald Greenwald, president, said yesterday in Toronto. But he said the balance sheet did not reflect the company's strong market franchise. He also noted that certain assets were carried on the balance sheet at cost, but refused to put an actual net worth on the firm.

Write-downs for last year included Cdollars 553m for North American properties, Cdollars 229m for natural resource holdings in Canada, and Cdollars 608m for minority investments in several other property and energy companies.

O&Y is scheduled to present a detailed financial restructuring plan to creditors of its parent company in Toronto on Monday and is expected to offer them a large equity stake in the firm in exchange for rescheduling debt and additional operating loans.

The company said its immediate priorities were to negotiate a reorganisation plan that would allow it to sustain ongoing operations until market conditions improve, and to assemble an investor group that would allow Canary Wharf to be completed.

Mr Greenwald told a news conference that there were some potential investors for O&Y's new proposal for the project, but revealed no names. 'We believe we know how to complete Canary Wharf in a way no other entity could match,' he said.

O&Y said it had not yet put a figure on 'the major deterioration in value' of the Docklands project. But it promised to provide interim financial statements, and announce a formal write- down some time this year.