Canary Wharf creditors offered 15%

THE administrators of Canary Wharf have offered unsecured creditors of the development 15 pence in the pound, as part of a plan to bring the project out of administration, writes John Murray.

A spokesman for Ernst & Young, appointed as administrator to the Olympia & York project in May, confirmed that a letter had been sent to the creditors setting out the terms of the payment, but declined to discuss the details.

The letter warned that if the settlement was not accepted, Canary Wharf would go into receivership and the unsecured creditors would get nothing. Replies are sought by 2 April.

It added that the banks had agreed to the scheme in principle, and would provide fresh funds to advance the project, including pounds 98m for the Jubilee Line extension to Canary Wharf.

It hinted that another institution - understood to be the European Investment Bank - was prepared to join the 11-strong bank club.

It is estimated that a further pounds 100m will be needed in the next few years to complete the project and fit offices.

The plan offers an exit from administration through a company voluntary arrangement. Creditors who work under warranty would get 40p in the pound from the deal.

A company voluntary arrangement allows a company in administration to return to normal trading, but it must be approved by the Court.