Further to the statements in the Company's annual report and accounts published on 23 June 2010 regarding the proposed demerger of the Battersea assets, the Company and its advisers have been engaged in ongoing financial restructuring negotiations with the holders of the Company's Series A and B unsecured loan notes, NAMA, Lloyds Banking Group and an adhoc informal committee comprising the larger holders of the Company's 7.5% convertible unsecured loan stock (CULS) and the zero dividend preference shares (ZDP) issued by the Company's wholly-owned subsidiary REO Securities Limited. Significant progress has been made towards agreeing the shape of a consensual financial restructuring with the informal adhoc committee that is now being discussed with the Company's other lenders. The committee, REO Directors and Treasury Holdings (which supports the restructuring proposal) together account for some £59.4 million of convertible loan stock representing 59 per cent of the total amount in issue and for some 32.9 million ZDPs representing 57 per cent of the total number of ZDPs in issue.

Taking account of the status of negotiations, the Company has determined that the interest payment due to the CULS holders on 31 August 2010 will not be made.

A further announcement will be made in due course.