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Madrid/London: Investment Corporation of Dubai (ICD) is still in talks with Colonial despite ICD earlier saying its bid for the indebted Spanish property firm had expired, sources close to the negotiations said on Tuesday.
The Dubai fund said it had been unable to reach agreement with Colonial's shareholders by a Monday night deadline and said in a statement that "the offer formulated by ICD has expired".
However, two sources later said hopes for a deal had not been ruled out and that shareholders, creditors and the $82 billion Dubai fund were still negotiating. "The talks continue as creditors want to avoid the company filing for administration, practically the only way forward if a takeover deal fails," said one banker who declined to be named.
Suspension
Market regulator CNMV suspended Colonial shares from trading after the news and demanded that ICD and Colonial's two main shareholders - Luis Portillo and the Nozar group - clarify the status of the talks and whether they expected to reach a deal.
CNMV asked each of them to issue a statement immediately. In its earlier statement, ICD did not explain why talks on the 3 billion euro ($4.6 billion) deal had failed so far.
Sources close to the negotiations said the sticking points included ICD's request to renegotiate a syndicated loan and sell Colonial's residential unit, which could have then affected the price of the cash-and-bond offer.
Nozar, Colonial and ICD declined to comment while Portillo was not immediately available.
Colonial shares fell nearly 14 per cent, adding to a 28 per cent drop since ICD made its bid on Wednesday, but pared losses on news that talks continued. The stock was suspended soon after the Reuters report at 1.16 euros - down 5.7 per cent.
Failure to reach a deal would leave creditors with a headache over what to do with Colonial and with the debt that some of them extended to Portillo and Nozar to build up their combined 52 per cent stake.
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