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London: A deal that would see Spanish real estate company Colonial taken over by Investment Corporation of Dubai (ICD) was seen closer on Tuesday, although the parties still have to reach an agreement as a deadline looms, sources familiar with the negotiations said.
Talks between Colonial, ICD and three groups of creditors are ongoing in Madrid, London and Dubai. ICD's deadline for striking a deal with the banks expires on tonight.
The negotiations are "making progress", one of the sources said, but added "there are many parts involved that need to be agreed".
Colonial is trying to win over three sets of creditors so the sale can go ahead.
One is the group of international banks and local savings banks that lent former Chairman Luis Portillo and the Nozaleda family the cash to fund their purchase of Colonial's shares.
Then come the four banks behind a 7.2 billion euro ($11.4 billion) syndicated loan - Goldman Sachs, Eurohypo, Calyon and Royal Bank of Scotland (RBS).
A third set comprises lenders to the company itself, including Spanish savings banks, one of the sources said.
More willing
Banks involved in the syndicated loan are now more willing to reach agreement, provided other lenders also agree on waivers and other actions being discussed, one of the sources said.
"The banks in the syndicated loan won't make concessions unless the local lenders do," the source said. "I think the lenders want the company to survive, it's in nobody's interest to destabilise the company."
Goldman, Eurohypo, Calyon and RBS may favour an agreement due to persistent turmoil in financial markets - if they had to block the sale and force a firesale of assets, they may not be able to get the prices they want or expect.
After a decade-long boom, the Spanish real estate sector is in crisis and house prices are expected to fall this year, analysts have said.
Colonial stock rose three per cent to one euro by 1251 GMT.
The company is being advised by Lazard, while Morgan Stanley is advising ICD. Those two banks declined to comment.
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