ICD likely to clinch Colonial deal soon

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.

Negotiations between Colonial, ICD and three groups of creditors are continuing in Madrid, London and Dubai. ICD's time-limit 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 attempting 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 supply 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 includes lenders to the company itself, including Spanish savings banks, one of the sources shared.

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."

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.