Investor Group Cuts Its O & Y Rescue Offer
A bid by an investor group including CBS Inc. Chairman Laurence Tisch has sharply cut back its offer to rescue the ailing Canary Wharf project, sources confirmed Thursday.
A Wall Street group including Tisch and former Salomon Bros. Vice Chairman Lewis Ranieri has lowered its bid to $464 million at current exchange rates from $691.6 million, sources said.
Olympia & York Developments Ltd. placed Canary Wharf, Europe’s largest office development, under British insolvency protection in May after talks with its bankers collapsed.
Since then, the Ranieri-Tisch bid has emerged as the most serious offer.
The investors don’t propose to buy Canary Wharf, but rather are offering to finance construction, a new subway line to the remote East London project and create an account for tenant improvements, sources said. The investors also would gain an unspecified status ahead of other creditors.
One of the sources familiar with the negotiations said the offer was lowered because Canary Wharf’s administrators are pursuing the sale of two buildings in the project.
One building would be bought by Texaco Ltd., which was scheduled to occupy the office tower this year, the source said. Texaco declined comment, except to say it is continuing talks with Canary Wharf’s administrators.
The other sale would involve the building owned and occupied by Morgan Stanley & Co., the source said. Morgan Stanley has sued Canary Wharf developer Olympia & York to honor a contract to buy the building. O & Y, under severe financial distress, hasn’t bought the property and Morgan is believed to be considering another buyer.
A Morgan Stanley spokeswoman declined comment, except to say the firm was trying to sort out its claim with O & Y.
The Wall Street Journal, citing an unidentified person close to Loews Corp., where Tisch is chairman, first reported the lower offer in Thursday’s editions. The newspaper said the deal was revised because the Wall Street group was concerned that prospective tenants might not move into Canary Wharf.
