Banks expected to reject Reichmann

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The Independent Online
THE 11 banks that have lent nearly pounds 600m to Canary Wharf are expected to reject an offer from a consortium including Paul Reichmann, of Olympia & York, which developed the scheme, to provide pounds 350m so that the project can be completed.

The consortium has offered to inject enough money to complete the project and fulfil the initial commitment to put pounds 100m into the building of the Jubilee Line extension to Docklands.

Mr Reichmann's consortium is understood to include Primerica Corporation, the corporate parent of the Wall Street investment bank Smith Barney, as well as Lewis Ranieri, of Hyperion Partners, and Laurence Tisch, the chief executive of the CBS television network and of the Loews hotel and tobacco conglomerate.

The banks meet Ernst & Young, the administrators of the project, to discuss the offer today.

Indications are that the banks do not think the bid is attractive as it offers no initial repayment of any of their debt and no certainty of full repayment in future.

'The banks are not sure it will put them in any better position than they are now,' a highly- placed source said. 'They need to clarify the position about where the new money will stand in any pecking order.'

Primerica is controlled by Sandy Weill, a Wall Street veteran who ran Lehman Brothers before it was acquired by American Express in 1982 and merged with the Shearson and EF Hutton retail brokerage houses.

Mr Ranieri is a former vice- chairman of Salomon Brothers and is widely credited with the creation of the thriving market in mortgage-backed securities.

Mr Weill and Mr Ranieri have long-standing personal relationships with Mr Reichmann, who called on their services in the late 1970s when O&Y first entered the New York property market.

The partners in Mr Reichmann's investment group are still very tentative, a source close to Mr Ranieri said, and contact has been largely limited to individual discussions with Mr Reichmann rather than among the three prospective partners.

Mr Weill and Mr Tisch have reputations on Wall Street as 'bottom-fishers', who buy into distressed businesses only under very favourable terms.