Brookfield Multiplex, the consortium behind the Pinnacle project, is close to dropping a legal case against the owners, representatives announced today.
The agreement, regarding currently outstanding fees, removes insolvency as an imminent threat to the project, a 1 m sq ft development which is still in the early stages of construction.
The consortium is thought to have reached an agreement which could form the precursor to a broad financial arrangement to fund the future development of the scheme, which has lain dormant for the past year due to monetary constraints.
Brookfield Multiplex announced in a statement issued today that: “A settlement has been offered and, unless executed in the next seven days, it will fall away. The details of any settlement are private and confidential.”
The company issued a £15m legal claim in August against three specialist vehicles that own and manage the Pinnacle, for the recovery of fees that had not been paid for a year previously.
The High Court gave Brookfield Multiplex the right to bring a winding-up order against the special-purpose vehicles who are working on behalf of owners Saudi Economic and Development Company, and fund managers Pramerica.
It is yet to be seen whether the outstanding fees have been settled in full, but it has been indicated that any payments could form part of a broader financial restructuring of the original agreement between Brookfield Multiples and the Pinnacle’s owners.
Brookfield Multiplex agreed a £593m contract in January 2009, split into two parts, for the construction of the Pinnacle, which is set to become the tallest building in the City of London. It is thought that the first part of this agreement has already been fulfilled.
Sources have indicated that any further funding arrangement would depend on whether the scheme could achieve a pre-let of 33% or more.
Of the £460m that is thought to have been spent on the project so far, £140m was loaned from HSH Nordbank and £70m of equity fund has been used for the for the acquisition of the £210m site.
The lengthy search for debt finance meant that a further £250m of equity being had to be raised in order to fund construction in the meantime.
A debt package that it was hoped would be established in early 2012 was postponed as banks, led by HSBC, sought reassurances in the form of a pre-let or revised scheme. HSH has now offered an extension on its loan until November 2013 at the earliest.
Photo courtesy of KPF and Cityscape