London tower developer faces insolvency claim after court row

Thu Nov 22, 2012 2:00am EST
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By Tom Bill

LONDON Nov 22 (Reuters) - The developer of the tallest skyscraper in London's financial district faces a legal challenge that could force it out of business after a dispute with the tower's builder, a source close to the process told Reuters.

Contractor Brookfield Multiplex launched a legal claim for about 16 million pounds ($25 million) against the owners of the 63-storey Pinnacle skyscraper this summer for payments relating to a 593 million pound construction contract.

The 1 billion pound scheme on Bishopsgate in the UK capital is stalled as a stump in the ground after the developers failed to agree a major letting that would have freed up bank finance to complete the building. Brookfield downed tools late last year as part of the payment dispute.

The scheme is majority-owned by SEDCO, a Saudi Arabian investment manager, alongside fund manager Pramerica Real Estate Investors, a subsidiary of U.S. insurer Prudential Financial Inc , and is being developed by Arab Investments.

After failing to file a defence, the developers were last month ordered by the judge to pay Brookfield Multiplex the 16 million pound sum, which includes interest and court costs, UK trade magazine Building reported on Thursday.

If Brookfield Multiplex, the construction arm of Canadian-American developer Brookfield, receives no payment within the next week or two, it will apply for the developer to be wound up, the source told Reuters on condition of anonymity.

A spokesman for the developers was unavailable for comment.

The legal threat is the latest in a string of setbacks for the Pinnacle. The motionless tower cranes and empty building site have been a stark reminder of the crash in the office market in London's financial district since work stopped late last year.   Continued...