Olympia Wins Breathing Space From Creditors

LONDON — Canadian property giant Olympia & York Developments Ltd. won a short breathing space Friday as its creditors agreed to lend it enough money to keep London’s huge Canary Wharf development afloat for one week.

“The banks have agreed to provide 5 million pounds ($8.8 million U.S.) to Canary Wharf. It will be available from today,” said an official at a leading bank involved in the London Docklands project.

The cash will keep the project alive for another week while negotiations continue on a $53-million cash injection--enough for a month’s operating costs, the official added.

But pressure is mounting on O & Y, the world’s largest property group, which is negotiating with nearly 100 lenders to restructure $12 billion in debt worldwide.

Several lenders to the $7-billion Canary Wharf project, Europe’s biggest office development, have said they might press to call in court administrators. The banks fear a scramble among creditors unless O & Y can secure a global debt standstill.

“Administration has moved up the order of possibilities. We have got to protect our security,” one lender said. Other banks agreed.

Administration places a company under a court-appointed official to protect it from creditors while a restructuring is worked out.

O & Y has asked the 11 banks that have loaned funds to its London Docklands development for $195 million to keep the project alive.

So far they have come up with only $7 million to $8.8 million--a weekly allowance while they argue over longer-term financial support.

A spokesman for O & Y in New York dismissed the threat of legal action by creditors. “The lending group has agreed to initial funding and is working with the company on an interim plan while they seek a long-term solution,” the spokesman said.