Olympia & York Developments Ltd., the debt-laden Canadian developer, failed yesterday in its attempt to get a syndicate of banks to agree to extend by one year a $450 million loan that comes due today.
Olympia & York also indicated yesterday that it had enough cash on hand to retire the portion of a $300 million commercial-paper program that matures today. The $300 million program was used to finance the Exchange Tower in Toronto.
The company had been trying to get the bank lenders of the $450 million loan to agree not to seize the loan's collateral, Scotia Plaza, a 68-story tower in Toronto's financial district.
It was not clear what the banks' refusal to sign an agreement would mean.
A spokesman for Olympia said he could not say definitively whether the loan agreement included cross-default provisions that could create more debt crises for the company. Such provisions can touch off calls on other loans held by the syndicate of banks and increase the cash problems facing the company.
The spokesman indicated that Olympia had received assurances from the banks that no moves would be made to declare a default on the loan or seek to force a sale of Scotia Plaza.
By refusing to sign a standstill agreement on the $450 million loan, the banks appeared to be keeping their options open as negotiations begin on restructuring Olympia & York's $18.5 billion of debt.
In a meeting Friday with 20 major bank creditors, executives of Olympia asked that all of its debts that mature this week be extended.
It also scheduled a meeting for Monday with more of its lenders.
The company promised to open some of its tightly guarded books to the banks at that time and to discuss plans to meet short-term cash needs while the group designs a longer-term revamping of its debt load and payment terms.