Saudis seek fresh deal to restart Pinnacle

The Saudi backer of the Pinnacle tower in the City of London is set to sell a stake in the project to in a bid to restart construction work.

Building’s sister magazine, Property Week, understands that the Saudi Arabia-based investor consortium Saudi Economic Development Corporation (Sedco) has decided to bring new equity into the scheme in a bid to shore up its financial position and bring forward development finance.

The move comes after construction of what would be the tallest tower in the City of London stalled last month over funding concerns.

A spokesman for the developer Arab Investments told Building last month that work on site by contractor Brookfield had ceased as the developer was struggling to source development finance for the project.

According to Property Week, talks have been ongoing between Sedco, Arab Investments, and lender HSH Nordbank over the best way to find the funding to resume, with a decision on the form the process will take expected at the end of next week.

Brookfield had resumed building work on the 288m tower late last year after it had stalled as Arab Investments tried to secure the next stage of funding for the £800m scheme.

The developer agreed a deal that included a £500m debt facility from a group of lenders including HSBC and HSH Nordbank, plus the injection of new equity from Sedco.

But the deal was reliant on the developer pre-letting a large part of the tower to lower the scheme’s risk, which it has not yet done.

Sedco had committed £150m of fresh equity to cover construction costs and facilitate the provision of a new debt facility, but it is now thought that some or all of this funding will come from external investors, Property Week said.