Candys facing a Mexican standoff

News

Mike Philips and Julia Cahill

29 August 2009

Mexican lenderBanco Inbursa is suing Christian Candy’s CPC Group over a $356.5m (£219m) loan made to the company on a luxury US housing project.

The bank, owned by the world’s third-richest man, Carlos Slim, claims that CPC has repeatedly failed to repay the loan, and interestwhich at 8 August totalled $20.4m. The loan matured in October 2008.

An 11-page document filed at the New York State supreme court last week, and seen by EG, shows that Inbursa is trying to force CPC to “pay certain costs associated with the loan, including interest payments, until the loan is paid in full or the title to the property passes to the lender by foreclosure or voluntary transfer”.

The property is an 8-acre site at 9900 Wilshire in Beverly Hills, California. Brothers Nick and Christian Candy bought the site through Project Lotus, a jv between CPC, Kaupthing and clothingentrepreneur Richard Caring, for $500m in April 2007. Project Lotus is vigorously defending the claim.

Inbursa’s lawsuit, reported first in US business magazine Forbes, states: “CPC has repeatedly made clear that it has more than sufficient funds to pay the amounts it is responsible for. In a 9 November 2008 news article in the Sunday Times, Christian Candy boasted that his cash position was beyond outstanding.”

It adds that CPC’s chief operating officer had also said the company had “a cash war-chest of around £200m and can stand comfortably on the touchline and select the right opportunities”.

The claim goes on: “Apparently, performing its obligations are not ‘the right opportunity’ for CPC. Despite repeated notices and demands for payment, CPC has refused to pay the amounts it owes. Rather, CPC has caused the lender to unnecessarily waste time and incur additional expense by forcing the lender to file this lawsuit.”

A Project Lotus spokeswoman said: “We are still in negotiationswith the lender and any legal claims against us are purely tactical. We will defend such claims vigorously.”

CPC has been trying to restructure the loan and stave off foreclosure proceedings sinceOctober. Inbursa declined to comment.

Mexican lenderBanco Inbursa is suing Christian Candy’s CPC Group over a $356.5m (£219m) loan made to the company on a luxury US housing project. The bank, owned by the world’s third-richest man, Carlos Slim, claims that CPC has repeatedly failed to repay the loan, and interestwhich at 8 August totalled $20.4m. The loan matured in October 2008. An 11-page document filed at the New York State supreme court last week, and seen by EG, shows that Inbursa is trying to force CPC to “pay certain costs associated with the loan, including interest payments, until the loan is paid in full or the title to the property passes to the lender by foreclosure or voluntary transfer”. The property is an 8-acre site at 9900 Wilshire in Beverly Hills, California. Brothers Nick and Christian Candy bought the site through Project Lotus, a jv between CPC, Kaupthing and clothingentrepreneur Richard Caring, for $500m in April 2007. Project Lotus is vigorously defending the claim. Inbursa’s lawsuit, reported first in US business magazine Forbes, states: “CPC has repeatedly made clear that it has more than sufficient funds to pay the amounts it is responsible for. In a 9 November 2008 news article in the Sunday Times, Christian Candy boasted that his cash position was beyond outstanding.” It adds that CPC’s chief operating officer had also said the company had “a cash war-chest of around £200m and can stand comfortably on the touchline and select the right opportunities”. The claim goes on: “Apparently, performing its obligations are not ‘the right opportunity’ for CPC. Despite repeated notices and demands for payment, CPC has refused to pay the amounts it owes. Rather, CPC has caused the lender to unnecessarily waste time and incur additional expense by forcing the lender to file this lawsuit.” A Project Lotus spokeswoman said: “We are still in negotiationswith the lender and any legal claims against us are purely tactical. We will defend such claims vigorously.” CPC has been trying to restructure the loan and stave off foreclosure proceedings sinceOctober. Inbursa declined to comment.