LEND Lease Corp, the Australian developer building London's Olympic Village, is facing delays in talks to fund the 1-billion-pound (US$1.7 billion) project after credit markets froze worldwide.
"We are looking to do a debt-equity deal but it has been delayed by what is happening in the marketplace," said Mark Gell, a spokesman for the Sydney-based company. "We are still working toward it. We have said around the end of the year. There is no change to that."
The worst financial crisis since the Great Depression is freezing lending, pushing the world economy toward recession. Developers of the Olympic site, Europe's largest public construction project, haven't been able to get bank loans as the British economy sputters, pushing unemployment to a two-year high, Bloomberg News reported.
"Raising project-based debt is difficult and that status has been the same for some months," Gell said. "Like all project finance you tend to put the funds in as the funds are required. You don't have a whole lot of money sitting in the bank waiting to fund projects."
Work on the Olympic Village was continuing and would be completed on time, Gell said.
Lend Lease shares fell 52 cents, or 6.3 percent, to A$7.69 (US$5.15) as of 1:50pm yesterday in Sydney after earlier declining as much as 7.8 percent. The stock is down 56 percent this year, compared with a 61-percent drop in the Bloomberg Asia Pacific Real Estate Index.
London's Olympics organizers said earlier this month they may scrap plans to build temporary arenas for sports such as basketball and shooting to save money as the global financial crisis squeezes the 9.3-billion-pound project.
"The credit crunch is hitting the Olympics hard, but we remain resilient," John Armitt, chairman of the London Delivery Authority, told the city's legislative assembly.