Deutsche Bank Sues Urbi for $61 Million Over Loans

Deutsche Bank AG sued Mexican real-estate developer Urbi Desarrollos Urbanos SAB in New York for $61.1 million for defaulting on loans, while a Barclays Plc unit sued homebuilder Desarrolladora Homex SAB over a swaps agreement.

Deutsche Bank made loans valued at $50 million and $55 million to Mexicali-based Urbi, according to a complaint filed yesterday in New York State Supreme Court in Manhattan. In April, Urbi didn’t make a $3 million payment on the $55 million loan and also failed to pay $1.55 million in interest on the two loans, Deutsche Bank said.

“The loan default constitutes an automatic event of default under the credit agreement, whereby Deutsche Bank has the right to declare the entire unpaid principal and accrued and unpaid interest on the loans immediately due and payable,” the bank said in its complaint.

Barclays today sued Culiacan, Mexico-based Homex in the same court for an alleged breach of a swaps and derivatives agreement. Barclays Bank Mexico SA, in its complaint today, said it incurred losses of 536 million pesos ($44.65 million) as a result of the default. Last week, Credit Suisse Group AG sued Homex, Mexico’s biggest homebuilder by revenue, seeking $26.7 million over a canceled derivatives transaction.

Mexican homebuilders have struggled to prevent declines in their cash reserves as the government shifts subsidies to promote more capital-intensive apartment construction in cities, instead of individual homes in commuter towns. Home foreclosures in Mexico more than doubled last year to a record 43,853.

Cash Falls

Urbi’s cash and cash equivalents fell 95 percent in the first quarter from the previous quarter. The company, the biggest Mexican builder by the number of homes, has hired Rothschild to advise it on a possible restructuring. Urbi was sued in New York last month by Credit Suisse and Barclays over financial derivatives.

David Aguilar, a spokesman for Urbi, declined to comment on the Deutsche Bank suit, saying in a phone interview that the company hasn’t seen the complaint.

Deutsche Bank also sued the guarantors of the Urbi loans and promissory notes, seeking $46.8 million in damages. The Frankfurt-based bank said that because of the default, it terminated a swap agreement with Urbi involving interest-rate and foreign-exchange option transactions. Deutsche Bank said it told Urbi the developer owed $37.7 million on the agreement.

Barclays, in the complaint filed today, claimed Homex failed to make required transfers of $1.7 million to the bank in April as collateral to cover potential losses, triggering the default. London-based Barclays said Homex was obligated to pay 536.6 million pesos for the early termination of the contract.

Marena Rubio, a spokeswoman for Homex, didn’t immediately respond to an e-mail seeking comment on the suit.

The Urbi case is Deutsche Bank AG v. Urbi Desarrollos Urbanos SAB, 651676/2013; the Homex case is Barclays Bank Mexico SA v. Desarrolladora Homex SAB, 651681/2013; Supreme Court of the State of New York, New York County (Manhattan).

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