The Libyan government has canceled Colony Capital LLC's plans to buy a majority stake in its European refining company, Tamoil, and is unlikely to offer the U.S. private equity group any compensation for ending the deal, the head of the Libya's sovereign wealth fund said Wednesday.
"No agreement was reached. We couldn't make a deal happen," Mohammed Layas, chairman of the Libyan Investment Authority, told Dow Jones Newswires.
Layas declined to say why Libya reversed course on the deal but said the North African oil-producing country had no plans to offer Colony any financial compensation. "I don't see that happening."
The Libyan government reached a deal in June to sell a 65% stake in Tamoil to Colony Capital. The Los Angeles-based private equity group would have paid around $3.5 billion for its stake in Tamoil. The government recently transferred full control of Tamoil to the fund.
Layas said Libya may seek a new Tamoil partner in the months ahead. "This could be a consideration in the future," he said, declining to elaborate.
The state-run Libyan Investment Authority, or LIA, created last autumn, has around $40 billion in capital, which the government is looking to invest in international assets.
Tamoil owns refineries in Germany, Italy, Spain and Switzerland, where it is based, and operates more than 3,000 filing stations in Europe.
Colony Capital was not immediately available to comment.
The original deal, which was supposed to have been finalized at the end of 2007, signaled at the time Libya's further opening up to foreign investment more than two years after the U.S. and U.K. renewed trade ties with Libya.
Those developments followed Libyan leader Moammar Gadhafi's promise to dismantle Libya's weapons of mass destruction program and cooperation with militant groups.
While Libya has grown more confident of its political and economic growth prospects than in years past amid today's record oil prices, the government has also been irritated by a new U.S. law that aims to help victims of terrorism receive compensation.
The Libyan government feels it has failed to see any big dividends from the U.S. government since it renounced its nuclear weapons program and cooperation with terrorists five years ago. The law helps victims of state-sponsored terrorism pursue the assets of countries that support terrorism.
Libya was complicit in the 1988 Pan Am flight 103 bombing over Lockerbie, Scotland, and the bombing of a Berlin nightclub in 1986. Americans were among the many people killed in both attacks.
Libya agreed in 2004 to pay around $30 million in compensation to some of the victims of the nightclub attack and, in 2003, formally accepted responsibility for the Pan Am bombing and agreed to pay $2.7 billion to families of the victims. Pending legal issues remain in both of those cases.
The U.S. formally restored diplomatic links with Libya in May 2006.