Colonial's shareholders have asked the Investment Corporation of Dubai to make changes to a takeover bid worth more than 3 billion euros ($4.53 billion), the Spanish property company said.

Colonial shares plunged as the news added to a pile of doubts that the bond-and-cash deal will come to fruition and the prospect of a counterbid faded considering Colonial's complexity. The stock closed down 14 percent at 1.35 euros.

ICD's offer is conditional on the sovereign wealth fund reaching agreement with banks that have lent money both to the company and to its shareholders.

"I don't see things working on that deal, the lending banks have no incentives," a banking source close to the deal said.

When ICD first declared its interest in the ailing firm earlier this month, it said former chairman Luis Portillo and the Nozaleda family, who together own 52 percent of Colonial, had agreed to sign up to any deal.

In a statement, Colonial said its shareholders wanted more details on the bid and would make a decision soon.

Colonial has attracted various potential bidders since its share price slumped in December as shareholders unwound derivative positions on its stock, which was already falling on worries about a sudden slowdown in the Spanish property sector.

The share slump forced Portillo out of the chairman's position and the highly indebted company then sold various assets to maintain cash flow.

ICD is the only group to have put forward a bid -- offering either 1.85 euros cash per share now or debt that will be worth 2.25 euros a share when it matures in four and half years' time.

"The conditions are tough, I don't think the investors will be convinced. Probably they'll say it's not good enough," said Benito del Rincon, fund manager at Lloyds Investment in Madrid, who holds Colonial shares.

The ICD offer depends on reaching a deal with Colonial's banks -- Goldman Sachs, Royal Bank of Scotland, Eurohypo AG and Calyon -- within three days.

ICD is pushing for a discount, or improved conditions, on Colonial's 4.66 billion euro syndicated loan. ICD also needs to reach an agreement within five days with banks that lent Portillo and Nozaleda money to buy stock. Some of those deals assumed a Colonial share price of 3 euros so the lenders are already facing losses.

"What is better for the existing syndicate? Renegotiate the debt badly, or go bankrupt?" a Spanish banker said.

A source close to the deal said ICD had created a conflict between investors and creditors who would now "fight to get the pieces of a shrinking pie".

If the ICD bid falls through, Colonial's banks could face writedowns. Otherwise they could have to take on some of its assets themselves, seeing as the company has already breached covenants, or renegotiate the loans -- an option bankers saw as highly unlikely given the credit crunch and sector outlook.

The Spanish property market is suddenly slowing after nine years of growth. However, Colonial does have some attractive, high-quality rental properties in Madrid, Barcelona and Paris.

"Nobody wants the assets, particularly at this moment of crisis, but nobody benefits from seeing the company go bust either. They would rather offer them support," one banker said. -Reuters