Goldman Sachs and other banks are reluctant to refinance Spanish property firm Colonial's debt, potentially blocking its buyout by Investment Corporation of Dubai (ICD), said a source familiar with the deal.

The Middle East sovereign wealth fund has been trying to acquire partial control of Colonial, and as one of the conditions needs approval from the firm's four creditor banks, which hold a 7.2 billion-euro ($11.22 billion) syndicated loan.

Goldman Sachs, Eurohypo, Calyon and Royal Bank of Scotland are against ICD's proposal because it includes a sweetening of the terms of the loan, the source said.

The banks are still missing details as they have not seen the final document initially agreed between the company and ICD, the source added.

The deadline to reach an agreement is on Tuesday, but it could be extended if the positions of the negotiating parts have become closer, the source said.

Colonial shares fell 1.98 per cent at 0.99 euro on Friday, a day after the company was dropped from Spain's blue-chip index to be replaced by engineering group Tecnicas Reunidas in a surprise move.

Meanwhile, billionaire Alicia Koplowitz, has reduced her stake in Colonial to 5.246 per cent from 9.068 per cent, according to a filing with Spanish stock regulators.

Colonial said a board meeting on Thursday had ended without a decision on the takeover offer from ICD, and another meeting had been scheduled for March 18 - a day before the bid deadline. Board approval is another condition for the deal to go through.-Reuters