Popular Inc. in San Juan, P.R., said this week that a previously announced plan to sell off roughly $375 million of troubled construction and commercial real estate loans to an investment group has been called off after the two sides could not agree on the terms of the deal.

The $38 billion-asset Popular announced in January that it had reached a non-binding agreement to sell $500 million of construction and CRE loans in Puerto Rico - 75% of which were nonperforming - to a newly created investment group for a price equal to 47% of the unpaid principal balance at Dec. 31. Under the original terms of the deal, Popular's main subsidiary, Banco Popular de Puerto Rico, was to own a 24.9% stake in the investment group and was to provide financing for about 50% of the transaction.

In an announcement Thursday, Popular Chairman and Chief Executive Richard Carrion, said that Popular terminated the negotiations after the buyer attempted to modify the terms of the deal.

"Although we are disappointed that we are unable to complete the transaction as originally envisioned, we believe that this is the best decision for the corporation and its shareholders," Carrion said. He added that Popular would continue to explore opportunities to sell the loans "in one or more transactions."

In heavy trading Friday, Popular's shares were down nearly 5%, to $2.88.

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