UPDATE 2-Dubai's ICD extends Colonial due diligence

(Adds Goldman Sachs role, updates share price.)

By Elena Moya

MADRID, Feb 21 (Reuters) - The Investment Corporation of Dubai will spend more time going through the books of bid target Colonial (COL.MC: Quote, Profile, Research), extending due diligence on the Spanish real estate firm until Feb. 27, the sovereign wealth fund said.

On Feb. 1, Colonial said it had opened its books to ICD for two weeks and the Dubai fund said it would announce its decision within three days of going through the accounts.

The deal is also on hold as ICD is trying to renegotiate a syndicated loan of about 6 billion euros ($8.84 billion), led by U.S. bank Goldman Sachs (GS.N: Quote, Profile, Research), by extending its length or sweetening its conditions, a source said.

As Colonial has already breached covenants, creditors led by Goldman Sachs could gain control of the company, avoiding a sale to a third party and, instead, selling the company's assets, the source said.

"It's a war between the financier and the buyer," the source said on Thursday.

Goldman Sachs declined to comment.

Colonial shares fell 2.8 percent to 1.69 euros at 1620 GMT.