Shipyards deny claim of talks over sale of company

Malta Shipyards Ltd has denied a claim by an American businessman that it is involved in talks over the sale of the company.

Malta Shipyards (MSL) had entered into discussions with Joseph Cala and the US-based Cala Corporation about the possibility of building a number of ships at the Marsa shipyard, a project Mr Cala is claiming is worth $5 billion, or about Lm1.7 billion.

But a report by the US Securities and Exchange Commission (SEC) said his company "is in final discussions with the Maltese government regarding taking over the Marsa Shipyard located in the country of Malta".

MSL chief executive officer Chris Bell and chairman John Cassar White said the duty of the management was to run the shipyards in accordance with the shareholders' policy.

Mr Cala had failed to produce technical and feasibility studies on the proposed project, they added.

However, Mr Cala insisted, when contacted, that the information regarding Cala Corporation's talks to take over Marsa Shipyards was correct when filed with the SEC.

"Malta Enterprise told us that Marsa shipyard was closed and the government was interested in finding a shipbuilding operator," he said.

Since Malta Enterprise was a government agency, his company's statement was accurate as it was based on what Malta Enterprise had said, Mr Cala insisted.

The Shipyards said that a quick internet search would reveal that Cala Corporation, which was previously named Magnolia Foods Inc, operated in the restaurant business with four employees.

Recently, MSL said, Cala Corporation decided to diversify its business by building hotels, casinos, and other recreational facilities on structures that are submerged in the sea. It was at this point that Mr Cala approached MSL.

However, MSL requested feasibility studies from the company. Not only were these studies not forthcoming, but it was discovered that the Cala Corporation was also running at a loss.

MSL said Mr Cala never submitted any proof of how he intended to finance this $5 billion project through a company with a capital of Lm60,000.

"We regret that this matter had to come to this point. We do not want the shipyard to find itself in a situation again where it builds a number of ships but does not get paid, as was the case in the past.

"The Maltese shipyards, like most other shipyards, are fully occupied, and if we improve our productivity from the present levels, the prospects for future work will be good."

Earlier this month, MSL filed a judicial protest against Mr Cala claiming he had had made a number of defamatory public statements and media interventions.

The company had said that if Mr Cala did not withdraw the unfounded allegations against shipyards officials, discussions with him would cease and legal action would be taken.

MSL said both itself and Cala Corporation were bound by a non-disclosure agreement while the discussions were taking place but Mr Cala felt he could ignore the agreement and used certain sections of the media to repeat, more than once, certain unfounded allegations.

Mr Cala said his corporation recently increased its capitalisation by 400 million shares. This meant that as soon as any shipyard issued its quotation, it would revalue its shares to the necessary price.

Mr Cala said that Malta's former Ambassador in the United States, John Lowell, spoke with Cala's investment banker Frank Marinaro, vice-president of Credit Suisse, regarding a bank guarantee for the undersea ships construction.

Mr Marinaro made it clear to Mr Lowell that without a quotation and construction costs, Credit Suisse would not be able to issue the bank guarantee.

If Malta Shipyards and Cala agreed on the quotation and construction costs, it would then facilitate the financing and issue the bank guarantee Mr Cala insisted that from the outset Cala made it clear that a quotation was a must in order to move forward.

He said that as soon as a construction contract was signed, Malta Shipyards would receive progressive payments along with a bank guarantee from Cala.

Asked why the General Workers' Union seemed to be backing Mr Cala in his dealings with Malta shipyards, GWU deputy secretary general Geitu Mercieca said the union was not backing Mr Cala. It had been contacted by Mr Cala and all it did was arrange meetings with the management of the shipyards and Malta Enterprise.

Mr Mercieca said the union wanted the facts to be clear in the interest of the workers. He said that other people had been involved in the saga, including Malta Enterprise officials and Mr Lowell.

If there were any problems with Mr Cala, the situation should not have been allowed to escalate.

All this person was asking for, after all, was a quotation. Why was Malta Shipyards refusing to give it to him? Moreover, whether or not he had money was not an issue. There could be others ready to back him, as he was claiming. And barges could be profitable for a shipyard to make. So why not give him a quotation and let him decide whether or not to order such work. The chapter would then be closed, Mr Mercieca said.

The GWU's aim, he said, was genuine and if any investment were possible, such an opportunity should not be lost.