Tony Zahra was appointed chairman of Malta Industrial Parks in May 2013. He told Vanessa Macdonald that the new board had been working quietly behind the scenes to solve numerous problems.

At one stage, MIP had debts of almost €100 million. What happened?

We took care of it and the finances are now in good shape. We restructured it in such a way that we could smoothen the ups and downs and have regular yearly payments.

So you refinanced the debt?

That is not the correct word. I would opt for ‘restructuring’, so that the company can afford to meet its obligations.

So what is the debt now?

[Pause] This is a commercial company so we would not like to talk about it. But we pay our bills on time.

MIP is saddled with factory rates which are established by Malta Enterprise, which considers economic factors and not MIP’s sustainability. Should they be higher?

The operation is sustainable at the moment. Remember that our objective is to make factories or other properties available for the development of Malta. We do not look at ways to maximise profits. We look at the bottom line but do not seek to maximise it.

We do not look at ways to maximise profits. We look at the bottom line but do not seek to maximise it

Don’t forget that we do not want to compete with private sector space.

Over the years, the profile of the MIP user has changed considerably. Factories given for manufacturing were being used for activities which were not in the covenant. What have you done about enforcement?

We have an administrator who is chasing every cent owed and the amount of arrears due to MIP has been reduced considerably over the past 12 months.

We talk to our tenants and remind them that rent is not paid voluntarily: it has to be paid – and paid on time. We now invoice on the due date and the rent is collected on the date it is due. There is no more credit given. That is the way it is done everywhere else. Why should it be different for MIP?

Many tenants have come up to date merely because until now there was no one knocking on their door asking for payment.

Some cases are a bit more difficult because the companies are facing problems but we talk to them and see how we can help out.

Some are no longer in existence and these have to be considered as bad debts.

So the time has come to be pragmatic and write them off...

Very much so.

Has it been necessary to evict any?

Why should we evict anyone? We would only do that if they were breaking any of the covenants.

There were complaints in the past that there were many factories breaking their covenants on the number of employees, productive activity and so on...

Basically, we are facing an eventual shortage of factory space, so we are looking at every single operation to see whether factories are still being used for the original purpose.

Surprisingly, only a very small number were in default of their covenants. My perception was that there were more... We are now talking to those few. We want to be fair but also firm, explaining that they must comply with the covenant.

We want to maximise use of the existing stock before we look at new factories. For example, there may be people who needed 5,000 sq.m. in the past but who now only need half of that space.

How many factories will be required in five years’ time – and how will you pay for them?

We still have land available. MIP will use a mixture of financial instruments. We have a substantial income, so there is no reason why we cannot leverage that, as long as we can meet our commitments.

How many factories will you need?

I think that is something you would need to ask Malta Enterprise as they are the ones that will do the promotion. We respond to their needs.

We are facing an eventual shortage of factory space, so we are looking at every single operation to see whether factories are still being used for the original purpose. Surprisingly, only a very small number were in default of their covenants

One thing which has changed is the definition of ‘qualifying activities’ for factory space being extended to non-productive activities such as warehousing. What pressure will that put on you?

The pressure comes from the financing of the project but we are lucky as the present interest rate regime is very low which allows us to borrow at a very reasonable rate – meaning we can do more than we would if the interest rate were higher.

There is also a problem with the condition of the existing factory stock. What are you doing?

We have a group of people constantly monitoring the situation. We are pragmatic in our approach and look at each case on its own merit. Sometimes we do the repairs; sometimes the tenant does.

There are other things going on too. Ta’ Qali has been on the boil for 25 years and it is now being done. We applied for a Mepa permit and got it.

We applied for financing through the EU, which will come from the 2014-2020 Budget. We should get the funds next year and will start redoing the village, including the roads, water services and so on.

And the removal of asbestos from roofs...?

That is a challenge but the roofs will be tackled in the shortest possible time. There were various options we adopted, one of which was to use the roofs for solar panels. But there are obstacles with the feed-in tariff which could be perceived as state aid. We are contesting this.

Look, MIP is trying to be as user friendly as possible. We are not talking about the past but about what we can do going forward. The new board found a number of problems but it is pointless to make a fuss because we have solved a lot of them, quietly and without making a fuss. We hope that when our term is up, we will leave things better than we found them.