The €450 million Tigné Point and Manoel Island project is proceeding according to plan and sales targets have even been exceeded, Midi plc chief executive officer Ben Muscat has told The Times Business.
Asked about the decision to launch a €30 million bond issue in euro and sterling next week, Mr Muscat says the project's 2008-2010 plan envisages raising funding for Tigné Point's long-term commercial elements (The Point retail mall) and significant structural works.
"It has always been known that funding would peak in 2009, partly through a public bond issue," Mr Muscat points out. "We did not do what others did: for the past eight years, the project has been funded through internal resources and bank facilities. The first tranche of loans have been repaid."
€5.37 million of this newly raised capital will partly repay a privately-placed €9.32 million secured bond due for redemption by next December. The company is in the final stages of negotiating a roll-over for the remaining balance of €3.95 million at a variable interest rate.
Mr Muscat says that was always the intention.
"When we negotiated the (Lm4 million) private placement with HSBC two years ago, it was clearly spelled out that the bond would be paid from a bond issue to the public. They are happy with our performance and are willing to roll-over the rest."
Midi plc says it requires €80 million to complete the next phase and just under €200 million to wrap up the entire project by 2013.
"We have already secured banking facilities totalling €75 million and in the course of the next five years the company will be ploughing back nearly €54 million in net profits," Mr Muscat says.
"The shareholders are committed to provide a further cash injection totalling €10 million. The balance to fund the completion of the project will be met from the bond proceeds and further banking facilities specific to the last phase. It is also pertinent to point out that up to this date, the shareholders have injected €37 million into the project through equity injections and re-investment of profits."
The bonds carry a coupon of seven per cent per annum and mature between December 2016 and December 2018, at the issuer's discretion.
A 40 per cent pre-placement subscription stage will open on Monday. The public offer will open on Tuesday and close on January 20 or earlier. Applications for the public are for a minimum of €2,500 (nominal) or £2,000 (nominal). In case of oversubscription, the issue may be increased to €40 million.
Midi plc chairman Albert Mizzi says the seven per cent coupon rate "was decided on the basis of what is happening in the financial world outside Malta. With poor appetite in the market elsewhere, coupon rates are now at around eight per cent. We decided to go for seven."
He adds: "Shareholders are not receiving any dividends until the completion of the project. All profits are being ploughed back. When our investors came on board it was made clear to them that this was a long-term investment."
Bank of Valletta and HSBC Bank Malta are joint managers of the bond issue, which is not underwritten.
"To underwrite a bond issue, you must pay a premium," Mr Mizzi said. "We believed there was no need for this and have in fact allowed for over-subscription."
Asked about the decision to launch a €30 million bond issue in euro and sterling next week, Mr Muscat says the project's 2008-2010 plan envisages raising funding for Tigné Point's long-term commercial elements (The Point retail mall) and significant structural works.
"It has always been known that funding would peak in 2009, partly through a public bond issue," Mr Muscat points out. "We did not do what others did: for the past eight years, the project has been funded through internal resources and bank facilities. The first tranche of loans have been repaid."
€5.37 million of this newly raised capital will partly repay a privately-placed €9.32 million secured bond due for redemption by next December. The company is in the final stages of negotiating a roll-over for the remaining balance of €3.95 million at a variable interest rate.
Mr Muscat says that was always the intention.
"When we negotiated the (Lm4 million) private placement with HSBC two years ago, it was clearly spelled out that the bond would be paid from a bond issue to the public. They are happy with our performance and are willing to roll-over the rest."
Midi plc says it requires €80 million to complete the next phase and just under €200 million to wrap up the entire project by 2013.
"We have already secured banking facilities totalling €75 million and in the course of the next five years the company will be ploughing back nearly €54 million in net profits," Mr Muscat says.
"The shareholders are committed to provide a further cash injection totalling €10 million. The balance to fund the completion of the project will be met from the bond proceeds and further banking facilities specific to the last phase. It is also pertinent to point out that up to this date, the shareholders have injected €37 million into the project through equity injections and re-investment of profits."
The bonds carry a coupon of seven per cent per annum and mature between December 2016 and December 2018, at the issuer's discretion.
A 40 per cent pre-placement subscription stage will open on Monday. The public offer will open on Tuesday and close on January 20 or earlier. Applications for the public are for a minimum of €2,500 (nominal) or £2,000 (nominal). In case of oversubscription, the issue may be increased to €40 million.
Midi plc chairman Albert Mizzi says the seven per cent coupon rate "was decided on the basis of what is happening in the financial world outside Malta. With poor appetite in the market elsewhere, coupon rates are now at around eight per cent. We decided to go for seven."
He adds: "Shareholders are not receiving any dividends until the completion of the project. All profits are being ploughed back. When our investors came on board it was made clear to them that this was a long-term investment."
Bank of Valletta and HSBC Bank Malta are joint managers of the bond issue, which is not underwritten.
"To underwrite a bond issue, you must pay a premium," Mr Mizzi said. "We believed there was no need for this and have in fact allowed for over-subscription."