Gasan Group is shortly to announce a €15 million bond issue, its sixth since 1994, group chairman Joe Gasan told The Times Business.

The bond issue, which includes an over-allotment option of a further €5 million to total €20 million, is pending approval by the Malta Financial Services Authority. The group has decided to redeem its €11.6 million 2008-2011 bond, which was issued in 2003, next month. The current 4,000 subscribers will be given first preference to rollover their investment in the new bond issue before it is offered to the public.

Mr Gasan said the issue, like the first five, will support the group's operating requirements. He pointed out that the group's draft accounts for 2008 are showing similar results to 2007, when the group registered an operating profit of €6.4 million and showed a gearing ratio of 41 per cent. Gasan Group made a further €63 million profit from the sale of its 50 per cent shareholding in communications group Melita in July 2007. The group later reinvested in Melita and now holds a 12 per cent stake. Mr Gasan is Melita chairman.

"We had a decision to make," Mr Gasan said of the latest bond issue. "Do we pay off the current bond and cover all our financial requirements from bank loans? Or do we issue a sixth bond to continue the legacy? We know people like to invest with us. We continue to borrow. We opted to have a mix of bank loans and overdrafts and bonds as opposed to just bank loans."

Gasan Group, which now employs 500 full-timers, was the first Maltese private company to announce a bond issue in 1994.

"We sell cars on hire purchase for five or six years' credit," Mr Gasan explained. "It is a very safe business and bad debts are rare. In the past, we used to use the bills of exchange as security for borrowing. In 1994, I thought bonds would be a better way to fund the business."

The group announced three consecutive, higher value bond issues, giving loyal subscribers first option to rollover their investment. In 2002, the newly built Gasan Centre, set on over five tumoli of land in the Mrieħel industrial park and the rental income generated by the property was added as security to the group's fourth bond issue.

"That bond matured in 2006. At the time, we had a number of investments because our cash flow was very good and we decided not to issue another bond and we gave people their investment and return. I received many letters from disappointed investors - I still have them. Besides institutions, many of the bond subscribers are pensioners, clients, friends, people who know us."

Mr Gasan said the economic situation in Malta will be more difficult than many believed but is confident that, although business will prove to be tough in some sectors, the country is small enough to overcome the downturn quickly.

"I am pleased that in the current circumstances the Gasan Group is relatively liquid," he affirmed. "There have been periods in our business, like 1998-2000, when we were a bit over-invested. If you are over-invested in difficult economic times it is not fun - it can be difficult. We will continue to look at growth areas, even in investments. I do not think we will venture into any new areas of business. But in our existing core sectors, we will be."

From its origins in shipping in the 1920s and its 80-year representation of Ford in Malta (Ford's second longest standing franchise outside the US), the group has grown to hold a diversified portfolio of ventures. Its core business remains the automotive arm, headed by Mr Gasan's elder son David, which also encompasses franchises for Jaguar, Mazda, and Volvo and Gasan Approved, a previously owned vehicle operation.

The business had "a very good year" last year, spurred in part by campaigns and promotions to coincide with the Ford anniversary. This year, the current influx of high value second-hand imports from the UK is not worrying Mr Gasan particularly. Gasan Automotive sold 30 Jaguars last year. In February and March this year alone, 15 high specification Jaguars were sold.

Thanks to the new registration tax regime, Mazda and Ford's economical and environment friendly city cars have witnessed "superb response". The Mazda2's price tag has been slashed by 32 per cent and the price of the new Ford Fiesta has fallen by 15 per cent.

In the meantime, the group is slowly venturing into the Libyan market. In conjunction with Malta-registered Austrian holding company Vaos, it has established three franchises for Mazda, Volvo, and Chinese marque Chery in Tripoli.

Vaos has been operating in Libya for 24 years and employs 2,000 people, most of whom are expatriates. Their main line of business is construction and maintenance relating to the oil industry.

Mr Gasan said a comprehensive parts and service operation is currently in the process of being set up in Tripoli.

After consolidating the business in the Libyan capital, the joint venture hopes to branch into Benghazi in 2010/11 and later to one or two of the smaller cities.

Another cornerstone operation is GasanMamo Insurance, which, Mr Gasan said, continues to be a major player in the local insurance sector.

The group's investment in the property sector has grown significantly over the years and a fully fledged property division is now run by younger son Mark, who also heads Mekanika, the electrical and mechanical engineering division.

The group also holds a number of smaller investments and shareholdings, including an interest in Midi plc, the developer of the Tigné and Manoel Island project. It is also "patiently waiting" for planning permission to be granted to two major Sliema projects: Town Square and Il-Pjazzetta.

Another long-term project involves Comino, after the group bought a 25 per cent stake in Kemmuna Ltd last year. The project will involve a high end, environment friendly project surrounding the island's two bays.

Mr Gasan said the most interesting development at the moment is the 18,000-square metre Ta' Monita residential project in Marsascala, a joint venture with Tumas Group. In another joint venture, the two groups have acquired a 10-tumolo stretch of land adjacent to the Gasan Centre to develop a dedicated business block.

The Gasan Group has a penchant for the long term. Mr Gasan bears his late father Joe's advice not to bother with short-term ventures. Mr Gasan, now a proud grandfather of baby Sophia, born to his daughter Sarah in London the night Gasan Group were celebrating 80 years of Ford in Malta, has no intention of retiring.

Now 59, he said he was convinced he would retire at 55 but then became involved with turning Melita around after the business ran into difficulty. It took up 70 per cent of his time for a few years and considerable investment.

"It was fun," he said, settled perfectly in his office on the newly completed additional floor of the Gasan Centre. "I am working a little less than I used to, at a slightly slower tempo. I am helping the boys as much as I can. I am enjoying it."


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