99.9 per cent of shares represented at the meeting vote in favour  

Noel Grima

GO shareholders have endorsed the Spin-off of a subsidiary, Malta Properties Limited, into a separate, and publicly listed, entity focused on property management.

The necessary changes to GO's Memorandum and Articles of Association and a related resolution enabling this restructuring, were approved during an Extraordinary General Meeting held last Wednesday.

As a result of the Spin-off of MPL, all GO shareholders will receive exactly the same number of shares in the new entity as they currently own in GO.

Based on a recent report carried out by Architecture Project, MPL's property portfolio, covering 11 different sites, is valued at nearly €53 million.

MPL Chief Executive, Nikhil Patil, said, "The Spin-off of MPL will allow GO to focus on its main business of communication while MPL focuses on maximising long-term value for our shareholders from the company's extensive property portfolio. As the two companies will now be listed separately, shareholders are also free to either maintain their shareholding in both companies or to focus more on the company which better suits their investment objectives. The properties in our portfolio have considerable potential for redevelopment which should drive growth based on the solid foundation of also having GO as a key tenant in some of our sites."

GO Chairman, Deepak Padmanabhan, said, "Two years ago, GO had made clear that it wanted to pursue a clear strategy to develop its substantial property portfolio and maximise value for shareholders. Different options were evaluated and the conclusion reached that a Spin-off would be the best approach to achieve our objectives. GO is a communications company, not a property manager or developer, and so there is a clear rationale for empowering MPL with the freedom to focus on its task of redeveloping the 11 properties currently in our portfolio, thereby generating new income streams and enhancing long-term value."

"Seen also in the context of GO's own, equally exciting, recent strategic investments in Fibre to the Home, 4G and wi-fi, these are interesting times indeed for our shareholders. I would therefore also like to thank them for their enduring support and for now overwhelmingly endorsing this restructuring, which required the approval of 75 per cent of the shares", continued Mr Padmanabhan.

The expectation is that the company listing will take place before the end of 2015 and that it will continue to be led by Mr Patil.

Mr Patil has been on the Board of Directors at GO for eight years and also sits on the Boards of BMIT, GO's subsidiary data services provider, and Cablenet, the Cypriot communications operator in which GO also has an interest.

Mr Patil is a Director - Strategy & Investments, with Emirates International Telecommunications, which has a 60 per cent shareholding in GO.

Edmond Brincat, GO's financial chief, explained to shareholders that GO had entered into complex negotiations with the government to settle ownership of the sites it was using. Now that this complex job is done, the Spin-Off could take place. The property on MPL's books is estimated to be worth €31 million but the initial equity of the new company will be €31 million. There are 101 million shares in GO and as a result of the Spin-Off there will be an equivalent amount of shares in MPL.

GO will pay rent to MPL for its use of the properties, estimated at some €3 million a year and thus MPL will make profits, although it is not foreseen the new company will start paying dividends from the very first years of its existence.

GO will thus be able to focus on investments in its core business and thus maximise its profits. Through paying rents for MPL's properties, GO will decrease marginally its profits but it is estimated the company can afford to do that.

Questions from the floor revealed that GO has no idea yet what the initial MPL share price will be and this and further information will become more apparent as the listing date nears. The estimated price of the properties has been reached after two independent valuations.

Towards the end of the Q&A session, a woman shareholder asked a question which in view of the sudden announcement to be made the next day would result to be very prophetic. She asked what does Emirates International Communications (GO's majority shareholder) think of this deal.

GO's chairman, who represents EIC, replied he was there as GO's chairman and was acting on behalf of GO.