Malita Investments plc will be issuing 20,000,000 ordinary B shares to the public at a nominal value of €0.50 each, with a further over allotment of 10,000,000 ordinary B shares. The shares are being offered at an issue price of €0.50 each. This was announced by Malita Investments chairman Kenneth Farrugia at a media conference to launch the issue.
Speaking about the company, Mr Farrugia said: “Malita Investments plc was set up on 3 June 2011 as a fully-owned government entity to acquire, develop, manage and operate a portfolio of immovable assets which includes a selection of properties that are of strategic national importance. The government of Malta will retain at all times a shareholding of 70 per cent in the company, unless otherwise determined by the House of Representatives”.
Apart from chairman Mr Farrugia, Malita’s board includes Vincent Mifsud, Frederick Mifsud Bonnici, Danny Rosso and Anne Marie Tabone, who provide the company with complimentary skills in the accountancy, audit, governance, banking, investments and insurance fields. Moreover, in order to ensure adherence to the code of principles of good corporate governance, the Board has established an audit committee, an investment committee and a remuneration and nominations committee.
Mr Farrugia went on to say that Malita Investments has been capitalised by the government through a €25 million cash injection, as well as through the transfer of the directum dominium of Malta International Airport and the Valletta Cruise Liner Terminal. These two properties – both long-established landmark locations of strategic and national importance – have to date paid regular ground rent that will now be received by Malita Investments plc. As a result of these two property transfers, together with the cash equity injection, Malita will have a pre-IPO capitalisation of €59 million.
The first two urban regeneration investments undertaken by Malita Investments were the acquisition of the Parliament building and the open-air theatre from the Government of Malta through the grant of a temporary emphyteusis for 65 years against a premium of €82 million and a ground rent of €100,000 per annum. In return, these two investments are expected to generate revenues for the company in the form of rent receivable by way of two lease agreements entered into between Malita Investments and the Government of Malta. The funding of these two acquisitions will be undertaken through a long-term finance facility of €40 million entered into with the European Investment Bank at a fixed rate of interest, the company’s own capital of €25 million, and the proceeds of the IPO, as well as the company’s operational cash flows.
As a result of the transfers and the property investments, Malita Investment’s revenue streams will primarily be derived from four long-term contractual arrangements consisting of the ground rents from Malta International Airport and Valletta Cruise Ports and the lease payments from the Parliament Building and the open-air theatre.
Mr Farrugia also went on to explain: “The company’s business profile is such that the existing revenue streams are highly visible and quantifiable, given that they arise from long-term contractual agreements. These contracts also provide for the periodic revision of the ground rent and rental income. Moreover, the company’s cash outflows also carry a high degree of visibility. These comprise the fixed rate of interest on its bank facility with the EIB as well as corporate administration costs and taxation, with the resulting proportion of cash surplus expected to be distributed in dividends to shareholders, such that the latter will receive a consistent return on the nominal value of their ordinary shares. In fact, it is the directors’ intention to distribute a total dividend to the holders of ordinary shares in the company equivalent to approximately 60-75 per cent of the profit after tax earned in a financial year. Consequently, in the absence of unforeseen circumstances and subject to applicable law, the company will pay its first dividend representing the final dividend for the year ending 31 December 2012, in April 2013. An interim dividend is also expected to be paid in September 2013 following the publication of the interim results for that period. These two distributions will equate to an annualised gross dividend yield of seven per cent of the issue price. The company is thereon planning to pay an interim and annual dividend every calendar year”.
Subscriptions for shares will open on Monday, 23 July and will close on Friday, 27 July. The ordinary shares are expected to be listed on the Official List of the Malta Stock Exchange on 16 August and trading is expected to commence on 17 August. Investment in the ordinary shares of the company should be undertaken after giving due consideration to the prospectus, which is available on request from the financial intermediaries – as set out in Annex 2 of the Securities Note forming part of the prospectus – and electronically from www.malitainvestments.com