- New Bond Issue

PAVI Shopping Complex plc is issuing Lm5 million in bonds carrying a coupon of 7 per cent per annum with a final redemption date on 26 October 2017. The Issuer reserves the right to redeem the bond earlier either on 26 October 2014, on 26 October 2015 or on 26 October 2016.

The bond issue opens on Monday 15 October and closes on Friday 19 October or earlier but on Thursday 11 October a pre-placement exercise will take place for those investors wishing to apply for a minimum of Lm5,000 (nominal). Applications during the general public offering are for a minimum of Lm1,000 and in multiples of Lm100 thereafter. Application has been made for the bonds to be admitted to the Alternative Companies List of the Malta Stock Exchange. Investors ought to note that the Alternative Companies List is a second tier market designed primarily for start-up companies carrying a higher investment risk.

PAVI Shopping Complex plc was incorporated as a private limited liability company on 26 July 2007 and changed to a public limited liability company on 27 September 2007. The issued share capital is Lm3,600,500 divided into 1,800,250 ordinary ‘A’ shares of Lm1.00 each held by PG Holdings Limited and 1,800,250 ordinary ‘B’ shares of Lm1.00 each held by Yvonvi Limited. While PG Holdings Limited is fully owned by Paul Gauci, Yvonvi Limited is owned by Victor and Yvonne Grech.

Paul Gauci and Victor Grech have undertaken, except in the event of death or an intervening court order, not to dispose of their shareholding in PAVI Shopping Complex plc for at least 1 year from the date when the bonds are authorised as admissible to listing on the Alternative Companies List.

PAVI Shopping Complex plc is the parent company of the PAVI Group and has two fully-owned subsidiary companies – PAVI Supermarkets Limited (PAVISL) and PAVI Bakery Limited (PAVIBL). As at 31 July 2007, the PAVI Group employed a staff complement of 122 persons. The principal business activities of the PAVI Group are:

• the retailing of food and non-food products carried out through PAVISL which operates the PAVI Supermarket;

• income-sharing arrangements with third party operators in respect of certain specialist activities (such as the butcher shop, delicatessen counter, fruit and vegetable counter, pasta shop and fish shop) carried out from within designated areas of the PAVI Supermarket.

• the management, operation and letting of other retail and commercial outlets within the PAVI Shopping Complex. Existing outlets currently include a florist, a telecommunications outlet, fashion-related shops, a newsagent, a bank outlet and also a car wash.

As part of a Group reorganisation exercise undertaken in recent months, PAVI Shopping Complex plc acquired the Shopping Complex for Lm8,400,000 measuring approximately 29,056m2.

The PAVI Group’s strategy for the complex, based on the vast experience of the promoters Paul Gauci and Victor Grech, has been to build a major shopping centre around the PAVI Supermarket. Further developments of new retail outlets are expected within the next 3 years including a fast-food restaurant which has been leased out to First Food Franchises Limited, operators of the McDonald’s chain in Malta; a ‘Do-It-Yourself’ centre planned for 2008; and additional commercial outlets including a wine cellar and other specialist catering facilities.

PAVI Shopping Complex plc has agreed to constitute the Shopping Complex in favour of the Security Trustee (Bank of Valletta plc) for the benefit of bondholders. The bonds constitute the general, direct, unconditional and secured obligations of the Issuer, and shall at all times rank pari passu without any priority or preference among themselves. However the bonds rank with priority and preference to all other present and future obligations of PAVI Shopping Complex plc by virtue of a first general hypothec against the Issuer and a first special hypothec over the Shopping Complex in favour of bondholders.

With effect from the end of the current financial year ending on 30 April 2008 until the maturity date, PAVI Shopping Complex plc will build a Reserve Account amounting to at least 50% of the value of the bonds from the available free cash flows arising from the operations of the PAVI Group in order to partly-fund the repayment of the bonds. The Reserve Account shall be held in the name of BOV as Security Trustee for the benefit of bondholders.

The Directors of PAVI Group are forecasting earnings before interest, tax, depreciation and amortisation (EBITDA) for the current financial year ending on 30 April 2008 to be in the region of Lm632,000. Net interest payable on the Group’s outstanding borrowings of Lm254,000 will result in an interest cover of 2.49 times. Total borrowings as at 31 April 2008 are expected to amount to Lm5.2 million. Compared to total equity of Lm3.65 million, PAVI’s debt to equity ratio is estimated at 1.42 times.