Simonds Farsons Cisk plc - Farsons Business Park and Property Spin-Off

On 29 May, Simonds Farsons Cisk plc issued an announcement giving an update on the Group’s plans for its property interests.

Farsons Business Park

The Group revealed that two applications were submitted today to the Malta Environment and Planning Authority (MEPA) in connection with the development of the Farsons Business Park which will comprise seven low density office blocks each having five recessed storeys and intersected by generous courtyards. Additionally, all office blocks will be connected to a multi-level car park as well as the old brewhouse through restored corridors and walkways which used to serve the old brewery. The design of the project seeks to reduce the environmental footprint to a minimum and set new green local standards for workspace environments through the application of new technologies for the cooling and heating of the proposed buildings.

Works on the projected are expected to commence in mid-2016 and will be developed in 3 phases with the last phase being completed by the end of 2020. The first phase will include the conversion and re-use of the old brewhouse which is scheduled for completion by mid-2018. The other Grade A office blocks and amenities will be commissioned in phases by the 2020. When complete, the project is expected to result in an investment of over €40 million and will comprise over 18,000 square metres of office space, more than 1,200 square metres of food and beverage areas and 800 square metres of a beer academy, visitors’ attraction and also a unique ‘Cisk Sky Bar’. Furthermore, the project contemplates a multi-level carpark of over 700 car park spaces.

In the meantime, the Company is also in discussions with the authorities and nearby stakeholders to propose ways and means on how to improve and regenerate the surrounding areas in Mriehel through the formation of a public private partnership structure. Discussions are continuing on how such a structure can be set up with the aim of defining a long term vision for Mriehel to attract further local and international investment.

Spin-Off

Over the past months, the Board has firmed up its intent to review the internal structures within the Group by hiving off a number of properties and eventually ‘spin-off’ part of the Group’s property interests from the core business activities (largely relating to the food and beverage business), into a separate and distinct property-focused public limited liability company.

The Board’s objective is to ensure the best use of the Group’s substantial property portfolio, with a view to maximise shareholder value. Therefore, the Board believes that the food and beverage business should retain the following property assets:

(i)                The land and buildings at Mriehel supporting the manufacturing and beverage importation operations;

(ii)              The iconic old brewhouse, which shall be used to celebrate the heritage and culture of the brewery and its brands within the social and economic fabric of Malta and its communities;

(iii)             Other identified properties that are currently being used or may be used in the future by the food and beverage business.

As a result, the properties that shall be hived off to the property company are:

(a) The brewery façade;

(b) ‘Trident House’ site at Marsa;

(c) The properties housing the franchised food businesses;

(d) Properties being leased out to third parties;

(e) Any other property/properties that could offer a development opportunity.

The Board believes that the restructuring would bring with it a number of benefits. Firstly, it will separate the trading performance and values of the fast moving consumer businesses from that of the longer term property business. Secondly, it will enable, if thought desirable, new strategic partners and investors possibly with specific property development expertise, to participate into all or part of the property group.

It is the intention of the board to issue a number of ordinary shares in the property company that would equate to the same number of ordinary shares in issue under Simonds Farsons Cisk plc. A dividend in specie would then be paid out to the current shareholders, and hence each shareholder would receive an equivalent number of shares in a newly listed company. The Board further believes that the first half of 2017 would be the appropriate time to implement the restructuring of the corporate framework of the Farsons Group as identified above.

Funding

Currently, the Board is also looking at a number of funding options to ensure that both the food and beverage business as well as the property business will have adequate funding and appropriate levels of gearing. A company announcement will be issued once the preferred options are identified and concluded.

A presentation of the Farsons Business Park and the proposed restructuring will be delivered to shareholders during the forthcoming Annual General Meeting taking place on 25 June.