4.9% Gasan Finance Company plc 2019/21

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Gasan Finance Company plc - Prospectus dated 18 October 2013

The Issuer & Gasan Group

The Gasan Group is a large and well-diversified group of companies with business interests spread over a variety of sectors and a successful track record since the start of operations in 1928. The Group consists of a number of companies representing a number of worldwide recognised brands. Today, the Gasan Group’s subsidiaries and associates operate across the following five principal sectors:

(i)           Automotive & Marine

The Gasan Group has a 65% shareholding in Gasan Zammit Motors Ltd (in 2012 Gasan Group merged its automotive business with that of the Zammit Group). This company operates from the sales and customer care centre in Mriehel and has an extensive portfolio of franchises including, Ford, Mazda, Yamaha, Volvo, Maruti, Jaguar, Honda, Chevrolet and Isuzu.

(ii)          Property Development

Through its property division, the Gasan Group has been involved in some of Malta’s largest property developments mainly related to commercial and residential real estate. 

(iii)         Insurance and Financial Services

The Gasan Group is involved in the insurance business through its 56.25% stake in GasanMamo Insurance Ltd and GasanMamo Insurance Brokers Ltd. Furthermore, the Gasan Group holds a 50.63% stake in GasanMamo Financial Services Ltd which is licenced by the Malta Financial Services Authority (MFSA) to conduct investment services business.

This segment also comprises the Issuer, Gasan Finance Company plc (the Issuer), which was set up with the aim of sourcing funding to support the Group’s operations and expansion projects. The Issuer’s assets mainly comprise the following:

a)    Premises in Mriehel known as the Gasan Centre. The Issuer leases this property to Gasan Properties Ltd (a fully owned subsidiary of the Gasan Group) which in turn sublets some areas within the centre to other Group companies as well as to third parties. The Gasan Centre has been valued by an independent architect at €27 million (as at 16 September 2013) and generates annual rental income of €1.4 million.

b)    Property in Sliema known as “Il-Piazzetta” comprising a mix of offices and commercial premises valued by an independent architect at €6.4 million (as at 16 September 2013). Gasan Finance Company plc leases these premises to third parties and generates annual rental income of €0.25 million.

c)     The Issuer currently has two loan agreements with related companies of the Gasan Group. As at 31 December 2012, the Issuer had loan receivables of €15.8 million from Gasan Enterprises Ltd (the investment vehicle of the Group) and almost €5 million from Gasan Group Ltd (the parent company of the Group).

d)    Gasan Finance Company plc also holds bills of exchange that were drawn on customers who purchased motor vehicles and marine engines on hire purchase terms from the Group’s automotive division. The discounted value of the bills of exchange as at 31 December 2012 was of €1.7 million. The Prospectus notes that these bills of exchange will be transferred back to Gasan Enterprises Ltd upon the redemption of the Maturing Bonds on 31 May 2014. Furthermore, the Issuer did not acquire other bills of exchange from GasanZammit Motors Ltd and currently has no intention to do so in the foreseeable future.   

(iv)         Engineering

Mekanika Ltd (100%) is a leading electrical and mechanical contracting company which is mainly involved in the provision of elevators, escalators and air conditioning systems. Furthermore, Mekanika has also been awarded significant facilities management contracts including Mater Dei Hospital and HSBC Bank Malta plc.   

(v)          Investments

Gasan Enterprises Ltd (100%) acts as the investment vehicle of the Gasan Group holding various investments including the 12% shareholding in Melita plc, 9.06% of MIDI plc as well as other stakes namely the 50% interest in the Chemimart Group and 50% stake in the Embassy Group.

Use of Proceeds

The net proceeds from this bond issue, estimated at €24,480,000, were used by the Issuer as follows: 

(i) €15,168,200 were used in settlement of the Bond Exchange Programme; 

(ii)  to repay the €4.8 million still outstanding of the Bonds 2014/16 (to be redeemed on 31 May 2014); 

(iii)  the balance was used for the general funding purposes of the Issuer and the Gasan Group.

Status

The bonds shall constitute unsecured obligations of the Issuer and will rank pari passu without any priority or preference with all other present and future unsecured obligations of the Issuer.

Coupon

4.9%

Amount Issued

€25,000,000

ISIN Code

MT0000061250

Maturity

The bonds will mature at 100% (par) on 30 November 2021 but may be redeemed early at 100% (par) at any date between 30 November 2019 and 30 November 2021 by giving not less than 30 days notice.

Interest Payment

Annually on 30 November

XD Date

15 November

Listing

Official List

Directors

Joseph Gasan (Chairman), Juan de Battista, Mark Gasan, Roderick Chalmers, Anthony R. Curmi, Michael Soler and Geoffrey Camilleri (Company Secretary).

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