5.0% Hal Mann Vella Group plc 2024

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Hal Mann Vella Group plc - Prospectus dated 06 October 2014

The Company

Hal Mann Vella Group plc is the holding company of a Group mainly involved in the manufacturing of tiles and pre-cast elements, importation of marble, granite and natural stone as well as tendering for real-estate related projects both in Malta and internationally. The family owned Group is also involved in ‘Property Development & Letting’, ‘Fashion Retail’ and ‘Hospitality’. The Issuer does not carry out any trading activities and simply acts as a finance and investment company of the Hal Mann Vella Group.

The four main divisions of the Hal Mann Vella Group are as follows:

 

  • Manufacturing, products & general contracting services – comprises the manufacturing of products made out of natural stones including marble, granite, travertine, onyx, hard stone, composite stone, terrazzo and terrazzo pre-cast elements. This division also includes the provision of general contracting services through which the Group tenders for turnkey projects. In fact, the Group has been involved in most of the local major projects. The most recent works carried out by the Group include those at Smart City, City Gate (Valletta), House of Four Winds (Valletta), Casa Ellul (Valletta) and the Life Sciences Park & ICT (University of Malta). This is the core division of the Group accounting for circa 80% of total revenue. Going forward, this division is expected to be strengthened through the modernisation of the Group’s factory [subject to the issuance of the necessary permits by the Malta Environment and Planning Authority (MEPA)] which should ultimately result in increased efficiency, larger capacity and generate cost savings. The new factory layout and machinery should enable the Group to maintain its leading position in the local market whilst also being able to tender for contracts in foreign countries, with the main target being the UK. Furthermore, the factory reorganisation will release a parcel of land for alternative use as described below.

 

  • Property development & letting – this division is involved in the acquisition and development of selectively chosen real-estate projects which also serve as a captive source of business for the manufacturing & general contracting activities of the Group. During the last three financial years, the Group has been involved in the construction of 12 apartments (9 sold; 1 subject to promise of sale agreement) in Xemxija known as Northport Apartments and a residential block known as Spinola Residences which is fully let out to third parties. The Group also owns a 50% shareholding in the Madliena Ridge project which comprises 20 villas (14 sold; 2 subject to promise of sale agreement). The focus of this division in the coming years is the development of a mixed-use commercial property comprising 14,000 square metres of rentable office space, warehouse facilities and parking. The €7 million development will be built on a tract of land measuring 3,600 square metres located adjacent to the factory in Lija and is mainly earmarked for leasing to third parties. The project is still subject to MEPA permits.

 

  • Fashion Retail – the Group has been involved in the retail segment since 2005 after it was awarded the Guess franchise for Malta. Today, the Group operates 3 Guess stores located in Baystreet, The Point and Bisazza Street, Sliema. Furthermore, in the third quarter of 2014, the Group opened a fourth outlet under the Brooks Brothers brand in Republic Street, Valletta. The Directors anticipate a number of new store openings in the future and are also considering the addition of other franchise brands to the Group’s portfolio.

 

  • Hospitality – the Group owns and operates two aparthotels (Mavina & Huli) and the Lovage Bistro, all located in Bugibba. An application has been submitted to MEPA with respect to the refurbishment of the Mavina aparthotel in a bid to materially improve occupancy and room rates that would be more comparable to other local 3-star hotels.

Guarantor

Sudvel Ltd is the guarantor of the bonds and was incorporated on 8 March 2005. It is a fully-owned subsidiary of Hal Mann Vella Group plc and principally acts as a holding company. In fact, it owns a plot of land measuring circa 5,200 square metres and a 50% shareholding of a warehouse complex, both of which form part of the hypothecated property in favour of bondholders. Additionally, the Guarantor owns 50% of two parcels of land each located in Naxxar and Lija.

Use of Proceeds:

The net proceeds from the Bond issue, estimated at €29.3 million after issuance costs, will be principally used by the Issuer for the following purposes:

 

  • the first €13.7 million will be used to refinance an equivalent amount of bank loans held by various subsidiaries of the Issuer;

 

  • to finance the modernisation of the Hal Mann Vella factory and the investment in new plant and machinery (circa €5 million);

 

  • to finance the construction and development of a mixed used commercial property over a land measuring 5,200 square metres situated in Pantar Street, Lija (circa €7 million);

 

  • the balance will be used for general corporate funding purposes of the Group (circa €3.6 million).

Security:

The Bonds will be secured by a first-ranking special hypothec over the Hypothecated Property which comprises the Hal Mann factory, showroom and adjacent land measuring circa 22,300 square metres (owned by the Issuer) as well as a piece of land measuring 5,200 square metres and 50% of a warehouse complex (owned by the Guarantor, Sudvel Limited). The Hypothecated Property is located in the limits of Lija/Mosta and valued at €27.5 million. Moreover, bondholders will be granted a first-ranking general hypothec over the remaining assets of the Issuer and Guarantor. As at 31 December 2013, the carrying value of all the assets of the Hal Mann Vella Group was €60.6 million.

Status:

The Bonds shall constitute the general, direct, unconditional and secured obligations of the Issuer, and shall rank pari passu between themselves, but with priority or preference over any other unsecured indebtedness of the Issuer.

Nonetheless, the Issuer may, from time to time, without the consent of the Bondholders, create and issue further debentures, debenture stock, bonds, loan notes, or any other debt securities provided that no issue may be made that would rank senior to the Bonds.

Coupon

5.0%

Amount Issued:

€30 million

ISIN Code:

MT0000811209

Issue Price:

100% (par)

Interest Payment:

Annually on 6 November

XD Date:

22 October

Maturity:

The bonds will mature at 100% (par) on 6 November 2024.

Listing:

Official List of the Malta Stock Exchange

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