7.15% Mediterranean Investments Holding plc 2015 – 2017 GBP

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Mediterranean Investments Holding plc - Prospectus dated 14 June 2010

The Company

Mediterranean Investments Holding plc (MIH) was incorporated as a private limited liability company on 12 December 2005 and converted to a public limited liability company on 6 November 2007. MIH is a joint-venture between Corinthia Palace Hotel Company Limited (CPHCL) and the National Real Estate Company (NREC) of Kuwait.  

Palm City Limited (99.99%)

Palm City Limited manages the Palm City Residences project through a build-operate-transfer agreement with CPHCL who holds legal title to the land on which the development is constructed. This unique development in Janzour, Libya, constructed over a plot of land measuring 171,000 square metres, is a 413 residential unit compound including residences ranging from one-bedroom apartments to four-bedroom fully-detached villas complemented by a variety of amenities and leisure facilities. The occupancy rate as at 31 December 2013 was at 95% (equivalent to 392 units) and such high occupancy levels were maintained until July 2014. In view of the renewed political conflict that emerged during the second half of 2014 in Libya and the consequent security challenges, diminished commercial activity as well as lower demand for residential premises, occupancy dropped to 66% by the end of 2014 and continued to drop below 50% by the end of the first quarter of 2015. Furthermore, MIH expects occupancy to continue declining to around 19% by the end of this year.

The Company is involved in two other projects in Libya as detailed below. However, in the light of the prevailing situation in Libya, works on these two projects have been put on hold.

Palm Waterfront (100%)

This wholly-owned subsidiary will be primarily engaged with the development and operation of the Palm Waterfront site, measuring 50,000 square metres, located adjacent to the Palm City Residences. The new site will comprise a 164-room 5-star hotel, 259 residential units (to be offered for lease or outright sale depending on market conditions), an entertainment centre, retail outlets, car park and a marina.

The project will be initiated once the situation in Libya stabilises and the subsidiary raises the required funding (40% equity and 60% debt) to complete the development phase. This development is also dependent on obtaining the necessary planning approvals from the authorities in Libya.

Medina Tower (25%)

The Medina Tower Joint Stock Company is equally owned by Arab Union Contracting Company of Libya, Alinmaa Holding Company for Tourism & Real Estate Investments of Libya; MIH and International Hotel Investments plc. The Medina Tower joint-venture company, set up in 2010, will develop a parcel of land situated in Tripoli’s main high street and measuring 11,000 sqm into a 42-storey high-rise tower comprising a mix of residential properties as well as retail, commercial, conference facilities, spa and car park. Overall, the property will comprise a total gross floor area of circa 200,000 square metres.

The project designs of the Medina Tower are complete and all development approvals have been obtained from the relevant authorities. Furthermore, the main construction contract was signed on 5 September 2012. The financing for the first phase of the project is already in place whilst the remaining funding required will be raised through a bank loan. In this respect, the Issuer has signed a term sheet with a Libyan financial institution.

Use of Proceeds

The proceeds raised from MIH’s second bond issue in July 2008 were intended for the investment in one or more of 3 identified projects, namely i) the Tripoli Commercial and Residential Towers (now rebranded as Medina Tower); ii) The Fawar City and Marina development and iii) the Misurata Village development in close proximity of the Misurata Free Trade Zone. Despite having entered into a shareholders’ agreement with Al Enmaa for Economic Development and Real Estate Investment Company of Libya (EDREICO) within the stipulated 18-month period from the date of the 2008 Prospectus, Medina Tower’s development plans had not progressed sufficiently to warrant an immediate investment in an amount equivalent to the proceeds raised in the 2008 Bond Issue. At the same time, other demands were identified with increased investment costs on the Palm City Residences project. In order to accelerate the completion of the project and in doing so securing revenue generation at an earlier date as well as making use of the 2008 bond proceeds in the manner most complimentary to the existing funding requirements of MIH, the proceeds from the 2008 bond issue were utilised to finance the completion of the Palm City project.

As a result, the proceeds from the new bond issue will be used as follows:

(i) €31.25 million to finance MIH’s 25% equity contribution in the Medina Tower project. This consists of €19 million to reinstate the funds raised in 2008 which were utilised to fund the additional capital expenditure requirements of Palm City, and the requirement of an additional €12.25 million investment in Medina since during the planning stage this high-rise development has been extended to 40 floors from the previous 26;

(ii) the balance of €8.75 million will be used for general corporate funding purposes of MIH.

Status & Security

The Bonds are unsubordinated and unsecured.

However, MIH has undertaken that as from the start of the financial year commencing 1 January 2012, and over a 5-year period it shall create a sinking fund which it estimates will be equivalent to 50% of the value of the issued bonds, thereby creating a cash reserve from annual surpluses to meet part of the redemption proceeds by the maturity date. This fund shall be under the control of a Custodian, independent of the Issuer, and held in a segregated account. Meanwhile, it is worth noting that in the event that MIH successfully sells 25% of its shareholding of Palm City Limited (valued at circa €50 million), the build-up of MIH’s sinking fund will be accelerated by setting aside the equivalent of 25% of the future capital and interest bond obligations (estimated at €12.4 million) to compensate it for its loss of dividend income as a result of the reduced shareholding in Palm City.

Coupon

7.15%

Amount Issued

GBP4,385,900

ISIN Code

MT0000371246

Maturity

23 July 2017 but may be redeemed early at 100% (par) at any date between 23 July 2015 and 22 July 2017 by giving not less than 30 days notice.

Interest Payment

Annually on 23 July

XD Date

9 July

Listing

Official List

No. of Bondholders

Approx. 498

Directors

Alfred Pisani (Chairman), Samuel D. Sidiqi, Joseph Fenech, Joseph Pisani, Faisal J. S. Alessa, Khadija Oubala, Mario P. Galea and Stephen Bajada (Company Secretary).

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