Mediterranean Investments Holding plc - New Bond Issue

Mediterranean Investments Holding plc is issuing new bonds in either of two currencies for a total of Lm6,439,500 or €15,000,000 or in any proportion of the two currencies depending on the level of demand from investors. Both bonds carry a coupon of 7.5% per annum with a final redemption date on 4 December 2014. The Issuer reserves the right to redeem the bond earlier at par either on 4 December 2012 or on 4 December 2013. The bond issue is fully underwritten by Bank of Valletta plc.

The bond issue opens on Wednesday 21 November and closes on Tuesday 27 November or earlier. However on Monday 19 November a pre-placement exercise will take place. Applications for the Malta Lira issue are for a minimum of Lm500 and in multiples of Lm100 thereafter, while in the euro issue the minimum application is for €1,000 and in multiples of €100. 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.

Mediterranean Investments Holding plc was incorporated as a private limited liability company on 12 December 2005 and converted to a public limited liability company on 6 November 2007. The principal object of MIH, which is limited to activities outside Malta, is to acquire and develop real estate opportunities in North Africa, including opportunities with respect to retail outlets, shopping malls, office and commercial buildings, resident gated compounds, housing, build-operate-transfer, governmental projects and conference centres.

The issued share capital of MIH is €48,002,000 divided into 24,001,000 ordinary ‘A’ shares of €1.00 each held by Corinthia Palace Hotel Company Limited (CPHCL), 19,201,000 ordinary ‘B’ shares of €1.00 each held by National Real Estate Company (NREC) of Kuwait and 4,800,000 ordinary ‘B’ shares of €1.00 each held by Libya Projects Trading and Contracting Company (LPTACC) also of Kuwait and a subsidiary of NREC.

Mediterranean Investments Holding plc owns the entire share capital of Palm City Limited and has a 30% shareholding in QP qpm-projacs Limited and a 10% shareholding in Agility (Libya) Limited.

QP qpm-projacs Limited is actively involved in the field of project management, providing services to third parties engaged in the construction and development of real estate properties in Libya. It is expected that QP qpm-projacs Limited will be tendering for a number of other projects in the near future. The other parties to this joint venture, Projacs International (Bahrain) and QPM Limited (Malta), have for several years been involved in project management throughout Europe, the Middle East and Africa.

Agility (Libya) Limited was set up by Global Logistics For General Trading and Contracting Co. of Kuwait (30% owned by NREC) with the object of providing supply chain logistics to retail and wholesale operators that wish to outsource various services such as warehousing, freight forwarding, logistical transportation, customs clearance, oil and gas field logistics, ports management, ground-handling and airport services among others.

The Directors of MIH are Mr. Alfred Pisani (Chairman), Mr. Jamil Sultan Alessa (Vice Chairman), Mr. Mustafa T. Mohamed Khattabi, Mr. Musaed Al Saleh, Mr. Joseph Fenech and Mr. Khalil E. A. M. Alabdullah.

MIH, through Palm City Limited, is in the process of completing the Palm City Residences Project (www.palmcityresidences.com), which is a 408-unit compound that includes residences ranging from one-bedroom apartments to four-bedroom semi-detached villas. The development is located in Janzour, Libya and  occupies 133,824 square metres. It aims to create a village-type environment offering a host of amenities and leisure facilities that include a supermarket, a variety of retail shops, a laundry, health clinic and a number of catering outlets and cafes.

CPHCL holds legal title to the land on which the Palm City Residences Project is being constructed by virtue of a 99-year lease agreement dated 5 July 2006. Following a Build-Operate-Transfer Agreement entered into between CPHCL and Palm City Limited on 6 July 2006, Palm City Limited was engaged by CPHCL to finalise the construction of the Project and operate it for a period of 65 years. Upon expiry of the 65-year term, Palm City Limited is under the obligation to transfer the operation of the Project to CPHCL.

The financing of the Palm City Residences Project, which in total is estimated to cost in the region of €110 million, will be funded through a combination of equity, shareholders’ loans, bank finance and part of the proceeds from this bond issue.

Palm City Limited intends to enter into short-term lease agreements (mainly 5-7 years) with multi-national companies for their employees to take up residence within the complex. Palm City expects that up to 70% of the Project should be rented out by the time it reaches completion stage towards the end of 2008. This is based not only on the demand considerations for facilities of this type in Libya, but also on discussions currently underway with prospective tenants, with whom negotiations are, in a number of cases, at an advanced stage. It has been reported that negotiations are currently being held with various companies including AGIP, BP, PetroCanada, OMV, Samsung, Siemens, General Dynamics and Mitsubishi.

On the basis of the valuations conducted by Architects DeMicoli and Associates, the Palm City Residences Project is estimated at €56 million as at 3 October 2007. On the other hand, the open market value of the Palm City Residences Project on maturity, which is expected to take place between the second and third year of operation (2010 – 2011), is estimated at €160 million.

For further information on MIH, investors are requested to consult the Prospectus which is available by email upon request.

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