Mediterranean Investments Holding plc - Bondholders Meeting

On 21 May, Mediterranean Investments Holdings plc (MIH) announced that it will be convening a meeting on Monday 11 June for holders of the 7.15% MIH bonds maturing in 2017. The Company explained that in the coming days it will be inviting to the meeting all those investors holding the 3 tranches of the 2017 bonds as follows:

  • 7.15% MIH plc 2017 denominated in EURO (€) with ISIN: MT0000371238
  • 7.15% MIH plc 2017 denominated in Sterling (GBP) with ISIN: MT0000371246
  • 7.15% MIH plc 2017 denominated in US Dollars (USD) with ISIN: MT0000371253

    During the meeting, bondholders will be asked to approve a change to the use of bond proceeds originally set out in the Prospectus dated 14 June 2010 as amended on 5 July 2010.

    The Prospectus had stated that the €31,250,000 in net proceeds would be utilized to fund the Company’s investment in the Medina Tower Project in Tripoli, Libya, through its 25% equity interest. The project comprises a mixed-use development in the centre of Tripoli comprising 200,000 square metres of built up area across 40 floors and an additional four underground levels of parking. To date, the Company has injected €9.1 million into this project. However, due to the outbreak of hostilities in Libya last year, the timeline for the mixed-use development has been revised. In fact, the project, which as originally indicated in the 2010 Prospectus was expected to welcome tenants as from the first half of 2014, is now expected to resume in the third quarter of 2012 and expected to become operational in the third quarter of 2016. As a result, the Company still has a further balance of €18 million to invest in this project but the Board of Directors estimate that no further equity contributions will be required before mid-2014. Moreover, the announcement revealed that this idle cash is being held separately in bank deposits and low-yielding instruments.

    In the meantime, the Company took out a €13.2 million loan during the 2011 Libyan civil war to counteract the lost business from Palm City and be able to meet the payment of capital creditors and other commitments during the political turmoil. The announcement noted that the Company is still servicing the interest costs related to this loan which are much higher than the low returns being earned on the idle cash from the 2010 bond proceeds.

    As such, the Company is calling on bondholders to vote on a proposal which will allow the Company to use €8 million of the 2010 bond proceeds to finance the part repayment of the 2011 loan. This repayment will immediately reduce the Company’s interest cost on the loan without affecting the Company’s immediate commitments towards the Medina Tower Project.

    The announcement also provided an update on the operations of Palm City Residences following the end of the conflict in Libya. MIH noted that it has managed to preserve its assets during the conflict and now expects to progressively start experiencing good occupancies, on the basis of a mix of medium to long term leases across a varied portfolio of tenants at Palm City in view of the uniqueness of this project and the absence of competition in this sector. In fact, Palm City reached 75% occupancy by March 2012 this level is expected to increase to 90% by July 2012. Moreover, the announcement explained that before any competition can enter the market, Palm City can command rates that are even higher than the original estimates thereby providing the basis for a renewed steady revenue stream that should assist the Company in meeting its debt servicing requirements.