MMH in frantic negotiations with developers to avoid €15m bond crash

As the prospects of the first-ever crash at Malta’s small bond market continue to increase, the owners of the former Malta Shipbuilding site concession in Marsa, known as Mediterranean Maritime Hub (MMH), are conducting frenzied negotiations to lure big developers to cover their mounting debts.

In exchange, through its chairman, Paul Abela, MMH is offering a significant stake in his 65-year government concession, even though it remains unknown what such developers have to do with the maritime industry.

The Shift learned that the government is informed about the ongoing negotiations. However, so far, it has taken a backseat and decided not to intervene to start the process of regaining the failing concession and stopping speculation over a major public asset.

Big Boys smell a deal

As Abela and his company are not in a position to pay back their bond lenders some €15 million next year, MMH is negotiating with prospective investors to sell shares in its concession for debt repayment.

Sources told The Shift that MMH is asking for a repayment of millions in pending debts, including the €15 million outstanding bond issued in 2016. In exchange, Abela is ready to sell shares to those risking their money in his failed concession.

The Shift is also informed that big developers with close connections to the government, including Bonnici Group, GAP through developer Paul Attard, cranes operator Y&P, F.Schembri & Sons (Tad-Dobbu) and the Fahrenheit Logistics Group, based in Attard, are playing ball, planning to eventually divide the unique maritime site in the Grand Harbour among themselves.

Other prospective bidders have also been approached, and Pierre Balzan of Melita Marine Group is coordinating their efforts.

If these negotiations go through, Abela will still remain a shareholder in the concession, although with just a 10% stake, to keep hold of the government concession.

The interested developers/contractors have already held talks with Prime Minister Robert Abela and explained their plans. So far, Abela, who was in business with Gilbert Bonnici of the Bonnici Group and very close to some of the contractors, is taking a wait-and-see approach.

Sources said the contractors involved are asking the government to change the concession parameters to accommodate their plans, which may not necessarily be related to the maritime industry.

So far, it seems the government has resisted the request, insisting that any new entrants in the deal must concentrate on business related to the maritime industry.

No money left

Located in the innermost part of the Grand Harbour, the 170,000-square-metre site was handed over to Gozitan businessman Paul Abela in 2016 through a 65-year concession.

The terms of the concession were never published. Unlike other concessions of public land, the agreement did not go through parliament. Chris Cardona was the minister responsible for the failed concession at the time.

MMH planned to use the facility for the oil and gas industry. However, this never really took off, even due to a worldwide industry crash related to the COVID pandemic. Instead, many other uses, including the storage of boats and the hosting of conferences, were tolerated.

Following failed attempts by private maritime industry stakeholders to buy into Abela’s concession, the Gozitan businessman turned to the government, asking it to use taxpayer funds to save his business from crashing by taking back the concession and paying him for the ‘investment’ he claimed to have made.

However, these negotiations failed, as Paul Abela requested some €50 million in compensation, which the government rejected.

Finance Minister Clyde Caruana vehemently opposed this deal, arguing that the government should not bail out failing private businesses.

The €15 million bond issue matures in October 2026. MMH auditors have already declared that the company will not be able to pay back its lenders if no injection of new investment is found.

In the meantime, Paul Abela is now living in Spain in a large property he bought a few years ago.