MMH bonds edge closer to default as company misses third deadline

Mediterranean Maritime Hub (MMH) bonds will remain suspended from any possible trading on the Malta Stock Exchange at least until the end of the year, as the company behind the Marsa Shipbuilding concession announced that it missed its third deadline.

The latest news raises the likelihood of a bond default next year – the first in Malta’s stock market history – causing significant concern across the island’s small financial market.

According to MMH, its third deadline to publish its audited accounts for 2024, set for last week, was not met, as the company stated that ongoing due diligence on a possible financial injection through new investors is still in progress.

This is the third deadline missed by MMH.

In the meantime, trading in the company’s bonds, held by many small bondholders, remains suspended, locking potential investors out of selling some of their investments and increasingly pointing to a very uncertain future.

Informed sources told The Shift that the real reasons behind the ongoing postponements are twofold.

The first is that the group of new investors, which includes some major contractors close to Castille, is getting cold feet on the deal due to the massive debts that MMH has incurred, which are only emerging in the ongoing exercise.

The second is their ongoing discussions with Prime Minister Robert Abela to amend the terms of the 2016 concession, allowing them to utilise the massive Grand Harbour site for other commercial purposes beyond oil and gas. Some contractors are insisting on being able to use the site for real estate purposes.

So far, the Prime Minister has not given in to these requests, but is informally trying to help, particularly the contractors in the consortium, which include Paul Attard of GAP, Famalco, and Bonnici Brothers. Only a few weeks ago, Abela announced the commissioning of a new master plan for the entire Grand Harbour area, including Marsa, where MMH is located.

According to the latest published MMH accounts, the company is unable to repay its €15 million bond issued in 2016, which is due next year.

MMH, owned by former Gozo Channel chairman Paul Abela, is practically insolvent and sinking into massive debts. These include millions owed to Bank of Valletta and the Church’s bank, APS.

Following Abela’s attempt to return his 65-year concession to the government, which failed after he requested a massive bailout, he has reached a preliminary agreement with a consortium of mixed businessmen to sell his concession.

However, negotiations have not been finalised and have been dragging on for months without a final settlement.

In the meantime, Abela has taken his family to reside in southern Spain in a massive villa.

The concession for Malta’s prime Grand Harbour site was awarded to Abela by the administration of disgraced former prime minister Joseph Muscat following a highly dubious due diligence process.