Government offers MIDI €50 million ‘bailout’ to return Manoel Island

The government has offered MIDI plc a €50 million compensation package in exchange for relinquishing its concession over Manoel Island, sources familiar with the negotiations told The Shift.

The proposed settlement would effectively see taxpayers compensate the private consortium behind the long-delayed and unfinished project, allowing the island to revert to public control.

According to MIDI sources, the offer almost exactly matches the value of a €50 million bond issue that MIDI must repay to investors in July. Without these funds, the company would be unable to repay its lenders, as it does not currently have sufficient liquidity.

Prime Minister Robert Abela confirmed last week that negotiations between the government and the developer are nearing their final stages.

Contacted by The Shift, a spokesperson for MIDI declined to comment.

“When we reach an agreement, we will issue a company announcement in terms of the listing rules for listed entities,” the spokesperson said.

However, sources close to the company’s shareholders said the government’s proposal has already been communicated to them and is proving controversial internally. Some major shareholders are reportedly dissatisfied with the amount offered and are pushing for a larger payout from public funds.

According to these sources, MIDI had been seeking a compensation package of around €70 million, roughly €20 million more than the government’s current offer.

At the same time, sources within the Lands Authority involved in the negotiations noted that the proposed settlement is already contentious and controversial, given that development on Manoel Island has largely stalled.

“We think the government is already being very generous. These funds are coming out of taxpayers’ pockets. This is practically a bailout,” a senior official noted.

Apart from restoration works on the historic Fort Manoel, the wider project has not progressed for decades, raising questions about whether the concession could legally be revoked without any compensation.

The government’s offer is understood to include the valuation of restoration works that MIDI claims to have carried out on the island, particularly on Fort Manoel, as well as the acquisition of Fort Tigné by the state.

MIDI had previously attempted to sell the fort to Gozitan developer Joseph Portelli.

Any final agreement is expected to require parliamentary approval.

The negotiations come amid mounting financial pressure on the developer.

In a recent judicial letter, MIDI warned that government actions to reclaim the concession were jeopardising the repayment of the €50 million bond owed to roughly 3,000 investors.

The company accused the government of causing “serious, substantial and actual” harm to both the company and its creditors and warned it could pursue legal action if talks with the government were not concluded.

The concession dates back to a 1992 agreement granting MIDI the right to develop Manoel Island and the nearby Tigné Point into a major luxury development. While the Tigné project was completed years ago, works on Manoel Island have largely been limited to the restoration of Fort Manoel, and the wider development never materialised.