A private company that, in 2016, took over a massive maritime site in the Grand Harbour, better known as the Malta Shipbuilding in Marsa, through a questionable government concession, is in deep financial trouble.
According to its auditors, it will not be able to pay back a €15 million public bond, redeemable in 2026, if no fresh financial injection is made.
Given this possible default, which would shock Malta’s limited financial market – the government, through INDIS Malta, is now contemplating a plan of action involving the termination of the 65-year concession and paying some form of compensation to the failing company to help it pay some of its massive debts.
The Shift is reliably informed that Paul Abela, the Chairman of Mediterranean Maritime Hub plc (MMH) – the company responsible for the bond – and a former Gozo Channel Chairman under a PN administration, has packed his bags and relocated to Spain.
Government sources confirmed with The Shift that negotiations are ongoing between INDIS Malta and MMH to try to settle for the return of the 175,000 square metre site onto the government books.
Negotiations are still at an early stage and no decisions have been made.
The Shift is informed that the PN Opposition is also being consulted on this possible move, which will need parliamentary approval before it goes through.
Part of the site turned into a boat yard against the concession’s terms.
Maritime industry sources are critical of the government’s intervention at this stage, calling it a ‘bailout’ for a failing private company. They said they were awaiting further developments on how the compensation, if any, would be calculated and what it would mean for Maltese taxpayers.
Since the government kept the concession details secret, it is unclear whether it can terminate the concession without compensation.
The story so far
In 2016, under the direction of Economy Minister Chris Cardona and disgraced former prime minister Joseph Muscat, Malta Shipbuilding’s premises were passed on to MMH Holdings, a company controlled by Gozitan businessman Paul Abela, better known for his company Elesolar, through a 65-year concession.
The concession was not granted through a parliamentary resolution, as is usually the case with such public concessions. Instead, the government directly entered into a contract with Abela, and no details were ever published on the concession’s terms.
No details of any due diligence supposedly undertaken on Abela, his businesses, and his company’s financial position to take over such a large public asset were ever made public.
Initially, the MMH intended to use the former shipbuilding site, which also comprises a dock, for the oil and gas industry. This did not materialise, and the company failed to attract significant business.
MMH was also supposed to invest some €55 million in the facility during the first ten years of the concession.
Instead, contrary to the concession’s terms, Abela started using the site for various other purposes, including the storage and repair of yachts and pleasure boats and the holding of conferences, such as Sigma.
The government looked the other way, irking competitors, including the Manoel Island Yacht Yard, which made an official complaint to the government.
Abela’s company continued to register negative growth, with its auditors warning that MMH was in troubled waters. It registered operational losses of €77,000 and €83,000 in 2021 and 2022.
No money yet, PwC declares, as Gozitan businessman Paul Abela moves to Spain.
According to the last published audited accounts, those for 2022, auditors PwC declared that if the company did not obtain alternative financing, it would be difficult to pay back its €15 million bond issue, which will close in 2026.
Attempts for private financial injection fail
In an attempt to shore up the company’s finances, MMH announced in 2023 that it had started talks and reached a provisional settlement with two major Maltese firms: Virtu Ferries, which operates catamaran services to Sicily, and Francis Busuttil & Sons Ltd, better known as Tal-Bandallu and owners of Foster Clarks, to transfer 70% of the company to them and take over the concession.
The two companies approached wanted some changes to the original concession, which would permit them to enter into new business areas not officially allowed by the original concession deed with the government. Following months of talks, MMH announced that negotiations had failed.
This has left MMH in a very vulnerable situation. In less than two years, it will have to pay back the €15 million worth of bonds for which the company has no money. And its owner has left the island.
The company said in a statement last week that it had started talks to terminate the concession. It emphasised that this would be done “in accordance with the provisions set out in the deed, while remaining mindful of the fact that the Grantee (MMH) has ongoing commitments, including to clients and the financial market.
Apart from this company, Paul Abela is a shareholder in Elesolar Company Ltd, Elesolar Holdings Company Ltd, and a director of Abel Energy Ltd, Mainti Sea Support Ltd, for which his family has a shareholding interest.
While Abela is still chairman of MMH Finance PLC. The bondholder, MMH Holdings, which runs the shipbuilding site, is controlled by his children, Angelique, Luisa, and Paul Abela Jr.
Expect more of the same with Prospects which has increasingly become the place to resort to when proposals are not bank able and rejected by latter. And the public is lured by the coupon. Lastly, bailouts are dangerous, and strictly speaking illegal. Once this is applied for one, all in deep waters will start expecting same with the pretext that this will negatively affect our fledgling bond market
The rot started with the bailout of Cafe Premier.
Isn’t there an investor protection scheme? What’s important is that ultimately investors are protected and that the government can turn against the issuer
Turn against the issuer and grab thin air, bet you he does not hold a cent in any legitimate bank by now let alone 2026.
You might find some clothes, a TV and a bucket of popcorn in a leased apartment, but it’s not going to cover 15 million.
That applies to Bank accounts only limited to €100k. Governments don’t usually protect private bonds, otherwise everyone would take the higher coupon, irrespective of the risk carried by the bond. The secondary risk, as Paul mentioned, is that if the Government does bail them out, we would see a plethora of non-bankable bonds on the market. Read the prospectuses!
Rats abandon a sinking ship – and also a ‘sinking shiipyard’.
Instead of oil and gas, MMH turned into a host location for SiGMA: https://sigma.world/news/sigma-europe-moves-to-much-larger-venue/ (2023)
https://www.facebook.com/reel/1006643441239823/ (2024)
Nice, as Onslow would say.
We’ll get him back to Malta the Spanish will not protect him
He is in Malta as we speak, 🤡
If you go deeper you will find the same two government officials; you know, the ones that ‘retired’
Maltese businessmen are all going to live abroad- making money from Malta and enjoying it abroad
And what is the problem with that after all Malta has become a GHETTO SLUM
Yes in Bridgetown ( Barbados ), Nassau ( Bahamas ) and Dubai.
Did you mean STEALING from Malta and enjoy it abroad? Wait for the corrupt in government to do the same when the time arrives – most probably they will end up in some paradise island or Dubai where the law cannot reach them. Mafia malta galore to the detriment of the hones worker.
I don’t know why, but it must be because it happened before, but I am asking myself: given the timing of the concession, could it be that there may have been a plan to do something like the Vitals Steward case, with transfers to offshore entities?
Could it be that once all the other scandals were exposed since the Panama Papers, plans for another offshore scandal had to be abandoned?
Bailing out private interest should never ever be allowed. It will skew the key principle of risk and fair compensation for that risk. Which bonds are next after MMH’s.
The MMH situation has been approaching this situation for a long time.
Looking at the last published very simplistic financial analysis, the situation needs to be addressed now, before it gets worse.
It seems to me that the company has not accumulated huge losses, it has rather never managed to increase its revenue streams to generate enough income/profits to pay back the bonds. It is not good enough to break even.
Its major asset is the concession itself, it represents a material part of our port infrastructure and it is in nobody’s interest to let the issue fester and the problem to grow further. It would be unfair if the government changed the terms of the concession to the present company. Other market players should be allowed to participate in any changed terms. So the government should liquidate the concession and reissue it via a tender to other participants in an open manner and not deal directly with anyone behind closed doors.
On paper the company still has an equity value of EUR 16 mln, so depending on how the government values the remaining years of the concession, it might be close to covering the bonds…. the shareholders being the ultimate risk takers will probably be wiped out entirely.
It is an interesting scenario, I can see the involvement of the government because of the port concession. Other than that, the government should not give the impression to the market that it is there to solve failing investments. The local market should mature like overseas markets. Investments always carry a certain degree of risk. Stop imagining that Malta is the centre of the universe. It is a normal market function for most investments to be fruitful, but some will inevitably fail. If we can’t accept this, then we will never have a well-developed and mature financial market. We will continue to build a market based on false pretensions and fake sense of security.
Why would they bail them out? If they cannot pay the bond, just take back the land and open a claim. Why pay them ?
SiGMA will remain in Malta it seems and will stay at MMH. I wonder if they have a permit for it to be held there?
I like that at least it’s moving to September. Less traffic without school. Better weather for small boats to ferry delegates. Let’s see.
I’ve worked for this company before, the family are all selfish people and will put your life on the line for their own profits.
A “PREMIER” solution! A Country governed by CROOKS