Setting the record straight on MIDI and Manoel Island

I refer to the Corporate Commentary in The Corporate Times section of The Sunday Times of Malta (March 29).

The basis of the Corporate Commentary with respect to the MIDI concession for the development of Tigné Point and Manoel Island is incorrect and fails to take into account the facts.  The conclusions reached assume that MIDI is in default of the Deed of Emphyteusis. The company categorically rejects these allegations and maintains that it has not defaulted on any of its obligations.

Firstly, the statement that the concession, taken as a whole, has already delivered disproportionate value to the private sector long before the settlement reached for the rescission of Manoel Island and Fort Tigné is incorrect and is not supported by the facts as detailed in the audited financial statements of the company.

A review of the financial statements highlights that over the 25 years up to December 31, 2024, the total profit registered after tax, excluding revaluations and impairments, amounts to €13.3 million. This amounts to €0.062 per share over a period of 25 years. If one takes the profits after tax since the Initial Public Offering (IPO) in 2010, these amount to €9.7 million, a 10% return over a period of 15 years (an average return of 0.66% per annum) for the shareholders.

Secondly, the statement that MIDI secured additional development rights and a significantly expanded footprint at Tigné Point in exchange for giving up parts of the Manoel Island project is misleading and false.  The Outline Development Permit (PA02135/94) which forms part of the original 2000 deed of emphyteusis (the Deed) defines the development volumes for both Tigné Point and Manoel Island.

The total gross floor area (GFA) originally contemplated was 267,200sqm (including heritage buildings) of which 132,000sqm was to be developed at Tigné Point and 135,200sqm at Manoel Island.

Prior to the approval of the Tigné North permits in 2012, the Planning Authority reconciled the development volumes and determined that the unutilised balance of the gross floor area at the time, when compared to the Outline Development Permit, totalled 1,513sqm.

In 2018, the Planning Authority subsequently consented to the transfer of 8,000 sqm GFA from Manoel Island to Tigné Point, paving the way for the approval of the full development permit for last remaining residential block in 2020.

Taking Tigné Point in isolation the additional volume developed at Tigné Point is equivalent to 6% of the GFA contemplated in the Deed.

Thirdly, the statement that Tigné was completed and monetised, while the more complex and less immediately profitable Manoel Island remained largely undeveloped is simply untrue. Furthermore, the statement that the upside was realised early, while the more challenging obligations were deferred is false.

The deed clearly gave MIDI the option to commence the development from any one of the following two phases: (i) The Tigné South and Tigné Sports Phases on Tigné Point including the Qui-si-Sana trunk road; or (ii) The Marina South Phase on Manoel Island which includes the new Manoel Island bridge, the dredging works and the breakwater.

The company opted to commence with the development at Tigné Point for a variety of reasons including the fact that a number of sites remained occupied by the government at Manoel Island including the AFM Bomb Disposal Squad, which only vacated the site in 2012 despite the government’s obligation to provide vacant possession by December 31, 2000.

As a matter of fact, the most onerous obligation at Manoel Island was the restoration of Fort Manoel. An obligation which was fulfilled concurrently with the development of Tigné Point at a cost in excess of €12 million.

The net reimbursement of €43m falls significantly short of the investment actually carried out- Mark Portelli

Fourthly, the statements that MIDI failed in its obligations and the delays encountered by MIDI with respect to commencing works at Manoel Island are pure excuses and distractions which have surfaced with the settlement are cheap and fail to take into account the facts which have been repeatedly explained in the public domain.

From a proper reading of the deed and the documented history of the project it is clear that the company has a right to an extension of the March 2026 completion date, by a minimum of 10 years.

So much so, prior to June 2025, this was recognised by the government during the negotiations held to amend the deed to provide for the archaeological finds at Manoel Island and to provide for the introduction of a strategic partner. 

Lastly, the statements that the settlement was entered into as the company’s debt repayment obligations are now due and that public funds have been deployed to alleviate private financial pressure are false and misleading.

Prior to the government’s withdrawal of support, the company had planned to refinance a portion of its outstanding bond through a new bank facility, for which a term sheet had already been secured.

The company’s contractual right to develop Manoel Island was frustrated not by any failure on the company’s part but by circumstances entirely outside its control, namely the government’s declaration to convert Manoel Island into a national park.

The company has agreed to a settlement which, once executed, will result in MIDI surrendering its legitimate right to develop Manoel Island. The net reimbursement amount of €43 million (including Fort Tigné) falls significantly short of the investment actually carried out on Manoel Island and Fort Tigné as verified by the government’s own independently appointed auditor.

The company’s acceptance of the proposed reimbursement was a pragmatic decision made in the interests of its creditors (including bondholders) and shareholders, the full reasoning for which will be set out in a circular to shareholders to be published shortly. The partial reimbursement of the expenses incurred by the company does not represent a concession by the government.

On the contrary, whereas MIDI unilaterally and voluntarily gave up its legitimate right to develop Manoel Island, the government initiated judicial proceedings to rescind the concession of both Manoel Island and Tigné Point, thus undermining the value of the Tigné Point properties securing the bondholders and other creditors.

In the circumstances the company was left with no option other than to accept significantly less than it was rightfully due.

Mark Portelli is the CEO of MIDI plc.