Shoreline's financial issues predate legal dispute, says Turkish contractor
The contractor rejected suggestions that a garnishee order it obtained against the mall's operators was the reason for bondholders being asked for more time
The Turkish contractor for the Shoreline mall and residential project is disputing claims by the mall’s operators that a garnishee order obtained by the contractor is the reason it needs more time to pay back a €14 million bond.
Shoreline was hit with a precautionary multi-million-euro asset freeze, known as a garnishee order, over a legal wrangle between contractors Koray Global Malta Limited and Shoreline Contracting Limited, a sister company of the Kalkara-based Shoreline Mall.
In a statement on Tuesday morning, Koray Global Malta Limited (KGML) rejected claims by Shoreline Mall that the garnishee order had hindered its ability to repay its debts.
The contractor said that since the garnishee order had been issued in mid-2024 – extended to “several” mall tenants in June last year – the mall operators had collected more than €524,000 in rent.
“This figure is, in commercial terms, relatively modest and does not support the proposition that the garnishee order, by itself, could explain Shoreline's current financial position”, the contractor said.
The rent figure indicated that either the commercial performance of the project had been “significantly weaker than represented or rental income has been channelled outside the Shoreline group of companies subject to the garnishee order”, KGML said.
“Should the latter prove to be the case, it would raise important legal issues concerning compliance with the Maltese court's order.”
In a circular last week, Shoreline Mall plc asked bondholders to vote on a proposal to extend the repayment date from August 1 this year to August 2028.
The company offered to bump up the bond interest rate from 4% to 6.50% over the two years and pay bondholders a one-time “commitment fee” of 0.25%.
Telling bondholders that its asset base was more than double the amount owed for the €14 million bond, it said its ability to repay the bond on time was impacted by the legal dispute “entirely unrelated to the Mall’s business or the company’s own conduct”.
Responding to the circular Tuesday, the contractor said it maintained its position that Shoreline Mall plc’s “financial difficulties” pre-dated the legal wrangle between the two firms and the subsequent garnishee order, adding that such difficulties had led to it discontinuing work on the project.
It also claimed that the mall’s operators had alternative financing arrangements “specifically intended to address the bond repayment obligations” and had communicated the information to the Malta Financial Services Authority (MFSA).
“Given the statements made publicly by Shoreline regarding KGML's garnishee order, KGML considered it important that bondholders receive an accurate factual context”, the statement read. It said it was confident that the financial regulator would take appropriate steps.
The contractor added that while it had “deliberately refrained” from commenting publicly on its dispute with Shoreline Mall plc due to ongoing legal proceedings, it had been drawn into the discussion by the public circular issued by the operators.
Claiming that the project had been beset by financial difficulties “from a very early stage”, KGML said it had continued to honour its contractual obligations despite “repeated contractual breaches” by Shoreline Mall plc.