Shoreline Mall plc wants more time to pay €14 million debt
Company was meant to repay bondholders on August 1
Operators of the Shoreline shopping mall in SmartCity have officially asked bondholders to give them another two years to pay back a €14 million bond due for repayment on August 1.
In a circular to bondholders, Shoreline Mall plc asked bondholders to vote on a proposal to extend the repayment date to August 2028. In return, the company is offering to bump up the bond’s interest rate from 4% to 6.50% over that two-year period and also pay bondholders a one-time “commitment fee” of 0.25%.
Shoreline Mall said its ability to repay the bond on time was impacted by a legal dispute “that is entirely unrelated to the Mall’s business or the company’s own conduct”. The company has been hit with a precautionary multi-million-euro asset freeze, known as a garnishee order, over a legal wrangle between Turkish contractors Koray Global Malta Limited and Shoreline Contracting Limited, a sister company of Shoreline Mall.
Insisting it has nothing to do with the dispute, Shoreline Mall said the precautionary freeze imposed certain “legal constraints” impacting the company’s assets, hindering its ability to complete the refinancing of the bond due in August.
Shoreline Mall said its asset base is more than double the amount owed for the €14 million bond and another €26 million bond due for repayment in 2032.
The garnishee order is not an indication of any weakness in the company’s balance sheet- Shoreline Mall plc circular to bondholders
Legal avenues
“The garnishee order is not an indication of any weakness in the company’s balance sheet, any failure of the Mall’s operations, or any inadequacy in the security available to bondholders. It is an external legal measure that has created a procedural obstacle at an inconvenient time,” Shoreline Mall told bondholders.
The company said it is actively and vigorously pursuing all available legal avenues to have the measures lifted. It has filed a court application to substitute the garnishee order with a guarantee over real estate assets totalling €44 million held by Shoreline Residence Limited. International arbitration proceedings have also been launched and are expected to be concluded by May 2027.
The company said it plans to finance the eventual repayment of the €14 million bond from the sale of high-end villas at Shoreline, the company’s operation cash flows and/or refinancing. It will also set up a ring-fenced fund in which profits from the villa sales and rents paid by tenants of the Shoreline Mall will go. The fund will be used solely to repay the €14 million bond.
The company’s directors include South African entrepreneur Ryan Edward Otto, Malita Investments non-executive chairperson Roderick Psaila and accountants Charles Scerri and Robert Ancilleri. Among its shareholders are lawyers Kevin Deguara and Jean Farrugia, who face criminal charges in the Vitals hospitals scandal. They deny the charges.