Talks between Midi and Tumas Group to transform Manoel Island into a top-end Mediterranean village have been dropped, the companies have announced.

Midi was granted a 99-year concession for Manoel Island in 2000, with developers seeking to build a hotel at the historic Lazaretto, apartment blocks, retail outlets, a yacht marina, helipad and public plazas.

Last year, Times of Malta revealed that the two companies were in advanced talks for Tumas Group to buy a majority of shares for around €100 million.

However, in the announcement, posted on the Malta Stock Exchange on Monday, Midi said that, "by mutual agreement" both sides had decided that "the discussions between the parties in relation to Manoel Island have ceased".     

"The Company [Midi] remains fully committed to the Manoel Island project and the development works will commence once the required planning permits are issued," the statement read. 

The move comes in the wake of the arrest of Tumas Group's former director Yorgen Fenech, who on Saturday was charged with with complicity in the murder of journalist Daphne Caruana Galizia.

He pleaded not guilty to the charge and others, which include promoting or financing a criminal organisation and conspiracy to commit a crime. If found guilty, he will face up to a lifetime in prison.

Ms Caruana Galizia was murdered in a car bomb explosion in October 2017. Three men stand accused of placing and detonating the bomb that killed her. 

A middleman in the crime who is understood to have named Mr Fenech to the police, Melvin Theuma, has been promised immunity from prosecution in exchange for information about the case.

On Monday, the Tumas Group announced it was seeking an independent, external report to ascertain whether it had benefited in any way from the illicit activities being attributed to its former director.