The Nationalist Party club in Fleur de Lys. Photo: Chris Sant Fournier

The Nationalist Party pledged to sell 10 of its clubs over 10 years when it was faced with soaring debt repayments in 2015, the Times of Malta has learnt.

Party sources said a financial structure called Patria Trust had been set up to sell clubs over the course of a decade to “get some breathing space” from the rising interest rates on its multimillion-euro debt.

“At some point, the interest rate on the debt would have reached levels we would not have been able to cope with. It got to a stage where something had to be done or the banks would start seizing assets,” said the source, who is familiar with the PN’s financial situation.

The deed of the trust was made at HSBC Bank’s Valletta office around mid-2015 as part of a “securitisation process”.

It raised about €2 million from the initiative, the sources said.

Former PN foreign affairs minister and former European commissioner Joe Borg is the sole trustee of Patria, which for income tax purposes lists his Swieqi home as its registered address. The ultimate beneficiary, however, is the PN itself.

Among the party clubs covered by the trust are those in Cospicua, Qormi (Anici), St Paul’s Bay, Birżebbuġa, Fleur de Lys and Żejtun.

If we can find another way to make the most of these assets, then that should be explored

Media reports about the PN’s plans to sell one or two of its clubs raised eyebrows in recent weeks and prompted questions on the party’s financial stability.

“The situation was such that this was more about debt management than wealth management. I can’t really fault the previous [party] administration for trying to find ‘creative’ ways to address the situation. That said, this does give an idea of how serious the financial situation was and still is,” the sources added.

Nationalist Party leader Adrian Delia would not confirm or deny the existence of the trust but told the Times of Malta he was “examining the situation”.

One option currently being explored by the party is to find ways to make good on its obligation to debtors by renting out clubs and converting them into catering or commercial establishments without necessarily having to sell them.

“The main challenge is finding ways to make these properties work for you,” Dr Delia said.

“With property prices so high, the temptation might be to sell and take advantage, but if we can find another way to make the most of these assets, then that should be explored,” he added.

Dr Delia referred to recent media reports that the party’s finances would run dry by January as “untrue”, pointing out that a bigger concern than the party clubs was the media arm, which was “a large expense”.

The party sources said a promise of sale agreement had already been signed for the Cospicua club, while the sale of the Għaxaq and Żejtun clubs was currently “on hold”.

ivan.martin@timesofmalta.com