Melite to delist bonds with Alf Mizzi €9.2 million loan

The Maltese-owned franchise of Italian fashion stores, Melite Retail, will delist its €9,250,000 bonds – issued back in 2018 – in the wake of an unfortunate saga that saw COVID shut down its stores and recently, its main tenant defaulting on rental payments.

Alf Mizzi & Sons, holder of 40.3% in Melite Retail, will forward the company’s finance vehicle Melite Finance plc a €9,250,000 loan to fully repurchase the outstanding bonds for eventual cancellation.

A bondholders’ meeting will be held on 23 July to obtain approval from bondholders and take acceptances for the buy-back by bondholders holding in aggregate at least 95% of the nominal value of the bonds in issue.

In February 2024, Melite’s Italian subsidiary, Melite Properties Srl, terminated its rental agreements with third-party tenant Giadea, for not settling rent payments for January 2024 on 10 stores across Italy it had leased.

Melite Properties holds the lease and rental agreements for a portfolio of fashion stores for the Accessorize, Calvin Klein Underwear, and the 3INA Cosmetics brands in Bologna, Bolzano, Como, Firenze, Genova, Milan, Padova, Pavia, Torino, Treviso, and Verona.

Melite Finance’s buyback is still being offered at par despite the bonds having traded below par since 2020. Melite Retail will pledge all ordinary shares in Melite Finance in favour of Alf Mizzi & Sons, as security.

Melite Retail’s shareholders Michael Soler of Daystar Holdings (7.43%) and MMGH (9.7%) will offer guarantees, by way of 7.6% and 9.7% respectively, of any eventual shortfall in the loan repayment. Shareholders Andrew Ganado Limited (21.65%) and related company GAN (9.11%) will also commit funds receivable from existing loans to Melite Properties, as a guarantee to Alf Mizzi for the loan, at a value of 5%. This means Alf Mizzi is relying on Melite’s assets for the repayment of 77.7% of the loan.

Melite Finance had said in February that it would safeguard the interests of bondholders, adding that the Alf Mizzi loan and buyback were the most viable means for securing bondholders’ interests through a return of the capital previously invested in the bonds.

Melite Retail caught a gasp of air in 2022 after registering a €883,000 gross profit following the lockdown on its Italian stores due to COVID. The profits reflected the increase in rental income upon the re-opening of outlets.

Melite was caught in the eye of the storm in 2020 and 2021, when the COVID lockdown forced shut some 26 of its Italian stores, affecting the payment of its 4.85% coupon.