GO’s €50 million property ‘swap’ buoys share price

GO plc's big property coup at its last annual general meeting has seen share prices bump up to €0.88c on Friday's closing bell, since the announcement on 9 May of a €50 million property portfolio, when shares were trading at €0.75c.

The sensitivity of the market confirmed the general positive reaction to GO's announcement of a special purpose vehicle that will manage its impressive property portfolio.

GO's embattled board of directors were then facing a shareholders' revolt until they announced they were transferring back to government their tract of land in Qawra - which will see €11.4 million registered in GO's income statement - and gaining the legal titles on 11 telephone exchanges in its possession.

The exchanges are already part of the company's property portfolio, but they have been extracted from GO's balance sheet and included in a special purpose vehicle to manage the property. No scope for the SPV's business - now valued at €50 million - has so far been determined.

One keen financial observer noted that apart from the one-off €11.4 million, much of the value of the exchanges already exists on the company's balance sheet.

"There could be a change in investor mood once they fully comprehend that the value quoted of the property at €50 million already exists in the company's balance sheet. The €50 million in property to the SPV was in fact already on the company's books. It is simply another book entry."

Be that as it may, the move by GO to create this property SPV did help quell the anger of shareholders, even if only for a one-time opportunity to see share prices increase.

Initially, GO plc chairman Deepak Padmanabhan and chief executive David Kay went in for the 9 May AGM to fend off heavy criticism by numerous shareholders who questioned the company's overall loss of €45.2 million in Greek subsidiary Forthnet.

Describing the losses as a "major concern", Padmanabhan insisted the Greek investment in 2008 was made because "the Maltese market did not offer enough protection".

GO plc has outstanding bank loans of €69 million which must be paid up by 2015 but MaltaToday is informed the company is currently able to generate enough funds to meet these obligations.