City Gate special purpose vehicle to make €15 million share offer

The special purpose vehicle that will raise finance for the construction of the €80 million City Gate project and new parliament building will be issuing 20 million ordinary 'B' shares at a value of €0.50 each to the public, with a further over-allotment of 10 million ordinary shares.

Malita Investments plc's chairman Kenneth Farrugia said the company, which is 70% owned by the Maltese government, will be developing and managing a property portfolio of strategic national importance.

The SPV will also be receiving the rents from leases of the Valletta cruise liner terminal, and Malta International Airport. MIA will pay €905,000 in rent this year, and €4 million between 2013 and 2016. By the end of its 65-year lease, it will have paid €120 million.

"Malita Investments is capitalised with a €25 million cash injection by the government, as well as through the transfer of the leases of Malta International Airport and the Valletta Cruise Liner Terminal. These two properties being long established landmark locations of strategic and national importance have to date paid regular ground rents which will now be received by Malita Investments. Through these two property transfers as well as the cash equity injection, Malita will have a capitalization of €59 million," Farrugia said.

Malita will be acquiring the parliament building and the open-air theatre on a temporary emphyteusis of 65 years for €82 million and a ground rent of €100,000 annually. In return, these two investments are expected to generate revenues to the company in the form of rent receivable by way of two lease agreements entered into between Malita Investments and the government.

The funding of these two acquisitions will be undertaken through a long-term finance facility of €40 million entered into with the European Investment Bank at a fixed rate of interest, the company's own capital of €25 million, the proceeds of the public share offer, as well as the company's own operational cash flows.  

Malita Investment's revenue streams will primarily be the ground rents from Malta International Airport and Valletta Cruise Ports as well as the lease payments from the parliament building and the open-air theatre.

"The existing revenue streams are highly visible and quantifiable, given that they arise from long-term contractual agreements," Farrugia said.

The company will be distributing a total dividend to shareholders of approximately 60%-75% of the profit after tax earned in a financial year, paying its irst dividend in April 2013. An interim dividend is also expected to be paid in September 2013 following the publication of the interim results for that period.

The two distributions would equate to an annualised gross dividend yield of 7% of the issue price.

Subscriptions for shares are to open on Monday, 23rd July 2012 and will close on Friday 27th July 2012.