City Gate special purpose vehicle gets €40 million EIB loan

The City Gate special purpose vehicle, Malita Investments plc, and the European Investment Bank (EIB) have signed a €40 million finance contract to finance the construction of the Renzo Piano parliament building and the open-air theatre in Valle

The €40 million contract was signed in Malta by EIB representatives Malita chairman Kenneth Farrugia. Through this loan agreement, Malita Investments secured a 20-year facility for €25 million as well as another 25-year for €25 million.

The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its member states.

"The board of directors are particularly pleased that Malita Investments plc has partnered with the European Investment Bank to finance this urban development project which is in effect the first heritage site," Farrugia said.

"I would like to express my appreciation to the European Investment Bank for the professionalism, support and commitment exhibited to this project during the many months of intensive negotiations which ultimately led to the signing of this agreement."

The €80 million City Gate project is one of the major public infrastructure projects promoted by the Maltese government in recent years. Malita Investment said the project is in line with the EIB's financing priorities.

The City Gate special purpose vehicle will issue 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 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. Through these two property transfers as well as the cash equity injection, Malita will have a capitalization of €59 million.

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 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.