GlobalCapital issues €10 million bond to repay 2016 bond

GlobalCapital has received regulatory approval from the Malta Financial Services Authority to issue €10,000,000 in unsecured bonds at 5% redeemable in 2021.

The €100 bonds will be issued subject to a minimum subscription of €2,000.

The proceeds from the bond issue will be used purchase GlobalCapital’s existing bonds from existing bondholders for cancellation, whether by way of a bond transfer or by payment in cash.

The bond Issue is open for subscription for existing bondholders as at the close of business on 13 May 2016, while professional clients in respect of any balance of the bonds not subscribed for existing bondholders as at cut-off date.

Back in August 2015, insurance specialist GlobalCapital plc registered profits for the first time in seven years with €222,671 compared to a loss in 2014 of €3.6 million, part of a strategy for aggressive cost-reduction and disposal of all immoveable property in excess of requirements.

Auditors Deloitte had however expressed doubts over the company’s plans to finance a bond redemption in 2016 by increasing shareholders’ capital by €15 million, amid plans to bring in Italian bankers EIP plc to take over their parent company’s shareholding.

GlobalCapital’s €17 million bond issue of 2006 (carrying 5.6% interest) is due for repayment at the latest by 2 June, 2016.

GlobalCapital has only secured part of the funding required for the repayment of the 2016 bond, which also includes accrued interests of €0.8 million. In March 2016, the group generated €4.7 million through a rights issue offer following which Investar plc became the majority shareholder of the company with a 52.6% shareholding. These funds have been placed in a sinking fund for the repayment of the bond.

GlobalCapital has received a commitment from Investar plc to subscribe up to €5 million in the new bonds in the event that there is a shortfall of such an amount or more in the overall take-up of the bonds. The company has also received commitments from other shareholders and professional investors, through its sponsor, to subscribe up to an additional €5 million in aggregate in the new bonds in the event of a shortfall in the overall take-up of the new bonds after the fulfilment by Investar plc of its above commitment.

A further rights issue for an amount of €5 million will be made following the issue of the new bond within  the next 12 months.

GlobalCapital’s annual report shows that company directors are confident of the successful outcome of the refinancing plans but that they are also aware of “significant uncertainties… some of which are not within their control.”

GlobalCapital’s former chairman, Dawood Rawat, currently based in France, was forced to resign after Mauritian authorities accused him of running a €960 million Ponzi scheme through one of his subsidiaries, the Bramer Banking Corporation. Bramer’s 30,000 deposit accounts were taken over by the State Bank of Mauritius.

Italian banker Paolo Catalfamo – an honorary consul-general for Mauritius in Italy – announced that his company EIP plc would acquire BAI’s entire shareholding in GlobalCapital.

But EIP bought the entire 8.93% shareholding of Aberdeen in Global Capital, a far cry from the 48.5% it originally had in its sights. EIP had said it intended to finance its participation in the €15 million rights issue by raising additional equity “from potential new investors known to EIP” even though to date there are no tangible commitments by third party investors.

GlobalCapital registered €5.6m (€5,606,505) in pre-tax earnings for the financial year ending on 31st December 2015 compared to €0.8 million in 2014.