Government considers ‘bailout’ on Marsa shipbuilding land

The government will be setting out the way forward to take back a public concession that has failed to deliver its owners the level of business they had first expected less than a decade ago.

MaltaToday understands that the Labour administration has agreed to have its industrial parks regulator, INDIS Malta, commence negotiations with MMH Holdings, the operators of the former Malta shipbuilding site, to terminate the 65-year concession for the land they took up in 2016.

With MMH Holdings having failed to obtain regulatory clearance to sell their concession last year to interested parties, and a hefty €15 million bond that is nearing repayment, the government has agreed to allow INDIS to start talks that can deliver a “fair and balanced” outcome for both sides.

The MMH site marked in yellow, where the state-operated shipbuilding company once operated

MMH was already seeking a cash injection from prospective investors due to the state of its equity, when auditors in 2022 warned of “a material uncertainty… that may cast significant doubt on the Group’s ability to continue as a going concern.”

Both parties – Angelique Abela on behalf of MMH Holdings, and INDIS executive chairman Jean Pierre Attard – signed a memorandum for the start of the talks.

Over the last five years, MMH had made repeated representations to the government to allow new business partners or extend the terms of the concession it had publicly competed for, so as to allow a wider range of business activities on site.

But rival business groups last year also complained to INDIS that MMH was allowing services that already do not respect its concession for an oil and gas servicing centre – such as hosting mega-conferences in its shipbuilding sheds or servicing yachts.

MMH had to operate the concession as a logistics hub for the oil and gas industry but has diversified its business into yachting and hosting conferences (Photo: MMH website)

Now it turns out that the government is backing MMH’s concerns that the original concession’s terms might no longer be in line with current economic realities in the maritime industry.

A government source told MaltaToday that not all Cabinet members were in agreement at seeing the administration heading towards a ‘bailout’ that would allow MMH a painless exit from a concession it had long been attempting to jettison to third parties.

Failed share transfer

MMH – whose ultimate beneficial owner is Paul Abela of Abel Energy – was granted the 65-year land concession by industrial parks regulator INDIS in 2016, taking over a 165,000sq.m site, which includes 1,200m of quayside and engineering workshops covering 30,500sq.m.

The area strategically abuts onto the Grand Harbour and currently operates as an operations and supply chain support base for the Mediterranean oil and gas industry.

But since 2018, MMH started diversifying into yachting maintenance and vessel-hoisting, and even hosting conferences.

In 2023 the company announced a prospective share transfer of a 70% stake to Virtu Holdings and LTV Developments. Virtu owns Virtu Ferries, operators of the longest-serving catamaran service between Malta and Pozzallo, while LTV is owned by Francis Busuttil & Sons Ltd, also known as Ta’ Bandallu, a major importer of food and groceries.

The share transfer was required for the restructuring of the MMH group’s capital, and as stated by auditors, “to meet its financial commitments in the medium term.”

The former Dock 7 is now used to hoist yachts (Photo: MMH website)

But the buyers were seeking a change in concession terms that would allow a wider range of services to be offered other than the oil and gas services MMH is contractually bound to provide.

Those changes had to be approved by the government regulators, in line with MMH’s obligations arising from the public deed entered into with the government.

But another player in the maritime field, Manoel Island Yacht Yard, made its own representations to INDIS over the attempted share transfer, in a pointed letter alleging breaches in MMH’s concession terms.

MIYY said that while the land at the Marsa shipbuilding area had been granted to MMH for oil and gas services, instead the company was marketing itself as a boat park for yachts despite these services not permitted by the original deed.

MIYY told INDIS it was allowing MMH full impunity to breach the deed, which was affecting its own business at Manoel Island, also a lands concession granted in a public call for offers back in 2010.

Earlier this year, MMH announced that Virtu and LTV, along with chairman Paul Abela, had decided not to renew the terms of the conditional share purchase agreement.