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The man who was the victim of a gun shooting in Sliema earlier this month owes a considerable sum to Giosue Gauci his ‘former’ partner in the hotel trade. Speaking to MaltaToday this week, Ronald Azzopardi who is a Planning Authority member would not say how much he owed for the purchase of the shares, but would only state the amount was considerable.
Azzopardi’s problems do not stop there. Azzopardi also owes substantial sums of money in his own name, including Lm360,000 personally to Mario Galea Testaferrata.
About one year ago, through one of his companies, he took a loan of Lm250,000 from APS Bank and owes about Lm220,000 on a property deal. Azzopardi also took a loan from Bank of Valletta of Lm503,000 in July of last year and told MaltaToday that the loan was a business one and originally part of a loan taken by one of the companies that he has shares in: Crown Ltd.
Azzopardi, who has been a member of the MEPA Board since 1998, first joined his brother in-law’s company as a minor shareholder, but on 13 February 2004 signed a promise of sale agreement to buy out Giosue Gauci the major shareholder and went on to save the company from definite bankruptcy, MaltaToday has learned.
In saving the company and its 100 employees, including 65 full timers, the businessman has ended up facing considerable debts including that owed to his former partner Gauci, a debt that is to be paid over 20 years.
Way back in 1997 Azzopardi joined his brother-in-law, Jean Borg’s business after Borg bought the former Carina Hotel in Windsor Terrace, Sliema. Mr Borg is involved in the construction and development business.
About one year later Azzopardi and Borg took on a third partner, Giosue Gauci, the father of Priceclub director Christopher Gauci, when it was decided to expand the hotel by buying the adjacent property owned by the same Gauci.
Expansion
The early days saw massive expansion of the business interests the major investor, was Gauci, who was also the major shareholder with about 75 per cent of the shares.
Giosue Gauci’s son Chris was the mover and shaker when the three bought the Crown Hotel and later opened O’Conners in St Paul’s Bay.
Giosue Gauci owns his share in the companies through his company Taormina Holdings. Taormina Holdings also holds shares in the Priceclub group and once benefited from a loan of Lm400,000 according to an affidavit presented in court by auditor John Zarb.
The companies owned by the three invested in the hotels adding new rooms and upgrading them while changing the name of the Sliema hotel to Windsor. “It was Gauci that was bringing in the money at that time,” Azzopardi told MaltaToday.
The companies also rented property owned by Paul’s Punch bowl at Lm100 daily, Azzopardi told MaltaToday, and opened O’Conners in Paceville.
Azzopardi’s involvement
Ronald Azzopardi became more involved in the company in 1998 and worked for seven months there managing the hotel before retaking his former job with SMS, a job he still holds to today.
According to Azzopardi, in May 1999 Jean Borg, also known as Jean Pierre Borg, fell out with Giosue Gauci and decided to sell all his shares to Azzopardi who told MaltaToday “Jean Borg passed the shares on to me, after Gauci had insisted with him that the three directors and owners of the companies should not be involved in the running of the business, and should leave that to the employees.”
According to Azzopardi it was at this time that the companies started to suffer as there was too much spending and because of the quick expansion, the companies cash flow was seriously affected.
Eye-opener
In January of 2000, worried about the financial situation of the companies he had shares in, Azzopardi asked Business Process Consulting Ltd to have a good look at the companies finances. Azzopardi told MaltaToday that what he found was an eye-opener and that Tony Meilaq, representing PCL recommended financial restructuring because of “overspending.” Ronald Azzopardi told MaltaToday that “At that point Gauci told me he was not in a position to invest more in the company.” Azzopardi was faced with a problem because while he was not the major shareholder he and Giosue Gauci had made equal guarantees to the bank to cover the companies’ overdrafts.
Foreign loans
With the companies doing badly help was sought from foreign financial institutions, since the banks in Malta were not willing to lend more money to the Sovereign Group.
It was Azzopardi who took the lead to invest now as “Gauci told me he was comfortable with Priceclub.”
“I spent substantial sums of money to try and get a loan from abroad. We were assisted by an Italian called Robert Palmerini but our attempts to borrow from the British Bank of Commerce, Stirling and Manchester Finance Co and a company registered in Falkirk, Business and Consultancy Ltd. I spent about Lm200,000 of my money and Gauci spent Lm30,000,” Azzopardi told MaltaToday.
Giosue sells out
Eventually an agreement was reached that Giosue Gauci sell his shares to Azzopardi and that the latter would become the companies’ only director of the company and a promise of sale agreement was signed. The agreement has a duration of five years.
Over the years the debts of the company started to snowball and 26 court cases were brought against it, all for money owed. In 23 of the cases the court decided in favour of the creditors and among these were the Bank of Valletta, on behalf of Elosolar which was owed Lm 30,674; Elba Enterprises which was owed Lm 25,000 for the sale of the Tudor Hotel, formerly Elba Hotel at 52 Arturo Mercieca Street, John Mary Vella who was owed Lm13,035 by the company; J&C Pisani was owed Lm12, 749; C&H Bartoli was owed Lm 6,569; a certain Karl Gaffiero, former managing director with the company, was owed Lm 6,288; Alf Mizzi and Sons was owed Lm4,365; Hal Mann Limited, was owed Lm 3,049; and C. Fino and Sons owed Lm 4,917, brought its case against both the company and also against Chris Gauci, Jean Pierre Borg and Nicole Borg.
“Those were not the total amounts of our debts to those companies,” Azzopardi told MaltaToday, “Fino was owed more than Lm100,000 at one time, Hal Mann was owed Lm23,000, Farsons Lm60,820, N Cordina Marketing Lm17,000, AC Construction Lm45,000, and Paul’s Punch Bowl about Lm70,000, just to mention some but we managed to pay them all.
“In December 2003, we had approached HSBC and came to an agreement as to how to restructure the company and settle the debts. HSBC also took over a bank loan we had from BOV. Since I took over the running of the company last year I also managed to settle Lm120,000 in VAT dues,” Azzopardi told MaltaToday.
Half a million loan
As stated above, in July of 2004, Azzopardi and his wife were loaned Lm503,000 by the Bank of Valletta and the bank took a general hypothec over all their property as well as a special hypothec over a house named Ta Masiku in an unnamed alley which abuts into Triq Jannar in Xaghra Gozo.
The Registry of Companies website indicates that no accounts have been filed for HD Holdings Ltd. In the case of Crown Ltd one set of accounts was presented showing losses in 1999 and 2000 of Lm395,118 and Lm364,958 respectively, before taxation and accumulated losses carried forward of Lm655,632 at the end of 2002. No accounts have been filed at the Registry for Rylex, Dona Lola and Fawstina, which is a nominee company and the one that purchased the shares in the companies from Giosue Gauci.
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