db Group issues €65 million bond issue to refinance hotel bank loans

Hotels group behind City Centre project in St Julian’s issues 4.35%, €65 million bond offer for refinancing of bank loans

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Matthew Vella
29 March 2017, 3:24pm
Silvio Debono, owner of the db Group
Silvio Debono, owner of the db Group
The db Group, developers of the City Centre project on the site of the Institute of Tourism Studies in St Julian’s, has issued a €65 million bond issue through its finance vehicle SD Finance plc, to refinance outstanding loans.

The bond finance, which have a coupon of 4.35% and redeemable as at 2027, will be used by the hotels and restaurants group to refinance outstanding HSBC loans for capital projects at the db Seabank and db San Antonio hotels, of some €53.5 million.

Another €9.5 million will be used to finance the redemption by the subsidiary Seabank Hotel and Catering Limited of a total of 4.1 million shares held by preference shareholders, to be exchanged for 95,500 bonds, and €1 million will be used for general corporate funding purposes.

In February, the Seabank consortium – which is owned by hotelier Silvio Debono, his Seabank Hotel and Catering Limited and Sea Port Franchising Limited – entered into a 99-year emphyteutical concession over the site on which the City Centre Project is to be developed.

The concession is subject to a cash consideration of €15 million, payable over a period of seven years, with the first payment of €5 million payable on signing of the deed. The balance of €10 million is payable in seven equal annual instalments. Stamp duty of some €3 million is payable upon signing of deed. Total annual ground rent of €1,562,509 will be payable to government.

Subject to the issuance of Planning Authority permits, the Group plans to develop the five-star Hard Rock Hotel, a casino, an exclusive top-floor bar, catering and dining establishments, a congress hall and conference centre, a shopping mall, a car park, office suites and residential units. The construction and development of the City Centre Project is expected to be funded through a combination of own funds, bank facilities, future debt issuances as well as cash flows generated by the initial instalment of residential units set to be constructed as part of said project.

The db Group has founded strategic partnerships with global players such as Accor Hotel Group and RIU Hotels & Resorts. In 2015, db Group launched its own brand, db Hotels + Resorts, to operate its chain of hotels and resorts.

The Group recently completed its hotel portfolio refurbishment and extensions programme aimed at the enhancement of both db Seabank Resort & Spa and db San Antonio Hotel & Spa with a global investment of over €70 million, thereby increasing the Group’s room pool by 501 rooms to a total of 1,052 rooms.

The Group’s main assets include the db Seabank Resort & Spa, the db San Antonio Hotel & Spa, the Porto Azzurro Complex, the Tunny Net Complex, Sea Port Franchising – which holds the franchisee licence for the Hard Rock Café and Hard Rock Bar brands – Malta Healthcare Caterers, with James Caterers Limited, and Sky Gourmet, with James Caterers and Do & Co.

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Matthew Vella is executive editor at MaltaToday.