Cassola claims that investors were misled in bond prospectus untrue: MIDI plc

MIDI plc has rejected claims that its 2016 €50 million bond prospectus misled investors.

In a company announcement MIDI plc said the document met regulatory standards and clearly disclosed potential project risks, while also being backed by provisions for deadline extensions under its development contract for Manoel Island.

The response follows an opinion piece by Momentum chairperson Arnold Cassola, published in MaltaToday, which questioned the legality and transparency of MIDI’s actions over the past decade and suggested the company could be in breach of its agreement with the government due to missed deadlines on the Manoel Island development.

Cassola argued MIDI raised funds through a public bond issue while still lacking the permits, masterplan, and financing required for the ambitious project, warning that the land could legally revert to the government if substantial completion had not been achieved by March 2023. He also claimed that none of the €50 million raised was earmarked for the project itself.

MIDI responded by stating risk disclosures in the 2016 prospectus were a legal obligation designed to protect transparency and were not indicative of an inability to mitigate such risks.

The company said the Deed of Emphyteusis governing the project, and available for inspection as part of the prospectus, contains automatic extensions for delays outside MIDI’s control, including permit-related hold-ups and archaeological discoveries.

“These clauses (Articles 13, 16, and 17) allow for extensions to the substantial completion deadline in cases of permit delays, external events, or archaeological findings,” the company stated, adding that the March 2023 date cited in the article does not account for these legally established extensions.

MIDI cited several setbacks since 2017, including five years of archaeological investigations conducted under the supervision of the Superintendence of Cultural Heritage, which resulted in a development exclusion zone covering 22,000sq.m of Manoel Island.

The company added: “The article in question highlights only one of a number of delays encountered by the Company, namely the FAA’s appeal with respect to the Outline Development Permit approved in March 2019”.

FAA had successfully appealed the first outline permit, leading to its annulment after a conflict of interest was flagged in the drawing up of the Environment Impact Assessment. A second appeal against a new EIA was later definitively rejected by the Appeals Court in May 2023, paving the way for an outline development permit to be issued.

The company maintains that its interpretation of the deed entitles it to at least a 10-year extension beyond the original March 2023 deadline, covering both recent and historical delays, including issues that arose prior to 2013 due to difficulties at Tigné Point.

Addressing criticisms of its financial reporting, MIDI said it has consistently stated in its audited statements that project timelines were subject to extension due to conditions outside its control.

MIDI concluded the announcement by reaffirming its commitment to “accuracy and transparency” in public discourse.

Changes: This article has been amended to reflect the fact that an appeal against the approval of the second EIA was turned down definitively by the Appeals Court. It also adds more detail from the company announcement.