Business giants locked in court over €264,000 bonds-listing expense

The aftermath of an acrimonious €28 million split between two of the country’s major entrepreneurs continues to be heard in court, as hotels group Island Hotels demands that construction magnate Nazzareno Vassallo pays up on costs incurred on a stock exchange listing.

Once partners in the Island Hotels Group since 1987, now IHG chief executive Winston J. Zahra and Vassallo Builders Group’s chairman Nazzareno Vassallo are at loggerheads over a €264,421 payment in costs for the submission of a prospectus for bonds.

The case has been ongoing since 2010, when Island Hotels filed an application stating that a 2009 framework agreement had bound Vassallo to pay all costs related to the admission, preparation and submission of a prospectus offering bonds to the public.

However only part of these costs had been paid, leaving an outstanding balance of €264,421. No reason was given for this.

Vassallo Group is claiming that it paid IHG more than it was bound to by the agreement. The amount requested was inflated and exaggerated, representing costs not related to the admission and preparation of the prospectus.

Vassallo Group declared that while it did not contest the agreement, IHG “conveniently left out” the circumstances that led to the clause about costs. It says the costs of the listing’s submission were overstated to €927,791, and that while Vassallo had already paid €642,970, in reality the costs should have been €494,500.

“They are nothing but expenses that were either extra, or exaggerated and unnecessary to the listing of the prospectus, arbitrarily included without our consent,” the Vassallo Group argues.

The ongoing court case is just part of the backdrop to the IHG-Vassallo split: in 2009, after Vassallo split up with the Zahras, he went on to open his own catering company, Catermax, to take on Island Catering head on.

Catermax is also 50% owned by hotel giants Corinthia Palace Holdings.

Corinthia Hotels’s holding company, International Hotel Investments plc, now plans a €50 million takeover of Island Hotels Group – offering a twist to fission and fusion of business alliances.