The Board of Directors of Gap Group p.l.c. (the “Company”) has announced the issue by the Company of €40 million secured bonds maturing in 2022, with an interest coupon of 3.65% and payable annually in arrears (the “Bonds”). The Bonds are being issued in two fungible tranches at par (“First Tranche Bonds” and “Second Tranche Bonds” and collectively the “Secured Bonds”) as explained in further hereunder. Application has been made for the Bonds to be admitted to the Official List of the Malta Stock Exchange.

The First Tranche Bonds are exclusively available for subscription by holders of the €40 million Gap Group p.l.c. 4.25% Secured Bonds 2023 (“Original Bonds”) appearing on the register as at 4 March 2019 (“Eligible Applicants”). In this respect, the Company is inviting Eligible Applicants to subscribe to the First Tranche Bonds by surrendering all or part of their respective Original Bonds, and in so doing, shall benefit from a premium of 5% on the nominal value of Original Bonds being surrendered. The premium shall be paid by the Company following the unconditional allocation of the First Tranche Bonds and shall take the form of either: (i) an allocation of an equivalent amount of Second Tranche Bonds, if available*; or (ii) paid by the Company through a direct bank transfer.

 

1. Rationale of the 4.25% Secured Bonds 2023

 

The principal purpose for the issuance of the Original Bonds in September 2016 was to acquire and develop three sites located in Qawra, Għargħur and Mellieħa. To date, the former two development projects are complete and most residential units have been sold. With regard to the Mellieħa project, development should be completed to a finished state by the end of this year. As for accomplished sales, over 50% of residential units have so far been sold or are subject to promise of sale agreements.

Demand from investors to acquire residential units in the afore-mentioned projects has been stronger than expected, which enabled the Company to achieve prices above those projected and a higher velocity of sales than originally contemplated. As a consequence, the reserve account held by the security trustee for the benefit of bondholders of the Original Bonds has a balance at the date of this letter of circa €18 million.

This success led the Group in 2017 to initiate the construction of 237 residential units and 219 underlying garages on a new site in Luqa, which is primarily earmarked for first-time buyers and buy-to-let investors. The total estimated cost to complete the project is circa €17.5 million.

 

2. Rationale for the 3.65% Bonds 2022 (the First Tranche and the Second Tranche Bonds)

 

The issue of the Secured Bonds is being made (i) in the case of the First Tranche Bonds, to facilitate the conversion of Eligible Applicants’ investment in the Original Bonds into the First Tranche Bonds; and (ii) depending on the rate of conversion from Original Bonds into First Tranche Bonds, for the purpose of raising of new capital to fund the development and completion of the development in Luqa through the issue of the Second Tranche Bonds and the settlement of all amounts outstanding under the bank facility granted to Gap Luqa Limited by MeDirect Bank (Malta) plc.

_____

*The issue of the Second Tranche Bonds is at the discretion of the Issuer. Should the Issuer not issue Second Tranche Bonds, any unsettled premium will be paid by the Company by direct credit into the bank account indicated by the Eligible Applicant.

 

The rationale underlying the issue of the First Tranche Bonds and the Second Tranche Bonds is further described below.

 

First Tranche Bonds

The issue of the First Tranche Bonds is essentially an Exchangeable Bond Transfer and, accordingly, the First Tranche Bonds will be issued solely against the surrender and conversion of the Original Bonds and will accordingly not raise any new funds to the Issuer but may, subject to the rate of conversion, enable the security trustee of the Original Bonds to release funds from the reserve account to the Issuer.

 

Second Tranche Bonds

 

The Second Tranche Bonds will be available for subscription by Eligible Applicants and the general public. The Company will only issue Second Tranche Bonds up to a maximum amount of €20 million and subject to some other conditions. The Second Tranche Bonds will be used to re-finance the MeDirect Bank (Malta) plc loan and to part-fund the development and completion of the Luqa Development. Any remaining capital expenditure on the said project will be financed from proceeds receivable on signing of sale contracts.

 

3. Participation in the Bond Issue

For more information please refer to the Prospectus dated 4 March 2019, which can be downloaded by clicking here or alternatively hard copies are available for free from our branches.

 

Should you wish to participate in this bond issue, you are kindly requested to contact our offices on Freephone number 80072206 to set an appointment with one of our Advisors.

 

The Offer Period closes on 26 March 2019 at 12:00 hours.