The Corinthia Group is considering a secondary listing on the London Stock Exchange in order to tap into foreign investment, now that there are the initial signs of recovery in the global economy.
Addressing a press conference on Monday, during which the issue of a €20 million 10-year bond was announced, Corinthia Finance plc Chairman Joseph Fenech explained that the group had already made some preparations to this effect, but they had to postpone them due to the onset of the global financial crisis last year.
“However, now that the global economy is showing signs of recovery, we are re-considering our listing on the LSE,” Fenech said.
The company’s assets grew by four times over the past ten years, from €337 million to €1,216 million, outgrowing the potential for local bank financing.
A bank may not be exposed with a single company to more than 25 per cent of its total equity, so Corinthia has to raise capital from other sources, such as the syndicated loan facility that it had to take to develop the Corinthia London hotel.
At the same time, over the past ten years, the group’s total liabilities doubled from €226.2 million in 1998 to €575.3 million in 2008, while the number of employees grew from 3,252 in 1998 to 3,408 in 2008.
Corinthia Finance plc (CF) was incorporated in 1999 as a financing arm for Corinthia Palace Hotel Company Limited (CPHCL) to enable the latter to undertake the ownership, development and operation of real estate developments.
Through its subsidiary companies, CPHCL is currently engaged in completing existing projects and developing new sites in various overseas territories with an approximate total value of €850 million worth of investments.
The Corinthia Group is now developing three projects in Libya – Benghazi, Tripoli and Janzour, another development in London and in the Russian city of St Petersburg, where after the completion and inauguration of the extension to the Corinthia St Petersburg Hotel, the project is in its final stages to complete the retail and commercial areas adjacent to the hotel.
The Corinthia Finance €20 million bond issue has an annual interest rate of 6.25 per cent, with an over-allotment option of an additional €5 million.
The bonds are redeemable in 2019 but might be redeemed earlier (as from 2016 at the issuer’s discretion) and are guaranteed by Corinthia Palace Hotel Company Limited (CPHCL).
The net proceeds from the bonds would be principally used to redeem the outstanding amount of the 6.7 per cent bonds which mature later this year and the remaining balance will be advanced to CPHCL for use in its general corporate funding purposes.
The funds would be used to enable the Corinthia Group to further develop business opportunities arising from its continued expansion.
Application forms and copies of the prospectus are available at all branches of leading banks and authorised financial intermediaries.
Subscriptions open on 15 September and the offer closes on 18 September or earlier if over-subscribed.
Existing Corinthia Finance plc 6.7 per cent 2009 bond holders will be given preference over other investors.
Corinthia Finance plc would be compensating the difference between the interest receivable on the maturing 6.7 per cent 2009 bond and that receivable on the new 6.25 per cent 2019 bond for the period 23 September 2009 and 30 October 2009 for existing bond-holders.
An application has been made to the Listing Authority for the admissibility of the Bonds to listing and to the Malta Stock Exchange (MSE) for the bonds to be listed and traded on its official list.
“Corinthia is a successful home-grown group of companies flying the Maltese flag whenever we ambitiously venture overseas,” Group Chairman and Chief Executive Officer Alfred Pisani said.