Curmi & Partners

AX Group plc – Series I 3.25% Unsecured 2026 and Series II 3.75% Unsecured 2029

AX Group plc – Series I 3.25% Unsecured 2026 and Series II 3.75% Unsecured 2029

 

Download the Prospectus here.

 

AX Group (“AX”, “The Group”), will be issuing an aggregate amount of €25 million (“the Bonds”) through two bonds maturing in 2026 (Series I) and 2029 (Series II).

 

Series I

Series II

Amount

€15m

€10m

Redemption Date

20th December 2026

20th December 2029

Coupon

3.25%

3.75%

Rank

Unsecured

Unsecured

Minimum Allocation

€2,000

€10,000

 

The Group was set up in 1977 and has become a well-recognised brand in Malta. The Group operates 35 entities which are principally organised into four primary business divisions: Hospitality and Entertainment (“H&E”), Healthcare, Property Development and Construction.

Hospitality and Entertainment

The H&E sector involves a portfolio of seven properties, six of which are four or five star hotels with a total bed count in excess of 800 guest rooms and suites. This sector consists of: The Palace Hotel, Victoria Hotel, Seashells Resort at Suncrest, Sunny Coast Resort and Spa, Saint John’s Boutique Hotel, Roselli Boutique Hotel and Tal-Kaptan Restaurants.

Healthcare

Within the Healthcare division, AX operates Hilltop Gardens and Retirement Village; the Simblija Care Home, a care home which caters for medium and high dependency patients and for residents who require respite care; and, the Revive Physiotherapy and Aquatic Centre, a physiotherapy and hydrotherapy centre. These are collectively referred to as the “Retirement Village”.

Property Development

The Property Development sector comprises of eleven companies, each of which is responsible for optimising the Group’s property portfolio by evaluating investment opportunities for existing properties and identifying properties for acquisition and subsequent development and operation. This division has been responsible for developing a number of residential complexes, hotels, restaurants, office blocks and other mixed developments.

Construction

The Group undertakes a number of construction projects including civil engineering works, turnkey assignments, and restoration works with a focus on third party projects. This division’s portfolio includes the conversion and completion of “is-Suq tal-Belt”, the development of the St John Boutique Hotel and Rosselli Boutique Hotel, the construction of Hotel 1926 in Qui-si-Sana and finishes of: KPMG offices, St Paul’s catacombs in Rabat and Lascaris War Rooms in Valletta

Use of Proceeds:

The Group will be utilising the majority of the proceeds for the purposes explained below.

The Marsa Project

The Group will be part-financing the acquisition of land situated in Marsa. The land includes subterrain and airspace, and measures circa 7,587 sqm. Currently, the land is occupied by a store in Marsa Road, and 9 adjacent stores in the surrounding areas. The total consideration of this land amounts to circa €7.0 million.

The Group also owns another portion of land measuring 620 sqm which was purchased for €0.6 million. This land is adjacent to a plot measuring approximately 5,500 sqm also owned by the Group.

The proceeds of the Bond will be utilised for the acquisition of the property in Marsa. Development of this property is expected to commence in future years, and is expected to be developed into a mixed office, residential and commercial property.

The Valletta Project

The Group will also be purchasing a ‘Palazzo’ situated in 41, Merchant Street, Valletta for a consideration of €5.5 million. The Group intends to convert the property into a self-catering accommodation which shall comprise nine luxury apartments. This property is still subject to necessary development permits and, if approved, is scheduled to start operating in 2021.

 

Allocation Policy:

A maximum amount of €25 million in bonds shall be first allocated to holders of the €40 million 6% bonds 2024 issued by AX Investments Plc and to employees and directors of any of the companies forming part of the AX Group (“Preferred Applicants”).

Any balance of the Bonds not subscribed for by Preferred Applicants shall be made available for subscription through an Intermediaries’ Offer.

It is the intention of the Issuer to split the Bonds into €15million Series I Bonds (3.25% 2026) and €10 million Series II Bonds (3.75% 2029) – however the Issuer reserves the right to allocate Bonds in any one or a combination of both bonds, which allocation is at the discretion of the Board.

In the event that Applications from Preferred Applicants in any one of the Series exceed the respective intended threshold indicated above, but there remain unallocated Bonds in the other Series, the Issuer shall, to the extent possible, allocate such remaining Bonds to those Applicants that have indicated on the respective Application Form their willingness to have the excess utilised for the subscription for Bonds of the other Series of Bonds.

 

Expected Timetable:

Application forms mailed to existing bondholders

26 November 2019

Application forms available to Group employees

29 November 2019

Closing of Offer Period

12 December 2019   

Intermediaries’ Offer

(Will not take place if the total value of applications received from Preferred Applicants exceeds the Bonds available for subscription)

18 December 2019

Announcement of basis of acceptance

20 December 2019

Commencement of interest on the Bonds

20 December 2019

Refunds for unallocated Bonds (if any)

6 January 2020

Dispatch of allotment advices

6 January 2020

Expected  date of admission of the Bonds to listing

6 January 2020

Expected date of commencement of trading  in the Bonds

7 January 2020

 

Disclaimer

The information above is solely provided for informational purposes and is not to be interpreted as investment advice, or to be used or considered as an offer or a solicitation to sell, or an offer or solicitation to buy or subscribe for any financial instruments, nor to constitute any advice or recommendation with respect to such financial instruments. The information contained in this note is based on public information, included that provided at stockbroker meetings. Investors are urged to read the Prospectus. The value of investments can fall as well as rise and past performance is no indication of future performance. Curmi and Partners Ltd. is a member of the Malta Stock Exchange, and is licensed by the MFSA to conduct investment services business