Curmi & Partners

MeDirect Bank (Malta) plc – 35 million 4% Subordinated Unsecured 2024 – 2029 issued in EURO and GBP

MeDirect Bank (Malta) plc – 35 million 4% Subordinated Unsecured 2024 – 2029 issued in EURO and GBP

Download the Prospectus here.

MeDirect Bank (Malta) plc (“the Issuer”, “MeDirect”, or “the Bank”) will be issuing a Euro equivalent amount of 35million in 4% Subordinated Unsecured Bonds due 2024-2029 (“the Bond Issue” or “the Bonds”). The Bond Issue will constitute Tier 2 Capital for the Issuer.  

Amount:

€35 million

Issuer:

MeDirect Bank (Malta) plc

Redemption:

5th November 2029 with option of early redemption annually on 5th November 2024 until 5th November 2029

Coupon:

4%

Rank:

Subordinated (Tier 2 capital)

Minimum Allocation: 

€25,000/ £25,000

The Bank provides lending to international and Maltese corporates and provides banking services, primarily in Malta, focusing on term deposit, savings and wealth management.  In 2009, MeDirect was acquired by AnaCap Financial Partners II L.P. and the Issuer’s senior management at the time, through a capital injection of over €19 million from Medifin Holding Limited. The Issuer has a subsidiary in Belgium, MeDirect Bank SA/NV, which provides online client delivery, savings and wealth management products to the Belgian retail market. In 2014, the Bank acquired 100% of the share capital of Volksbank Malta for €35.3 million to develop its corporate banking platform in Malta. In 2018, MeDirect merged with Charts Investment Management Services Limited (“Charts”), a Maltese stock broking, wealth management and corporate advisory firm in which it had already held a majority stake since 2010.

The Issuer has grown over recent years into the third largest Maltese bank by deposits, and is now considered as a core domestic bank, directly supervised by the ECB and the MFSA. The bank has branches in Sliema, Paola, Mosta and Gozo, offering a vast range of banking activities. Whilst prior to 2014 a substantial part of its financing was derived from international wholesale markets, over the years it has established a diversified retail and corporate deposit base. Additionally, the Group has expanded its lending activities and also offers wealth management services via its branch network and an online platform. 

The Bond will be issued as part of an exchangeable bond transfer. Currently, the Bank has outstanding €25million bonds in EUR and in GBP, bearing an interest of 6% per annum, redeemable on 28 November 2024 but with the option of being called earlier, on 28 November in each year between 2019 and 2023 (“the 6% 2019-2024 Bonds”).

The Bond is open for subscription by holders of the 6% 2019-2024 Bonds via an exchange, with bond holders having the option to subscribe for the new Bond Issue up to the amount of their holding in the 6% 2019-2024 Bonds as at 11th October 2019. 

The Bonds are being issued to raise funds to be utilised for:

  • The early redemption of the 6% 2019-2024 Bonds and
  • To redeem the following bonds maturing in December 2019:
    • 7.5% €12.5million subordinated bonds in EUR and GBP, and
    • 7.5% €10million subordinated bonds in EUR and GBP.

Once the new Bonds are issued, the 7.5% bonds are redeemed and the 6% 2019-2024 Bonds are called, the Issuer would still be in line with its Tier 2 capital requirements, applicable by law. 

Complexity

It should be highlighted that the Bond is a complex instrument and as noted also in the Prospectus, is only suitable for investors who have the knowledge and experience to understand the specific risks relating to this type of investment. The complexity of the Bond is related to the fact that it entails a bail-in feature, whereby it can be written down or converted into common equity in certain circumstances. Furthermore, the Bonds are made complex because of the Issuer’s option to redeem them early.

Allocation Policy:

The Issuer shall allocate the Bond Issue on the basis of the following priority:

  • Bondholders of the 6% 2019-2024 Bonds up to the extent of their holdings in 6% 2019-2024 Bonds to be utilised for the purposes of the settlement of consideration of bonds and subject to the minimum holding of €25,000/£20,000
  • Any Bonds remaining unallocated following the allocations made according to the above, through an Intermediaries’ Offer also subject to the minimum holding of €25,000/£20,000.

The Issuer will pay €5.75 per €/£ 100 nominal for each 6% 2019-2024 Bonds transferred to the Issuer to bondholders who surrender these bonds in exchange for the new Bonds, pursuant to an exchangeable bond transfer. The €5.75 is composed of:

  • €5.62 representing the 6% interest for the period between 28 November 2018 and 5th November 2019 and
  • €0.13 representing a 2% interest between 6th November 2019 and 28th November 2019.

Holders of the 6% 2019-2024 Bonds would still need to top up their investment to the minimum amount of €25,000/£20,000.

Expected Timetable:

Application forms mailed to existing bondholders 

14 October 2019 

Offer Period and Intermediaries' Offer

14 October 2019 to 23 October 2019 

Announcement of basis of acceptance 

25 October 2019 

Commencement of interest on the Bonds

5 November 2019 

Refunds for unallocated Bonds

5 November 2019 

Expected date of notification of registration

5 November 2019 

Expected  date of admission and of commencement of trading

5 November 2019

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