Curmi & Partners

KA Finance Plc - €6,000,000 4.75% Secured Callable Bonds 2026-2029

KA Finance Plc - €6,000,000 4.75% Secured Callable Bonds 2026-2029

Download the Company Admission Document here.

KA Finance Plc (“the Issuer” or “KA Finance”) will be issuing a 4.75% secured callable bond due 2026-2029, amounting to €6 million (“the Bond Issue” or “the Secured Bond”) on the Prospects MTF.

KA Finance has been set up as the financing entity of KA Holdings Plc (“KA Holdings” or “the Guarantor”), collectively referred to as “the Group”, with the aim of financing the Group’s further expansion. KA Holdings is a property development company incorporated in April 2012, which primary business objective is to invest in real estate assets for rental returns or resale. KA Holdings is mainly focused on developing and building of office space in Mriehel and the renting out of such space. KA Holdings along with a related company Project Technik Ltd, an innovative and experienced contractor which specialises in ceiling, drywall, plastering, and interior finishing works, are fully owned by Kurt Abela.

In 2012, the Group acquired land in a prime site in Mriehel with the objective of developing an office building named Centris Business Gateway. In 2014, an adjacent plot of land of equivalent size was acquired by Project Technik Ltd. The development was projected to be completed in two phases and half of the land was transferred to KA Holdings for the development of Phase I (“Centris I”). Construction of Centris I started towards the end of 2013 and was completed in Q1 2016.

KA Holdings is projecting to expand its operations via additional investments in immovable property as part of its core activities in addition to partly diversifying its business. All planning permits for the development of a plot of land adjacent to Centris I to be purchased by KA Holdings, referred to as “Centris II”, are in place. It is envisaged that Centris II will be developed into a similar commercial block as Centris I. The property’s valuation in its current state has been estimated at €6.7 million and upon completion in 2020, it is expected to have a value of €14 million. A site in Swieqi was also acquired in 2018 and work has commenced to develop the property into a 15-apartment complex (“the Apartment Complex”). Permits have been issued and work has commenced. In August 2018, another property was bought in Gzira which is projected to be converted into an 8-room boutique hotel (“the Boutique Hotel”).

 The Secured Bond is primarily secured by a special hypothec on Centris II. Furthermore, the Secured Bond is considered a complex instrument given the option of early redemption by the Issuer. As from 2026, the Issuer may redeem in whole the Secured Bond on the basis of prices indicated in Section 2.2.6 (sub section no. 3) of the Company Admission Document.

Amount:

€6 million

Issuer:

KA Finance plc

Redemption:

2nd September 2029 with option of early redemptionon any day falling on or after 2nd September 2026 until 2nd September 2029

Coupon:

4.75%

Security:

i. Special Hypothec to be granted by the Guarantor over Centris II

ii. General Hypothec to be granted by the Guarantor over all its property both present and future

iii. Joint and several guarantees to be granted by the Guarantor as security for the punctual performance if the Issuer’s payment obligations under the Bond Issue

iv. Pledge agreement whereby the security trustee is appointed to hold the proceeds from the Bond Issuer

Minimum Allocation: 

€2,000

Use of proceeds:

The net proceeds from the Bond Issue are expected to amount to approximately €5.88 million and will be used as follows:-

   i.         €2.0 million will be advanced to the Guarantor to be utilised for the purchase of land on which Centris II is being built on;

   ii.         €2.9 million will be advanced to the Guarantor to develop Centris II property in Mriehel to cover constructions and finishing works;

   iii.         €0.8 million will be advanced to the Guarantor to be utilised to build and finish off the luxury apartments in Swieqi and

   iv.         €0.18 million will be advanced to the Guarantor to build and finish off the Boutique Hotel in Gzira.

Allocation Policy:

The total amount of €6,000,000 of Bonds is being reserved for subscription by the Placement Agent and Manager participating in the Placement Offer, Curmi & Partners Ltd. Any interested investors should contact Curmi & Partners Ltd. 

Expected Timetable:

1. Application Forms made available

24th July 2019

2. Issue Period

24th July 2019 to 16th August 2019

3. Issuance of Bonds

23rd August 2019

4. Commencement of interest on the Bonds

23rd August 2019

5. Expected date of Constitution of Security

27th August 2019

6. Expected date of admission of the Bonds to Prospects MTF List

29th August 2019

7. Expected date of commencement of trading of the Bonds

30th August 2019

23rd August 2029 with option of early redemption on any date falling on or after 23rd August 2026 until 23rd August 2029

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