The Maltese Government, through its industrial parks regulator INDIS Malta, has agreed to begin negotiations that could see it reclaim the site of the former Malta Shipbuilding, currently held by MMH Holdings on a 65-year lease, reports MaltaToday.

This initiative comes after MMH's failure to generate the level of business initially anticipated when the concession was granted in 2016.

The Government has agreed to begin discussions with MMH to negotiate a “balanced” termination of the concession.

A significant factor driving these talks is MMH's inability to gain regulatory approval for a proposed sale of the concession to interested investors, paired with growing financial strain, including a €15 million bond nearing maturity.

This financial burden has raised concerns about MMH's long-term viability, with directors admitting in September that the company will require "alternative financing" to pay off the bond. 

Auditors had already flagged issues with MMH’s financial stability in 2022, citing doubts about the company’s ability to continue operations without fresh investment. This led MMH to repeatedly approach the Government to request either new business partners or expanded concession terms that would enable them to engage in a wider range of activities on-site.

The Government is now considering these concerns, acknowledging that the original concession terms may no longer suit the evolving economic landscape of the maritime industry.

However, the decision to renegotiate the concession is not without controversy. Some members within the Government Cabinet are hesitant to approve a deal that may allow MMH an easy exit from a contract it has been attempting to transfer to third parties. This disagreement reflects broader concerns over a potential "bailout" that could set a precedent for other concession holders in financial difficulties.

Over the years, MMH has gradually shifted its operations beyond its original focus on oil and gas services. Since 2018, the company has diversified into yacht maintenance, vessel-hoisting, and even conference hosting – activities that fall outside the original concession's scope.

In 2023, MMH announced a potential share transfer that would have given a 70 per cent stake to Virtu Holdings and LTV Developments. However, this deal was conditional upon regulatory approval to modify the concession terms, allowing MMH to offer expanded services beyond oil and gas. This proposed shift was seen as essential to restructure MMH's capital and address its financial commitments.

Competitors in the maritime industry, notably Manoel Island Yacht Yard (MIYY), have contested these moves, according to MaltaToday. MIYY submitted complaints to INDIS, arguing that MMH’s actions violate the original concession terms by operating as a boat park for yachts rather than an oil and gas service centre. These breaches, according to MIYY, negatively impact competitors who must adhere strictly to the terms of their own concessions. MIYY has accused INDIS of permitting MMH to act without accountability, thereby creating an unfair business environment.

Ultimately, the prospective sale to Virtu and LTV did not proceed. Earlier this year, MMH announced that both investors and MMH chairman Paul Abela had decided not to renew the terms of the conditional share purchase agreement, largely due to unresolved regulatory challenges.