Malta’s Government-controlled Malita Investments plc has confirmed it is facing liquidity challenges but insisted it is not expecting a government bailout, amid growing speculation about the future of its Ħal Farruġ affordable housing project in Luqa.

It stressed that any potential solutions must be “commercially sustainable and compliant with applicable state aid regulations.”

In a statement issued through the Malta Stock Exchange on Friday, Malita sought to correct what it described as “inaccuracies” in a recent Shift News report, published a day before the company's announcement, suggesting contractors had suspended work due to unpaid dues.

“This is inaccurate,” the company said. “Works at the Ħal Farruġ site have been temporarily suspended by the company itself, pursuant to contractual rights to suspend works contained in the relevant construction contracts, and not by contractors as the articles suggest.”

The company explained that the pause was a strategic decision taken pending the conclusion of a broader reassessment of its position.  

The strategic review – which will assess all available options for Malita’s financial and operational future – is expected to conclude during the fourth quarter of 2025. The board said it will provide updates “once material decisions have been taken or when there are significant developments to report.”

A couple of days after Malita's announcement, Times of Malta reported that two contractors had filed judicial letters demanding over €624,000 in unpaid bills from Malita Investments. 

Malita confirmed that work at the Ħal Farruġ site is currently suspended, a decision the company says it took independently as part of a “strategic reassessment” of the project. Court records show Calibre Industries, part of the Cortis group, claims over €545,000 in unpaid invoices, while Vella Falzon Building Supplies has sought just over €79,000, the latter related to a different housing project in Msida.

Together, the two companies are pursuing €624,000, though it remains unclear if other contractors have outstanding claims against Malita.

Dividend suspension and share price drop

In its announcement on Friday, Malita acknowledged that it is facing liquidity challenges – a situation that had already led to the decision not to declare an interim dividend earlier this year, marking the first missed dividend since the company went public in 2012.

The announcement appears to have weighed on investor sentiment, with Malita’s share price tumbling to €0.41 last month – a 16.4 per cent decline from both its IPO price of €0.50 and its most recent rights issue price. By 13th October, the stock had slipped further to an all-time low of €0.40.

Malita Investments share price year to date (YTD)

The move came as a complete surprise to shareholders, who were assured in February 2024 that Malita intended to maintain a total gross dividend yield of seven per cent. At the time, the board said its policy was to pay an interim and final dividend each year, promising “consistent dividend income” for investors.

Ballooning costs and strategic review

That pledge was part of a presentation to investors ahead of a €33 million rights issue, launched to address major cost overruns in the company’s affordable housing project, under which is it bound to build and rent out 756 residential units – originally estimated at €50 million but now projected to exceed €120 million.

“These liquidity issues have triggered the company to reassess its position on the Affordable Housing Project and to undertake a comprehensive strategic review,” the statement continued.

The company said it is in talks with the Housing Authority and other Government entities to determine the best way forward.

Credit facilities exhausted and delays mount

Malita’s latest filings indicate that the company has exhausted its current credit facilities and is now negotiating new loans.

“However, it is not currently in a position to draw down on these facilities,” the statement reads.

The cost overruns have been compounded by significant project delays, with the Luqa development of 267 residential units – initially slated for completion by December 2026 – now expected to finish in 2028.

Leadership contrast

The latest results paint a starkly different picture from that presented by outgoing chairperson Marlene Mizzi in 2023, when she expressed disappointment at not having her contract renewed.

While acknowledging the government's prerogative to to select its representatives on the Malita Investments Board, Ms Mizzi said that "given the accomplishments in recent years and the success in overcoming significant challenges as Chair, it would be insincere of me to claim that the decision by the company’s largest shareholder, not to renew my position, did not take me by surprise, particularly since this decision was taken during a very sensitive juncture for the company.”

She added: “I also leave a legacy of proper corporate governance, robust systems, and a healthy company with a solid financial future” – a statement that now contrasts sharply with Malita’s current challenges.

About Malita Investments

The Government of Malta holds a 79.75 per cent stake in Malita Investments plc, which operates on an independent and commercial basis to contribute to long-term investment and national development.

The company’s principal activities include the financing, acquisition, development, management and operation of immovable property, in particular, projects of national and/or strategic importance.

Malita’s portfolio includes the Malta International Airport, Valletta Cruise Port, the Parliament Building, and Pjazza Teatru Rjal, among other key sites.