Merkanti Holding plc has promised to pay bondholders the interest that was due on 12th August by the end of the month, apologising for an administrative situation that left it unable to access its own funds.

Malta’s bond market was shaken earlier this month when the NYSE-listed Scully Royalty subsidiary announced that it would be delaying an interest payment of €1.425 million due on a €25 million bond listed on the Malta Stock Exchange.

Shortly afterward, the company said it expected to make the payment within the 60-day grace period allowed by the terms of the bond, allaying concerns about a potential interest payment default.

At the time, Merkanti said it is in the process of selling an asset, and finalising a bridge financing agreement that would allow for the early realisation of the proceeds from the sale, which would go towards the bond interest payment.

The missed payment was therefore widely understood to be related to short-term liquidity shortage.

However, the latest announcement makes no mention of this bridge financing agreement, instead attributing the missed payment to administrative and managerial changes and the implementation of new internal procedures and controls.

“Unfortunately, these corporate actions coincided with the bond interest payment period and impacted Merkanti Holding's ability to access and transfer its own funds,” said the company.

The changes ostensibly refer a Board shake-up during an EGM held on 19th August, which saw the re-appointment of Martin Ware and Silke Stenger as Directors of the company. Joining them are the newly appointed Michael Smith, Pradeep Kumar and Milica Moravcevic.

Merkanti Holding said it expects final registration of the corporate changes and the revised instructions for its bankers to be in place this week, at which point the new management will be in a position to fund the required amount to meet the full interest payment.

Claims circulating online that some bondholders did in fact receive their interest payment were also addressed, with Merkanti

Noting that there were 18 mailings to bondholders for a total value of €8,374, which included bank cheques in settlement of the annual interest due to these bondholders.

“These bondholders do not receive electronic bank settlement as they have not provided direct settlement instruction to the Malta Stock Exchange,” said the company. “The mailing of the cheques was an administrative error.”