Melite Finance plc, the finance company of Melite Retail Limited, on Saturday stated that its shareholders have resolved to provide much-needed financial support, after it had to terminate lease agreements for a number of its stores in Italy.

In February, Melite Properties Srl, an Italian subsidiary of Melite Retail Limited, had to terminate the agreements with Giadea Srl, a third-party tenant which did not settle rent payments for January 2024 for the 10 stores it leased from Melite Properties. Melite Finance had said that the Italian subsidiary sent multiple requests to Giadea for payment, yet this was to no avail, and Giadea has “abusively retained occupancy of the stores in question.”

Melite Properties holds lease and rental agreements in some of Italy’s most prominent retail areas. It has a property portfolio that has been built up over a 16-year period. Melite Retail was formed in 2015, operating a number of fashion franchises in mainland Europe, including Accessorize, Calvin Klein Underwear, and 3INA Cosmetics brands across Italy. Melite Properties’ portfolio includes stores in various locations across Bologna, Bolzano, Como, Firenze, Genova, Milan, Padova, Pavia, Torino, Treviso, and Verona. Melite Finance is a Maltese company listed on the Malta Stock Exchange.

Earlier this month, Melite Finance’s Board of Directors met with shareholders to request financial support for Melite Finance and Melite Properties. The shareholders had shown a willingness to support the companies, and after some time consider the nature of the financial aid, a decision was taken during an Extraordinary General Meeting (EGM) on Friday.

Alf. Mizzi & Sons Ltd (AMS), holder of 40.3 per cent of Melite Retail’s issued share capital, affirmed its commitment to provide the requested support to the company and safeguard the interests of holders of the €9,250,000 secured bonds issued by Melite Finance in 2018. As a result, it agreed to lend Melite Finance €9,250,000, with this loan set to be used to make an offer in the market to fully repurchase the outstanding bonds in issue for eventual cancellation.

The buyback would be offered at par, despite the fact that the bonds have been trading below par since 2020. The loan is conditional on bondholder and regulatory approval of a resolution to discontinue the listing of the bonds and on the buyback exceeding a pre-set minimum level of acceptances.

Melite Retail stated that it shall be providing security for this loan through a pledge over all the ordinary shares which it holds in Melite Finance, in favour of AMS.

Additionally, Melite Retail is also receiving support from shareholders Daystar Holdings Limited (7.43 per cent shareholder) and MMGH Ltd (9.7 per cent shareholder), with these two companies both offering their support in procuring the AMS loan. Daystar and MMGH will do this by providing security in the form of guarantees amounting to 7.6 per cent and 9.7 per cent respectively, of any eventual shortfall in the repayment of the loan.

Aside from this, Andrew Ganado Limited (21.65 per cent shareholder) and GAN Limited (9.11 shareholder), have both stated that they will be providing an undertaking to apply any funds receivable by them from Melite Properties in terms of existing loan agreements between them and Melite Properties. This will provide a guarantee to AMS in respect of the loan in an amount which shall not exceed such amounts actually received by the companies from Melite Properties. This would be equivalent to up to 3.6 per cent (Andrew Ganado Limited) and 1.4 per cent) GAN Limited) of the loan amount.

As a result, AMS is essentially relying on the company’s assets for the repayment of 77.7 per cent of the loan.

“The Board of Directors of the company remains focused on endeavouring to safeguard the interests of bondholders to the best extend possible, and considers the AMS loan and buyback to constitute the most viable means for securing bondholders’ interests through a return of the capital previously invested in the bonds,” Melite Finance stated.

It added that after making the necessary considerations, it was resolved that the buyback would be “in the best interests” of both the company and its bondholders, in light of the challenging circumstances Melite Finance Group finds itself in, as well as those it may face in the future.

Melite Finance confirmed that further updates relating to the buyback and the proposed discontinuance of the listing of the bonds shall be announced in the “coming weeks.”

Additionally, it also announced that the company is scheduled to meet on Tuesday to consider and approve the financial statements for 2023.