Koray Global Malta Limited (KGML) has publicly challenged Shoreline Mall plc's explanation for seeking a two-year extension to the maturity of its €14 million bond, just hours before bondholders are due to vote on the proposal.

In a strongly worded statement, KGML rejected Shoreline's assertion that precautionary garnishee orders obtained by the contractor are the principal reason behind the company's restructuring proposal, insisting the sums frozen through the court order are "relatively modest" and cannot, on their own, explain Shoreline's financial position.

The exchange comes after Shoreline asked bondholders to postpone repayment of its €14 million bond until 2028, arguing that the ongoing legal dispute has complicated efforts to refinance the debt.

The contractor said the figures point to one of two possible explanations: either the commercial performance of the Shoreline project has been "significantly weaker than represented", or rental income has been channelled outside the Shoreline group of companies that are subject to the garnishee order. KGML added that, if the latter were found to be the case, it could raise legal questions regarding compliance with the Maltese court's order.

It further argued that Shoreline's financial difficulties "substantially pre-date" both the legal dispute and the garnishee order, maintaining that the dispute should be viewed as a consequence of the company's financial position, rather than its cause.

KGML said it had already submitted substantially more detailed information and supporting documentation to the Malta Financial Services Authority (MFSA), which it said would determine whether any regulatory action is warranted.

The dispute stems from construction works carried out as part of the Shoreline development. According to KGML, arbitration proceedings arose after what it described as repeated contractual breaches by Shoreline entities. The company claimed it continued fulfilling its contractual obligations for an extended period before terminating the contract when Shoreline's financial position allegedly made further performance impossible.

Shoreline's restructuring proposal

The statement follows Shoreline Mall's proposal to extend the maturity of its €14 million bond from 1st August 2026 to 1st August 2028. As part of the proposal, bondholders are being offered an increase in the annual coupon from 4 per cent to 6.5 per cent, together with a one-off commitment fee equal to 0.25 per cent of the bond's face value.

In a circular to bondholders, Shoreline said the extension was necessary because the garnishee orders had created practical obstacles to completing a planned refinancing of the bonds, despite what it described as strong operational performance at the mall. The company reported that retail sales increased by 18 per cent during the first nine months of the 2025/26 financial year and said the mall's valuation had risen to €81.5 million, excluding six luxury villas that it intends to sell.

Shoreline has also proposed establishing a dedicated sinking fund into which proceeds from future villa sales, and eventually mall rental income once the garnishee order is lifted, would be paid exclusively for the redemption of the bonds.

Bondholders are due to vote on the proposal at a meeting scheduled for today.