Shoreline Mall plc is asking bondholders to approve a two-year extension to the maturity date of its €14 million bond, while offering a higher interest rate and additional compensation in return.

The company has convened a meeting of holders of its €14 million 4 per cent Secured Bonds 2026 for 30th June, during which bondholders will be asked to vote on a proposal to extend the bond's redemption date from 1st August 2026 to 1st August 2028.

If approved, the proposal would increase the annual coupon rate from 4 per cent to 6.5 per cent, representing an uplift of 250 basis points. Bondholders would also receive a one-time commitment fee equivalent to 0.25 per cent of the face value of their holdings, payable alongside the interest coupon due on 1 August 2026.

The company would also retain the option to redeem the bonds earlier, either in whole or in part, provided it gives bondholders 30 days' notice.

Legal dispute cited as key obstacle

In a circular addressed to bondholders, Shoreline Mall said its ability to refinance the bond has been hindered by precautionary garnishee orders filed by Koray Global Malta Limited (KGML) as part of an ongoing construction-related dispute involving another company within the wider Shoreline Group.

The company stressed that it was not a party to the underlying construction contract and argued that the legal measures do not reflect any weakness in the mall's operations, financial position or the security backing the bonds.

According to Shoreline Mall, the court-imposed measures have nevertheless created practical difficulties in securing refinancing and pursuing other funding options that had previously been considered to repay the bonds at maturity.

The company has applied to substitute the garnishee order with a special hypothec over real estate assets owned by Shoreline Residence Limited, which it said are valued at approximately €44 million. The request is currently pending before the courts.

Meanwhile, arbitration proceedings before the International Chamber of Commerce are expected to begin in November 2026 and conclude by May 2027.

Sinking fund proposed

As an additional safeguard for investors, Shoreline Mall said it intends to establish a dedicated sinking fund if bondholders approve the extension.

Under the proposal, proceeds from the eventual sale of six luxury villas forming part of the Shoreline development would be paid directly into the fund. Once the garnishee order is removed, rental income generated by the mall would also be directed into the sinking fund. The money could only be used for the redemption of the bonds, including through buybacks of outstanding bonds before maturity.

The company has also undertaken not to repay intercompany loans or other intra-group debt during the proposed extension period, saying available financial resources would instead be prioritised towards bond repayment.

In addition, Shoreline Residence Limited and parent company Shoreline Holdings Limited would provide an indemnity covering any claims arising from the KGML litigation.

Earlier this year, Shoreline Mall had acknowledged that it was not in a position to repay the maturing bond from its own resources. As at the end of December 2025, current liabilities stood at €33.6 million compared to current assets of €9.4 million.

At the time, directors had said refinancing, support from related group companies and a possible rollover of the existing bond were among the options being considered.

The board is recommending that bondholders vote in favour of the proposal, describing the extension as a "strategically sound and commercially prudent" measure that would allow sufficient time for the legal proceedings to be resolved, the villas to be sold, and the bonds to be repaid in full.