The government is supporting Bank of Valletta’s decision to shoot the Austrian textile group’s plans to open a factory after the company failed to “source the financing for its project”.
A spokesman for Investments Minister Austin Gatt confirmed that government deemed unacceptable the company’s failure to provide guarantees of just 25 per cent of the project – a condition which GAMA CEO Manfred Baier in turn also called “unacceptable”.
The collapse of negotiations comes weeks after the same minister had announced GAMA’s plans to open in Malta and take over 400 Denim workers just made redundant. The company had also claimed it would raise its workforce to 700 by 2008.
Now, it is clear that the company hailed by Gatt is not even ready to dish out a few thousands of liri. With no sign of good will from the Austrians, government shot down the project.
“The negotiations needed a four-way agreement,” Gatt’s spokesman said yesterday. “Malta Enterprise, Bank of Valletta, GAMA and the owners of Denim: all needed to agree on all terms for the deal to go through. As far as the requests made by GMA for aid from Malta Enterprise, we are informed by GAMA that it was satisfied that all its requests had been met. However what Malta Enterprise offered cannot materialise unless GAMA sourced the remaining financing for its projects, which it did not.”
Baier said his company would have invested in machinery and employed the people – that, according to him, was enough to show how serious they were.
On Monday, BOV also implied that not even Malta Enterprise was satisfied with GAMA’s requests.
“As was entirely appropriate in this case, Bank of Valletta (BOV) has worked very closely with Malta Enterprise throughout the various stages of negotiation with the Austrian textile group GAMA,” a bank press release said. “Concurrently, both Malta Enterprise and BOV were carrying out the normal and necessary steps of due diligence and financial evaluation of the proposition being put forward by GAMA. In the event, neither Malta Enterprise nor BOV felt able to accommodate GAMA's requests. In keeping with the normal obligations and standards of customer confidentiality, BOV is not in a position to comment further on this matter.”
According to The Times yesterday, government felt there was “a principle at stake” despite the few thousands of liri required as guarantees from GAMA.
Government had offered loans and financial aid amounting to 5million euro to the Austrian company, as well as 3.5 million euro in soft loans from BOV.
At a meeting last Friday with BOV and Malta Enterprise, a GAMA representative announced that the company would not provide the remaining 25 per cent of bank guarantees. The reasons for this change of mind remain unclear.