Delays in bond listing review process draw applicants' ire

Accountants, financial services providers and firms are bemoaning the fact that applications to issue bonds have been taken ages too process, and are blaming the unacceptable delays on the failure of the listing committee to meet regularly, BusinessToday has learned.

The delay - or outright failure - in reviewing the bond issue applications is leaving companies in a bind, with one having recently withdrawn its application after no decision had yet been made after two months.

The review of bond issue applications falls under the remit of the Malta Financial Services Authority, as the financial services regulator.

In one example, on 4 August 2020, Premier Capital plc, the developmental licencee for McDonald’s in six European markets, announced that it had submitted an application to the MFSA’s listing authority requesting the admissibility to listing of €20,000,000 Premier Capital p.l.c. 3.75% unsecured bonds 2026, with a nominal value of €100.

Part of the proceeds of the proposed bond issue were to be utilised to finance the acquisition by Premier Capital BV (a Premier Group company) of the remaining 10% minority shareholding in Premier Capital SRL (Premier Capital BV is the 90% shareholder of Premier Capital SRL, which latter entity is the 100% shareholder of Premier Restaurants Romania SRL, the operator of the Premier Group’s McDonald’s restaurants in Romania).

Specifically, the minority shareholder of Premier Capital SRL notified Premier Capital BV that he was exercising a right competent to him in terms of the applicable shareholders’ agreement, pursuant to which Premier Capital BV was to purchase all of the shares held by said minority shareholder at a price calculated in accordance with the terms stipulated in the aforesaid shareholders’ agreement.

McDonald’s Corporation had provided its consent for the transfer of the minority shareholder’s shares in Premier Capital SRL to Premier Capital BV and, therefore, Premier Capital BV was to purchase all of said shares in Premier Capital SRL.

The terms of the Bonds to be issued were to be identical to those of the €65,000,000 3.75% unsecured bonds 2026 Premier Capital plc had issued in 2016. The new bonds were to be fully fungible with the 2016 Bonds. It was expected that the latest bonds and those of 2016 would trade separately up until the first interest payment date, following which the two would have converged into one single bond.

But on 2 October, Premier Capital withdrew its application for authorisation for admissibility to listing.

In a company announcesment issued by the Malta Stock Exchange, the company claimed it had withdrawn its application for the latest bond issue “due to unforeseen delays in the relative regulatory approval process”.

The acquisition by Premier Capital BV of the remaining 10% minority shareholding in Premier Capital SRL, originally planned to be financed through the proceeds of the issue of the Bonds, will be settled from Premier Group’s own funds, the company said.

In another case, on 16 July 2020, Endo Finance plc announced it had filed an application to the listing authority requesting the admissibility to listing of €28,000,000 Endo Finance p.l.c. 5.125% unsecured bonds 2030, guaranteed by Endo Ventures Ltd. That application is still pending.

When contacted by BusinessToday, a spokesperson for the MFSA acknowledged that the timeframes for processing applications for bond listings are not always in line with the expectations of sponsors and applicants, without going into the merits of individual cases.

“The Authority is making every effort to enhance the process by which bond listing applications are reviewed and processed so that turnaround times are improved,” the spokesperson said.