'Trouble at MFSA' led to delays in some services, finance minister says

Delays in the reviewing and adjudication of bond issue applications will be dealt with imminently with the appointment of a new board of governors at the Malta Financial Services Authority, finance minister Clyde Caruana told BusinessToday.

The MFSA’s Listing Committee had not met regularly since mid-2020, leaving accountants, financial services providers and firms bemoaning the fact that applications to issue bonds were taking ages to process, and leading many companies to actually withdraw their applications.

Now, with a new board of governors appointed on Tuesday, things look set to take a turn for the better, with the listing committee soon to start meeting again to review applications.

“With the trouble and issues the MFSA faced last year, we felt we needed to focus on appointing new board of governors,” Caruana said.

“And now that the board is in place, other bodies and services within the MFSA will soon be re-instituted. Amongst these will be the listings committee.”

A spokesperson for the MFSA, contacted a few days before the new board of governors was appointed, confirmed that with a new board of governors, bond applications would soon start being processed.

“The MFSA Board of Governors is the Listing Authority for the purpose of the Financial Markets Act (Cap 345),” they said. “The Board of Governors s in the process of being constituted in terms of the MFSA Act Cap. 330”

CEO resigns

In November last year, MFSA CEO Joseph Cuschieri had resigned after it was revealed that he had flown to Las Vegas with businessman Yorgen Fenech in 2018. Caruana had then accepted his resignation.

Cuschieri had initially suspended himself after it emerged that he and MFSA general counsel Edwina Licari had travelled to the US in May 2018, on invitation by businessman Fenech, the alleged mastermind in the murder of Daphne Caruana Galizia. Cuschieri said he had travelled with Fenech to advise him on regulatory matters.

Following an inquiry led by Chief Justice Emeritus Joseph Azzopardi and Dr Mark Simiana, the MFSA’s board of governors ratified Cuschieri’s resignation.

Bond applications withdrawn

Premier Capital plc, the developmental licencee for McDonald’s in six European markets, announced in August 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 Premier Capital had to withdraw its application for authorisation for admissibility to listing.

In a company announcement 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.

When contacted by BusinessToday in October last year, 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 had said.

New board of governors

Now, operators in the financial services sector are hoping that with the appointment of a new board of governors the MFSA will get its house fully in order.

On the new board, Prof. John Mamo was reconfirmed chairman while former finance minister Edward Scicluna, now governor of the Central Bank of Malta, was appointed as member ex officio.

The other five members on the board are Philip von Brockdorff, head of the University of Malta’s Faculty of Economics, Management and Accountancy, Mark Galea, head of the public finance unit at the National Statistics Office, Charles Zammit, formerly a member of the MFSA’s Board of Management and Resources, Economist Stephanie Vella, and Carmel Cascun, a lawyer.

These appointments are valid for a period of one year with effect from 4 February 2021.