A mathematical muddle for the finance ministry leaves this ‘offer’ open to many questions
Matthew Vella The small Neapolitan firm Palumbo SpA will be taking over the Malta Shipyards for a sum that was envisaged as the ‘worst case scenario’ offer by PricewaterhouseCoopers in an enterprise evaluation of the shipyards privatisation made for the Maltese government.
At first glance, the maths appears muddled. Palumbo is taking a large area of land of 160,000m2 for a combined total of €90 million: that works out at €18.80/m2 for the next 30 years.
But then the finance ministry mysteriousy stopped – for the second time – the privatisation of the lucrative Malta Superyachts, of which a reported €22 million offer by two preferred bidders would have yielded a sheer €23/m2 for some 32,000m2 of land in Cospicua.
News of this week’s sale of the Malta Shipyards has been muddled because of a reported mistake by Finance Minister Tonio Fenech.
On Tuesday, he announced a press conference (the press was informed only 30 minutes before) that Palumbo had clinched the deal for €67.3 million.
The ridiculously low deal confirmed a report by MaltaToday last Sunday: Palumbo had offered an upfront payment of €5.7m, and some €61m in rent for the next 30 years: or €1.44 million every year.
The finance ministry has refuted these figures, and claims Mimcol didn’t even engage PricewaterhouseCoopers “to perform an evaluation. The figures you quote are completely wrong.”
But this contrasts sharply with information in MaltaToday’s hands, which shows the €67m offer did not even match PWC’s ‘worst case scenario’.
Only on Friday (just hours after questions on the deal were sent by MaltaToday), did the ministry announced a “clarification” of the deal.
It turned out that shipyards would be going for €90.6 million: €18 million paid upfront, and €72.6m in rents, as first evaluated by PWC in its report.
Strange then, that Tonio Fenech could announce an offer on Tuesday that was even lower than what the government had hoped for. The minister was cagey about any upfront payments, a detail that was only made known on Friday when the new offer was announced.
But still, with just two yards in Naples and Messina, Palumbo has managed to see off a competing offer from shipping giants CMA-CGM.
With just €10 million of net tangible worth, the small Naples shipping firm must now secure another €23 million to invest in the Malta Shipyards.
Undervalued yacht yard? On the other hand, the Manoel Island Yacht Yard, which went to a consortium made up of Midi plc and Victor Bezzina, went for €12.4 million.
This deal is also open to questions: in the first place, the rental value of the yard was going for €9.6/m2 – far less than the value of industrial space rented by Malta Enterprise.
Compare this to the high rental value of the superyachts land: at €18.2/m2 it was the highest rental of all four shipyard units.
So why did the privatisation unit accept €12.4 million for the 30-year concession of Manoel Island, when the PWC evaluation put a €16 million tag on the land?
Superyacht bids stopped The biggest question perhaps relates to the second cancellation of the superyachts bids.
At an average €22 million offer by the two preferred bidders (Melita Group and the Hili Group), the government claimed this offer was “unsatisfactory”, even though it would have generated €687 for each square metre over a period of 30 years: that is way above the €566/m2 offered by Palumbo, or the €326/m2 for the 30-year concession of Manoel Island.
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