Issue link: https://maltatoday.uberflip.com/i/1213458
5 maltatoday | SUNDAY • 23 FEBRUARY 2020 CONTINUED FROM PAGE 1 Shortly after acquiring the concession from VGH, Steward's president Armin Ernst wrote to Konrad Mizzi in Febru- ary 2018, requesting that the Maltese government accept new terms in which Steward – now ostensibly backed by its American parent – would not need to provide a performance guarantee. "We further understand that the Gov- ernment confirms [that] receipt of the letter issued by Steward [attached] sat- isfies the concessionaires' obligations to finance the concession under the con- cession agreements and the financing extension letter," Ernst wrote to Mizzi, who duly signed the terms. In the extension letter, Steward says "it would be able to finance its own ob- ligations, and those of the concession- aire companies under the concession agreements, through Steward Group's resources and relationships." The letter was deemed to be a suitable alternative for the Maltese government, instead of making Steward honour its obligations to provide a €9 million per- formance guarantee. Vitals had no track record in the health industry when in mid-2017 it encoun- tered difficulties finding banking institu- tions to finance its operations and com- mitments. The performance guarantee would have been called up by the Mal- tese state, if the hospitals' concessionaire failed to meet its commitments. Yet as audited accounts posted last week by Steward show, in 2016 Vitals was already facing a warning that its in- ability to secure financing for its conces- sion was proving to be a "material weak- ness [that] may cast a significant doubt on [its] ability to continue as a going concern." That year VGH posted a net loss of €6 million, with total liabilities exceeding assets by €8.9 million. Since then debts are believed to have climbed to over €30 million, but accounts for VGH's 2017 fi- nancial year – the year in which it sold its concession to Steward – have not yet been filed. According to the concession agree- ment, Vitals was bound to put in place "an unconditional and irrevocable on demand prime bank guarantee issued by a bank duly licensed to carry out bank- ing activities in Malta or an EU Member State and acceptable to the government of Malta". Yet Konrad Mizzi had claimed in Jan- uary 2018, that Vitals had obtained a guarantee from an international bank, the name of which he could not recall. It remained unclear whether Vitals actual- ly honoured their commitment, with the health ministry failing to provide proof of Vitals' guarantee. Former prime minister Joseph Muscat (right) has accompanied Steward president Armin Ernst (second from right) to meet new Prime Minister Robert Abela, in which he informed him of Steward's wish to renegotiate terms in the hospitals' concession which had been hammered out with Muscat during 2019