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3 NEWS 10.11.2022 According to the Retail Price Index, Malta has witnessed rapid price growth over the first six months of 2022, with prices rising by an average of 5.1 per cent from January to June. The two main components driving the RPI growth rate in the first half of the year are food and housing. Food is contributing 1.9 percentage points while the housing contribution is at 0.9 percentage points. The next highest contributors are transport and communication at 0.6 percentage points, recreation and culture at 0.4 percentage points, and household equipment and household maintenance costs at 0.3 percentage points. retail price index FROM PAGE 1 Fenech and the other two directors were prohibited from accepting any new appointments which required MFSA approval in entities or for ac- tivities licensed by the MFSA for a pe- riod of two years. Now, Fenech is chairman and ex- ecutive director of Von der Heyden Group Finance plc. On 11 October, the company an- nounced it had been granted approval by the Malta Financial Services Au- thority for the listing of a new 10-year €35 million bond issue with an annual interest rate of 5% on the official list of the Malta Stock Exchange. Fenech is also executive director of Timan Investment Holdings Limited, the group's parent company which is acting as guarantour of the bond is- sue. The company had already issued a €25 million bond in 2017 and €25 mil- lion of the new bond issue are to be used for the redemption of the first bonds, due to mature in 2024. The re- maining €10 million will be on-lent to Timan Investments Holdings Ltd for the part-financing of the group's An- dersia Silver project, and for general corporate funding. Red flags But a number of players in the fi- nancial services sector have contacted this newspaper, expressing disbelief that the MFSA granted approval to a new bond issue by Von der Heyden Group. "At the time of the first issue, the group was already in a very precari- ous state," a financial consultant said, on condition of anonymity. "They had been making losses in excess of €3 million for the previous three years with negative cash flow from opera- tions every year." The consultant said that included in the company's first bond issue pro- spectus, had been a commitment to "developing high quality office build- ings and owning and managing hotels and residential properties in Poland , Germany, Spain and Malta. "But after five years, no property or business has been acquired in Malta," the source said. "To date, there is only a hotel management agreement for the Cugo Gran Macina Grand Harbour hotel in Senglea and a participation in a restaurant management company." Another financial services operator told BusinessToday that the MFSA should have launched an investiga- tion into Von der Heyden's use of the €25 million it raised in 2017, instead of granting approval to the company to seek a further €35 million from the Maltese to "invest in a black box". "Von der Heyden has already raised €25 million from the Maltese market, and invested hardly any of its pro- ceeds in Malta," they said. "And this new bond issue is guaranteed by a company which has been losing mon- ey, has negative cash flow and whose equity is lower than the value of the new bonds." Since the issue of the first bond in 2017, Timan Investments Holdings Ltd recorded a loss of €2.2 million in 2019, €1.7 million in 2020 and €2.2 million in 2021. And as of June 2022, it had recorded a loss of €3.8 million. When contacted by BusinessToday, Fenech acknowledged that the parent company had recorded a loss in the past three years, but put it down to the effects of COVID-19 on the property and hospitality industries, in which the company is heavily invested. He also acknowledged that plans for acquisitions in Malta had not materi- alised. "The group had an agreement in place to operate a boutique hotel in Valletta but those plans fell through when all construction and heavy work in Valletta was prohibited in the run- up to and during the Valletta 2018 celebrations as EU culture capital," he said. Fenech said that the Group now had a promise of sale agreement in place for the Cugo Gran Macina Grand Har- bour hotel. "We have also solidified a 50% share- holding in the five Hammett's restau- rants in Malta, and are also finalising a warehousing project in the south of Malta." Fenech acknowledges that Timan In- vestments did experience a cash flow issue due to COVID-19, but insisted that it was often the case - even with- out the effects of a pandemic – for a property company that puts up a heavy initial financial outlay to see re- turns slowly. As to the new bond issue, he said that the Group was giving preference to the present bondholders. In fact €25 million of the issue have been dedicated for the roll-over while €10 million will be available for subscrip- tion by new investors. Andersia Silver, the Group's flagship project, is a 40,000 sqm A-class office tower in Poznań, Poland, having an investment value of over €105 mil- lion. The 116m high skyscraper will be Poznań's highest building after its Andersia Tower (105,2 m) being de- veloped through a joint venture com- pany between the Von der Heyden Group and the City of Poznań. Fenech said that the Group had al- ready secured €55 million in loans from three banks, as well as 10% of its office tenancy in pre-leases ahead of construction. Von der Heyden Group, through a number of subsidiaries, is involved in real estate development and asset management, hospitality and cater- ing, private equity and investments. The group's ultimate beneficial own- er, Sven Von der Heyden, has been a resident in Malta for eight years. New Von der Heyden €35m bond issue raises questions on 2017 bond spend Von der Heyden Group has finalised a purchase of sale agreement for the Cugo Gran Macina Grand Harbour hotel in Senglea

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