State aid: Commission approves Maltese public loan of up to €18.7 million to support bond issue by real estate developer MIH in the context of the coronavirus outbreak

The European Commission has approved a bond subscription facility of € 18.7 million by the Malta Development Bank (MDB) to support a bond issue by real estate developer Mediterranean Investment Holdings p.l.c. (MIH). The measure was approved under the State aid Temporary Framework. In July 2020, MIH will issue a €20 million bond on the Maltese Stock Exchange Market to cover its financial needs. The Maltese financial markets have been experiencing a sharp decrease in investor confidence since the start of the coronavirus outbreak. There is therefore a risk that the bond will be undersubscribed. This could risk resulting in a broader contagion, especially since MIH belongs to the Corinthia Group, the largest issuer of fixed-income securities on the Maltese Stock Exchange. Through the bond subscription facility, the MDB would cover the part of MIH’s bond, if any, that remains unsubscribed by the market – up to a maximum of €18.7 million, with an annual interest rate of 5.5%. The Commission found that the Maltese measure is in line with the conditions set out in the Temporary Framework. In particular, (i) the interest rate on the loan exceeds the minimum levels laid down in Temporary Framework; (ii) the loan amount will not exceed the limits set out in the Temporary Framework; and (iii) the loan will be taken out by the beneficiary by 31 July 2020. The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework. On this basis, the Commission approved the measure under EU State aid rules.More information on the Temporary Framework and other actions taken by the Commission to address the economic impact of the coronavirus pandemic can be found here. The non-confidential version of the decision will be made available under the case number SA.57574 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved.