Joseph Portelli turns to public for another €50 million loan

Gozitan developer Joseph Portelli and his two main business partners, Mark Agius, known as Ta’ Dirjanu, and beach concessionaire turned developer Daniel Refalo, are asking the public to lend them a massive €50 million, partly to pay back millions in outstanding loans from Bank of Valletta and Fim Bank.

Following a restructuring exercise of their various companies, consisting mainly of recent developments of blocks of apartments all over the country, the three partners issued a €50 million bond with a coupon of 5.4% under the name of Excel Finance Plc.

The financial vehicle is headed by Albert Frendo, who was, until a few months ago, one of the top executives of the Bank of Valletta.

The bond’s prospectus shows that €25 million of the bond’s proceeds will go directly to pay the three businessmen’s outstanding loans with Fim Bank (€14 million) and Bank of Valetta (€11 million).

The rest will finance various ongoing construction projects across the island, mostly more blocks of apartments.

The prospectus shows that the three businessmen, all with close connections to the ruling Labour Party, have concluded negotiations with the government over the past months to lease dozens of apartments to be used for social housing by the Housing Authority.

The blocks, comprising 184 units, are mainly in Gozo, where the need for social housing units is very low.

The prospectus does not say how many apartments from these blocks were leased to the government. However, it describes the blocks of flats as a fixed-guarantee to the bond issue, as they are tied to a 10-year lease with the government.

Industry sources said that while government rental income is generally lower than expected from the commercial market under standard terms, Portelli’s leasing of all these units to the Housing Authority indicates difficulty in selling or leasing these blocks in the current market.

Portelli, Agius, and Refalo are known to have strong connections with the government, and many of their controversial projects were often still approved by the Planning Authority despite opposition from stakeholders, including ERA and others.

In some instances, the court revoked permits issued to the Portelli clan by the PA and declared them irregular.

Before the 2022 general elections, Portelli organised a fundraising dinner for Prime Minister Robert Abela at Ta’ French restaurant in Gozo, during which many contractors contributed to the PL’s electoral campaign.

This is the second time Portelli has issued bonds to settle massive loans involving his construction projects in a few months.

Only last summer, through a different company, Portelli managed to secure a €20 million bond from the public to help repay some of his outstanding loans with Bank of Valletta regarding the Mercury Towers project.

Through Mercury Projects Finance PLC, the new €20 million injection was used to cover a €5 million loan due to BOV by the end of this year, only a part of €87 million in loans issued by BOV to Portelli for the Mercury project, with different maturity dates over the next few years.

In addition, Portelli also owed approximately €73 million in outstanding loans through bonds issued in recent years to fund the project.

Regarding Mercury Towers, it is estimated that Portelli pays around €4 million in interest annually to cover his outstanding loans.