3514 Capital, and Joseph Muscat’s junk boys have sent a right of reply to this website along with an explicit threat, threatening this website of legal action if we continue to report on their junk business describing it as “misinformation”. I am reproducing the legal threat below. Also note that right of replies have a thirty day publishing window, but they insist on having it published immediately.
Below I am reproducing their right of reply in full with added notes. There are more notes which I am compiling and leaving for later.
The right of reply is about this article.
The article is about 3514 Capital’s buyout of Bank of Valletta’s junk loans and Joseph Msucat’s involvement with Christopher Vella and Jean-Carl Farrugia of DF Advocates. Nowhere in their reply do they deny their connection with and to Joseph Muscat but only said that they are not paying his legal bills. I’m sure he does, however and he has plenty of them.
Right of Reply by 3514 Capital
Reference is made to the article published on The Maltese Herald (https://themalteseherald.com/) on the 14 November 2024 Titled: Joseph Muscat: Cashing in from the Bank of Valletta junk loans (the ‘Article’). The said Article refers to 3514 Capital Partners Limited (the ‘Company’), its shareholders and officers, as well as to Iridium SICAV plc and 3514 Special Opportunities Fund (the ‘Fund’). We find the statements made in the Article defamatory and simply intended to harm the Company and its associates. We are therefore hereby exercising our rights in terms of Article 15 of the Media and Defamation Act (Chapter 579 of the Laws of Malta) (the ‘Act’) and hereby submit our right of reply. The Article contains blatantly false and incorrect statements about the Company, its associates as well as the transaction leading to the acquisition of a portfolio of non-performing loans from Bank of Valletta plc in December 2023 (the ‘NPL Transaction’). The Article further deceitfully suggests that the Company and/or its associates are somehow funding third parties’ legal costs in judicial proceedings which neither the Company nor its associates have anything to do with. By this present right of reply we would like to note the following:
• Given the author’s and this website’s interest in the NPL Transaction, it would have been expected that before publishing this Article and similar articles which preceded it, the author would have double checked his sources and reached out to the Company to confirm the veracity and accuracy of the information in hand. For reasons unbeknown to us the author has regretfully opted not to contact us and opted to proceed with the publication of the Article.
• It should be noted that non-performing loan transactions are a common phenomenon across Europe. Suffices to say that statistics show that in 2022 European leading banks disposed of circa €50b in non-performing loans. These sales are mainly driven by regulatory obligations imposed on European banks by regulators, including the European Central Bank (‘ECB’), which force banks to restructure their loan-book thereby relieving their balance sheets from assets which impact the banks’ financial soundness and releasing equity. The sale of non-performing loans is one of the measures suggested and, at times, imposed by the ECB on European banks, to derisk their loan books and improve their financial standing thus also freeing up capital to be utilised in other areas of business. In the case of Bank of Valletta plc besides improving the bank’s NPL ratio, the transaction improved the bank’s operational efficiencies, allowed the bank to free up capital resources to lend to new performing customers and above all above it had a positive effect on the bank’s profitability thus positively impacting directly the shareholders of the bank.
Mark Camilleri: The junk business is a very tiny portion of the banking business and it has been reduced considerably with newly-introduced regulations and banking regimes since the financial crisis of this century.
• It is also noteworthy that, contrary to the allusive remarks in the Article, the NPL Transaction followed a rigorous bidding and selection process organised by Bank of Valletta plc where the Company, its functionaries, its associated entities (including Iridium SICAV plc [‘Iridium’] ), the service providers thereof as well as all investors in 3514 Special Opportunities Fund (the fund set up under Iridium for the purposes of the NPL Transaction- the ‘Fund’) were subjected to a thorough due diligence process. Furthermore, besides elements of pricing and pricing methodologies based on internationally accepted principles of valuation of the assets forming part of the portfolio, the Company’s bid was selected also on the basis of the demonstrated capabilities of the Company, its functionaries and associates when it comes to their understanding of the NPL business, financial, legal and regulatory experience as well as the governance, internal structures and resources, and the processes proposed by the Company in the managing and servicing of the NPL portfolio. Regulators, including the Malta Financial Services Authority (which also acts as the regulator of the fund through which the operation was financed), were also involved in monitoring the process leading to the closing of the NPL Transaction during which both parties were assisted by a host of reputable and respectable service providers spanning the legal, financial and regulatory landscape.
Mark Camilleri: There were no bidders for Bank of Valletta’s junk loans in the first round of applications, and those that did submit bids did not meet the bank’s asking price. The bank disposed of its junk portfolio to 3514 Capital as last resort.
• Due to the complex nature of the transaction, possibly a first for a Maltese credit institution, and the size of the portfolio (707 non-performing loans spread across 245 borrowers), as well as the due diligence process conducted by the parties, the process lasted close to twelve months to complete.
Mark Camilleri: The nature of the transaction is not actually complex and in banking terms the portfolio is actually relatively small. BOV’s balance sheet was barely affected.
• Contrary to what is stated in the Article,the NPL Transaction was financed via fund raising activity involving the placement of units of the Fund to a wide spectrum of institutional and professional investors, both foreign and local forming part of the network of the Company and its founders. No third parties were involved in such fund-raising process as alleged in the Article. The said investors were also subject to thorough due diligence screening by the Company and Iridium SICAV plc as well as various service providers servicing such entities, including the fund manager, the fund administrator and the custodian of the Fund (all regulated entities licenced by MFSA) as well as Bank of Valletta plc. This modus operandi is also common in transactions of this kind.
Mark Camilleri: So far these investors remain unkwown.
• Reference in the Article to the €100 million assets under management and the 2023 financial statements of the Fund is also incorrect and misleading. It should be noted that whilst the face value of the NPL Portfolio amounts to circa €100m, as dictated by international accounting standards, the assets of the Fund as reported in the financial statements are based on the value of the portfolio as at 31 December 2023 and reported at cost. Furthermore, considering that the financial statements referred to in the Article cover the first 13 days of operations of the Fund, such statement cannot in anyway be referenced in reporting the performance of the Fund to date, let alone the compensation payable to any of its officers or those of the Company or its associates, nor the returns made to date by the Fund. In fact, the numbers quoted in the Article are all factually and technically incorrect.
Mark Camilleri: There is no record of these assets.
• We also fail to understand your reference to the 2020 financial statement of the SICAV (at the time named Alerce SICAV plc) in that at the time the idea of the NPL Transaction and the setting up of a dedicated vehicle for the purpose of such transaction were not even conceived let alone the setting up of the Fund.
• The Article makes reference also to Mr Deo Scerri’s involvement with the Company. In this regard you should note that Mr Scerri’s role with the Company was purely and simply that of a member of an advisory committee composed of other individuals, the terms of reference of which extended solely to providing oversight, guidance and advice to the Company and its servicing team purely from a governance perspective to ensure that the best of class processes embraced by international special servicing entities in the management and servicing of NPLs, are adopted and implemented by the Company, with particular focus on both efficiencies as well as the application of an ethical and humane approach to borrowers in the course of debt collection. In September Mr Scerri decided to resign from his post for personal reasons and therefore totally unrelated to the unfounded allegations contained in the Article.
• The Company and the Fund remain committed to continue managing the NPL portfolio with a high degree of sensitivity to the predicament which most of the borrowers in the portfolio find themselves in and to the extent possible help them find a way out, thereby enabling them to reperform or settling their loans in full.
Mark Camilleri: A saviour complex in the world of finance is always something to out look for when investigating cases in finance.
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Historian and Publisher
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