MIDI plc has accused the Maltese government of taking steps that could seriously harm the company’s creditors and bondholders, warning that the latest judicial letter issued by the Lands Authority, Transport Malta and the government has already caused “serious, substantial and actual” damage to the company.

In a strongly worded reply filed this week, MIDI rejected the government’s insistence that it is in breach of the Manoel Island emphyteutical contract — and insisted the state is acting in a way that threatens the company’s financial stability and its obligations towards investors.

The company said the government’s position is “entirely illegal” and “vexatious”, arguing that officials are attempting to pressure it into withdrawing objections over an alleged automatic extension to the project’s completion deadlines. MIDI said it has “no allegations to withdraw” and has not defaulted on any contractual obligations.

According to the company, the emphyteutical deed clearly states that the completion period is automatically extended for each day the company waits for the final development permit for Manoel Island — a permit that remains pending. MIDI said this means no breach has occurred, contrary to the government’s claim.

The judicial letter goes further, stating that the government’s actions are harming not only MIDI itself but also “its creditors and all those who invested, bought and/or hold rights on the issuer’s property, including bondholders.” MIDI warned that the state is “orchestrating sustained and unjustified interference” that disrupts its operations and could undermine the stability of the financial instruments tied to the Manoel Island project.

In a company announcement to the market, MIDI reiterated its entitlement to the automatic extensions, accused the authorities of acting “prematurely and untimely”, and confirmed it has requested an immediate withdrawal of the government’s threat to rescind the emphyteusis. Discussions with government are ongoing, including a verification exercise on MIDI’s claim for expenses and consideration paid on Manoel Island.

The company stated that it “reserves all its rights” to take legal action to safeguard its position.

The Manoel Island project has been stuck in limbo for years, with MIDI arguing that delays in the planning process — specifically the still-pending final development permit — have frozen the project through no fault of its own. Under article 21 of the emphyteutical contract, the project timelines automatically extend during such delays. The government, however, has recently taken the position that MIDI is in breach of the deed, prompting the exchange of judicial letters and raising concerns about the future of one of Malta’s largest regeneration projects.