Montenegro's Lustica to Raise Capital in Debt-to-Equity Swap
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Loading... - Eleanor Dick
- 01 Apr 2025
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Montenegrin hotel operator Lustica Development [MNG:LUDE] has announced plans to increase its capital by 36.5% through the issuance of 26,844,719 new shares in a debt-to-equity swap. This decision was approved by Lustica shareholders in late February and was detailed in a recent filing to the Montenegro Stock Exchange.
The new shares are set to be issued within 90 days, although Lustica Development has not disclosed the identity of the creditor or creditors who will acquire the stock. This move is part of the company's strategy to strengthen its financial position and support ongoing development projects.
Founded in 2008, Lustica Development is a joint venture between Swiss-based Orascom Development Holding (ODH), which holds a 90% stake, and the government of Montenegro, which owns the remaining 10%. Under the terms of their agreement, Orascom committed to developing the ambitious 1.5 billion euro Lustica Bay resort village. This project currently features the Chedi Hotel, four beaches, over 30 retail spaces, sports courts, and a marina village. Future plans include the construction of accommodations for 6,000 people, comprising more than 3,000 apartments, 300 luxury villas, and an additional six hotels. The marina is also set to expand to accommodate over 100 berths.
As of now, ODH owns 87.71% of Lustica Development, while the Montenegrin government holds 12.24%, according to recent bourse data.
In February 2024, Lustica Development converted 4 million euros (approximately $4.4 million) of debt owed to the Montenegrin government into 4,000,000 ordinary shares. The company's existing equity capital stands at 73.56 million euros, divided into 73,559,781 shares, each with a nominal value of 1 euro.
The previous debt-to-equity swap, which involved debt from annual payments for the years 2019-2022, was executed in accordance with a 2009 contract for leasing land for the construction of the Lustica Bay resort, as stated by the Montenegrin government.
Lustica Development's shares last traded on the Podgorica bourse on January 22, 2021, closing flat at 1.15 euros. The upcoming capital increase through the debt-to-equity swap is expected to enhance the company's financial stability and facilitate the continued development of the Lustica Bay project.
