The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Trustees for the City Markets employee pension fund would have “been in absolute breach of trust” had they sold the former supermarket chain’s head office to a Bahamian wholesaler for $3.8 million, with one charging the buyer “wanted something for nothing”.

Speaking as a pension fund trustee, rather than as principal of City Markets’ 78 per cent majority shareholder, Mark Finlayson told Tribune Business that the trustees were advised by their attorneys - and the committee supervising them - that they could not accept offers below appraisal value.

Disputing previous reports that Lightbourn Trading had offered between $4.5-$5 million to purchase the former City Markets headquarters building on East-West Highway, Mr Finlayson alleged that the Bahamian wholesaler also requested that it be provided with mortgage financing.

He added that this was something the pension fund, and trustees, simply could not do.

Expressing disappointment that the National Insurance Board (NIB) had not proceeded with its initial interest in the property, Mr Finlayson said the social security system would “have been the best option”.

While there have been hints from the Government that NIB might be back in the game, as Bahamas Customs has renewed its ‘on again, off again’ interest in the building, Mr Finlayson said the pension fund trustees were “actively talking” to other potential buyers.

The former City Markets head office is the employee pension fund’s main asset, and for which it received a high six-figure annual rent from the now-defunct supermarket chain.

Its sale, at the right price, is key to any plans to wind-up both the pension fund and trust that governs it, and ensure all the beneficiaries receive 100 per cent of what is due to them.

In the meantime, Mr Finlayson said the pension fund trust was receiving enough cash injections to meet all its obligations to the beneficiaries.

He added that these funds were being injected by his family as rental payments on the head office, and were “more than enough” to cover pension payouts as they became due.

“The trustees are actively talking to different people in relation to selling that building, and once that building is sold the pensioners will receive the funds,” Mr Finlayson told Tribune Business.

“Things have changed a bit. We thought we had a deal with NIB, but there was a lot of pressure, a lot of misinformation, so as a result NIB backed off.

“In my opinion, they’d have been the best option for purchasing the building.”

NIB emerged after previous interest from Lightbourn Trading fizzled out, once its offer was rejected by Mr Finlayson and his fellow trustees.

“Lightbourn Trading made an offer of $3.8 million for the building. He wanted something for nothing,” Mr Finlayson told Tribune Business.

“The trustees turned it over to the committee, and the committee told us: ‘Absolutely not’.

“The committee directed us to check with our lawyers, and the lawyers made it very clear: If we were to accept an amount below the appraisal value, we as trustees would have a problem. If we had accepted that $3.8 million, we would have been in absolute breach of trust.”

Mr Finlayson also alleged that Lightbourn Trading “wanted us to give him a mortgage, too. It was something we couldn’t do. We couldn’t have accepted his offer”.

This differs from what Tribune Business was previously told by sources close to developments at the time of the Lightbourn Trading offer.

Lightbourn Trading offered between $4.5-$5 million, a value sources said was based on an appraisal conducted on its behalf by Morley Realty.

This price was offered because the offices at the former City Markets headquarters are effectively unusable, and need to be demolished. The floor, which is laid over water tanks, is said to be collapsing, with a new roof also needed as the 28 year-old building starts to show its age.

Thus a purchaser would have to invest a considerable seven-figure sum to upgrade the property and make it workable before even moving in.”

NIB then emerged as a prime candidate to purchase the former City Markets headquarters, obtaining appraisal values that placed its worth between $7.2 million and $9.9 million - significantly above those provided to Lightbourn Trading.

However, the deal foundered after Bahamas Customs - which had been lined up to rent the building from NIB - changed course, saying it no longer had any use for the property.

Many had been suspicious that the Christie administration pushed the NIB deal as a way to escape a ‘political jam’, as it was caught between the Finlayson family, one of its major political supporters, on one side and the pension fund beneficiaries on the other.

Mr Finlayson, though, said these assertions were incorrect, as neither he nor his family would benefit financially from the former City Markets’ headquarters sale. This was because it was owned by the pension fund.

“We would have preferred to have sold the building to NIB, but in fairness there’s been a lot of pressure on them, a lot of misinformation that the Finlaysons would benefit from this,” he told Tribune Business.

“Their [NIB] committee came back and said that the purchase did not make sense, that they were putting the cart before the horse. There had to be someone willing to rent that building from NIB before they could make that investment.”

But, regardless of whether then pension fund’s main asset was sold or not, Mr Finlayson said it was still receiving enough cash inflows to meet its obligations.

“On a yearly basis, the trust receives enough money to meet the obligations to the beneficiaries on an annual basis,” he added.

“If the worst comes to the worst, each of the beneficiaries will receive the amount due to them as per the annuity under the trust, and move on to other things.

“That would be the best and most convenient thing. The beneficiaries would appreciate that, the trustees would appreciate that but, at the end of the day, we as trustees are meeting payments whether or not that building is acquired.”

And Mr Finlayson further told Tribune Business: “There is a certain amount of money that comes in every year to meet the obligations.

“It’s something we met in place before we came along, through Winn-Dixie, and the Finlayson family are meeting those obligations.

“The annual rent that the Finlayson family pays is more than enough to cover annuity payments.”