The Tribune

• AML Foods ‘moves on’ after ex-HQ settlement fails

• Group CEO: ‘We gave it a real go’ to ‘do right by all’

• Fate of key plan asset’s $3.36m sale in court’s hands

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Hundreds of City Markets pensioners were yesterday dealt a new blow after efforts to solve the legal quagmire blocking AML Foods’ $3.36m purchase of its former head office failed despite the latter “giving it a real go”.

Gavin Watchorn, the BISX-listed food retail and franchise group’s president and chief executive, told Tribune Business it had been left with little choice but to “move on” from its six-year attempt to acquire the East-West Highway property after the out-of-court settlement proposed did not receive unanimous acceptance.

AML Foods, which has long been seeking a new home for its Cost Right brand, has instead reached a deal to acquire the portion of the building that houses its present Solomon’s SuperCentre. It plans to invest a total $17m in converting that 80,000 square feet into a retail destination housing both Solomon’s neighborhood grocery concept and Cost Right’s wholesale club format, with the latter relocated from the Town Centre Mall before end-2023.

Acknowledging that hundreds of ex-City Markets staff were depending on the former head office’s sale and subsequent proceeds for their retirement benefits, Mr Watchorn told this newspaper it was “unfortunate” that AML Foods’ suggested resolution was not accepted and that the retail group has “exhausted” all possible remedies.

He added that it will now be up to the Supreme Court, and judicial system, to resolve the fate of the 6.52-acre property that also includes a warehouse facility and is part of the Soldier Road Industrial Park. The legal process will likely take several further years, and the AML Foods chief said the property “continues to deteriorate” in the absence of a settlement - a development that will further cut the monies obtained by retirees from any eventual sale.

“We believe we had purchased the former City Markets building with the intention to relocate Cost Right there,” Mr Watchorn told Tribune Business. “It’s been subject to various litigation. At AML, we had worked quite hard towards the end of 2021 into early 2022 with the various parties to reach some kind of settlement, some kind of agreement.”

While not providing any details, he explained that the proposal was designed to satisfy the interests of all sides involved in the dispute while also enabling AML Foods’ purchase to proceed. Besides the Solomon’s and Cost Right owner, Mr Watchorn said three other parties were involved, making a total of four.

While AML Foods was able to secure a written agreement to its proposal from one other side, and a verbal approval from another, it was unable to gain acceptance from the third and final party. “At this point we’re going to leave it to the court to work it out,” Mr Watchorn said. “There are a number of matters before the court, which I cannot comment on.

“Strategically, we cannot wait. We have a business to run, and have to make the best decision for the business. For Cost Right, there’s no secret that we’ve been looking for a new home for some time, and this transaction [involving the Solomon’s SuperCentre building] came up.” Rather than the former City Markets headquarters, Cost Right will instead be relocating several hundred yards up the road on the East-West Highway.

Mr Watchorn declined to detail AML Foods’ settlement offer. And he did not name the other three parties, or identify the two that had consented to AML Foods’ proposal or the one that rejected it. However, based on previous Tribune Business articles on the City Markets head office saga, one party is likely to be the employee pension plan’s trustees, Dennis Williams and Rosalie McKenzie.

Another is likely to be the Finlayson family. Mark Finlayson, via his Trans-Island Traders vehicle, and his family, headed by Sir Garet ‘Tiger’ Finlayson, were the majority 78 percent owners of City Markets and its immediate parent, Bahamas Supermarkets, when the company collapsed and ceased operating in 2012. Court filings seen by this newspaper detailed several alleged transactions involving the former head office and Finlayson family corporate vehicles.

The ex-City Markets headquarters and warehouse was the main asset owned by the failed supermarket chain’s employee pension plan, which was formally called the Bahamas Supermarkets Ltd Profit Sharing Retirement Plan. Branding the situation “unfortunate”, Mr Watchorn told Tribune Business: “We’ve given a real go at trying to get a deal done and settlement down there.

“We appreciate there are some pensioners still waiting to get their retirement benefits out of that transaction, but unfortunately we were unsuccessful in getting all parties to agree to what we had offered. From a business perspective, we have to move on and let it run through the legal procedures and see what comes out of that. I am confident AML has done what it can to get a settlement, but at this point we’re just resolved to let the matter be addressed through the court. 

“We believe we’ve exhausted.... we put a lot of work into trying to get an agreement everybody could be happy with and, unfortunately, we were not successful in getting that done. We wanted to do right by everybody, but ultimately had to move on. It’s unfortunate that the facility continues to deteriorate, and it’s unfortunate the pensioners are still waiting on funds. They have to continue to wait to get a retirement from that.”

Mr Watchorn acknowledged there were concerns from an AML Foods shareholder perspective “in having funds tied up in an asset we don’t have use of”, meaning the portion of the purchase price that has already been paid. It is now a decade since City Markets collapsed, and almost six years to the day that AML Foods signed the deal to purchase the former head office, and the retirees are no nearer to seeing monies long due to them.

The impasse largely stems from relations between the other three parties, rather than AML Foods, whose purchase has effectively been caught in the middle of their dispute. AML Foods’ latest annual report, for the 2022 financial year, said: “On September 21, 2016, the company signed an agreement to purchase a building located at Soldier Road industrial site for $3.359m.

“Subsequent to the payment of the final purchase price in July 2017, a dispute arose as to the ability of the vendors [the pension fund trustees] to provide good title to the property. This dispute is currently before the Supreme Court. Included in other assets is $3.138m which excludes VAT.”

Previous legal filings by AML Foods, which were detailed in an earlier 2020 Supreme Court judgment by Justice Diane Stewart, alleged that the BISX-listed group was battling a series of “opaque” transactions as it seeks to uphold “the validity” of its acquisition.

The documents detailed alleged efforts to carve-up the 6.52-acre property via a series of related party deals. These involved several “unrecorded and unstamped” conveyances purporting to transfer the now-derelict building and its associated warehouse to different corporate vehicles, many of which were “at least part owned or controlled” by the Finlayson family.

In particular, the BISX-listed group details a May 2014 scheme where the pension beneficiaries would agree to transfer the ex-City Markets headquarters building to a vehicle called BSL Retirement Plan Ltd in exchange for shares in that entity. In doing so, they would also give up their interest in the pension plan.

AML Foods alleged that BSL Retirement Plan Ltd was part-owned and controlled by Mark Finalyson’s family, with his father, mother and two sisters among the directors. Even though a majority of beneficiaries voted against the BSL Retirement Plan transaction, AML Foods claimed the former pension trustees, Christine Turnquest-Knowles and Constance Rolle, breached their fiduciary duties to ex-City Markets staff by proceeding to execute it anyway.

The BISX-listed group argued that the former trustees were effectively exchanging the pension plan’s key asset for shares in a company that had no value, since BSL Retirement Plan Ltd had zero assets until it obtained the former head office property.