The Tribune

By NATARIO McKENZIE Tribune Business Reporter nmckenzie@tribunemedia.net and NEIL HARTNELL Tribune Business Editor CITY Markets' principal believes the acquisition of the struggling five-store supermarket chain by Super Value's owner and president, Rupert Roberts, is "imminent", telling Tribune Business: "He's a very serious man, and he's very serious about this deal." Mark Finlayson, head of the Finlayson family-owned vehicle, Trans-Island Traders, which holds the 78 per cent majority stake in City Markets' operating parent, Bahamas Supermarkets, told Tribune Business he met with staff on Friday to inform them of the proposed deal, which would ultimately save at least some of the stores and 300 jobs. City Market stores remained open on Friday, although it had been widely speculated that they would close. Mr Finlayson told Tribune Business: "The stores are open. We have entered into very serious negotiations with one of the larger retailers here in Nassau, and it looks like we have a deal with him. "The main thing is I think it's going to be a continuous operation going forward and the jobs are secure. I can't say much more than that right now." He added: "I can say that that serious retailer is Rupert Roberts. I have spoken to my staff in relation to it. We think that a sale is imminent. They are just doing some due diligence right now. He is a very serious man, and he is very serious about this deal." Mr Finlayson declined to go into specifics of the deal citing that it had not yet been finalised. Mr Roberts was said to be in meetings when Tribune Business called for comment, and did not return the calls. Mr Finlayson's comments effectively confirm Tribune Business's exclusive revelation last Thursday that Mr Roberts and Super Value were now the likeliest purchasers of City Markets, having hinted heavily then as to the identity of the proposed buyer. However, given City Markets' financial struggles, and the loss of its sales and customer base, together with minimal inventory and the fact it owns none of its real estate, it would appear that what Super Value is acquiring are leasehold interests in five store locations - one in Grand Bahama, the other four in New Providence. Super Value is unlikely to be interested in the Eight Mile Rock outlet, given that it has no operational presence in Grand Bahama. That leaves just the four New Providence food stores - Harbour Bay, Cable Beach, Prince Charles Drive (Seagrapes) and South Beach. Given the proximity of stores such as the Cable Beach and Prince Charles Drive outlets to Super Value's existing locations, some observers have questioned why Mr Roberts would want to take them on, given the additional headaches involved in getting them up to scratch and the likely sales 'cannibalisation' that would occur. Yet sources close to the Super Value president say he believes location proximity may not be a major obstacle, given that the two supermarket chains were both profitable in the past despite this. It is also possible he may differentiate them in terms of product mix and customer appeal. And Mr Roberts has long been interested in acquiring his rival.... if the price is right. He submitted a $30-$35 million bid when Winn Dixie put City Markets up for sale in 2006, knowing it was a 'low ball' offer compared to other groups, and sitting there as a 'fall back' option if all other deals fell through. It appears he has adopted much the same strategy now, and it may pay dividends. The Finlayson family, stuck with a supermarket chain that lost over $16 million in its last financial year before exceptionals, is desperate to sell and bring an end to subsidising it out of its own pocket. Mr Roberts is thus likely to pick it up for the same price Mr Finlayson paid, $1, along with some debts/liabilities. Mr Finlayson, as previously reported by Tribune Business, offered City Markets to AML Foods for $14 million back in January 2012. The two sides were so wildly far apart in price that talks never got going, and by sitting back as the 'last option reserve', Mr Roberts may be set to increase his dominance in the mass market supermarket business. One issue, though, may be the staff. City Markets is unionised, Super Value is not, and has successfully resisted this in the past. Dionisio D'Aguilar, AML Foods' chairman, told Tribune Business: "Mr Finlayson had to do what he had to do. He had to get out of it. He was in no position to run it, and had to yield. "I think City Markets as a brand name is dead. It needed to come to an end. It needs to die, and that throws up all the available locations." Tribune Business understands that the vultures were already circling, so to speak, with the likes of Super Value and AML Foods sounding out City Markets' landlords on store availability. The landlords are the Treco family (Cable Beach); George Mosko (Harbour Bay); Troy D'Arville (Prince Charles); and Junior Bethel (South Beach). "Everyone's been talking to the landlords," one retail executive, speaking on condition of anonymity, told Tribune Business: "The landlords are in the driving seat. They can name their price." They added of the City Markets situation: "I can't see it lasting past Easter. It'll either close or be sold. It'll be interesting to see how he [Mr Roberts] deals with the staff, the minority interests, the pension plan. "Something needs to happen. This speculation and rumour mill is not doing anyone any good. I can't see it lasting past Easter." Mr D'Aguilar added that City Markets had been "floundering" for the past 18 months to two years, the problems created by the disastrous BSL Holdings ownership, when $28 million in net losses were run up over four years, had proven too deep-rooted for Mr Finlayson to correct. "Mr Finlayson made a valiant effort to revive it, but the writing was on the wall from the days the Barbadians had it," Mr D'Aguilar added. Mr Finlayson told Tribune Business last week that "two very serious" Bahamas-based players were assessing the possible acquisition of the struggling five-store supermarket chain. Tribune Business contacts had spotted Mr Roberts and his officials, notebooks in hand, assessing City Markets' Cable Beach store last weekend, indicating their interest had been renewed again. Whanslaw Turnquest, City Markets' chief inventory control auditor, told Tribune Business he was satisfied with the outcome of Friday's meeting at the Department of Labour over a trade dispute filed by staff against the company. Mr Turnquest said: "We had the meeting, and the meeting was quite successful. We have a 14-day cooling off period. I don't want to speak on the sale of the company, but it will be sold. All the workers' packages will be secured. The pension will be addressed in a different meeting. We are trying to set up a meeting with the lawyers for Wednesday to mitigate the long, drawn out process with the pension."