The Tribune

By NEIL HARTNELL

Tribune Business Editor

CITY Markets' principal believes an investment of between $6-$10 million is required to turn the supermarket chain's remaining four New Providence stores around, telling Tribune Business he aimed to close their sale to Super Value "by the end of this week".

Mark Finlayson, head of his family's Trans-Island Traders investment vehicle, which holds the 78 per cent majority stake in City Markets' operating parent, Bahamas Supermarkets, said he was handing the stores over to "the best in the industry" in the form of Super Value's owner and president, Rupert Roberts.

Reiterating that the Finlaysons would not recover a cent of their $19-$20 million investment in City Markets through the deal with Mr Roberts, Mr Finlayson disclosed that they had to "convert a portion" of that sum from debt into equity, in order to keep the supermarket chain solvent.

And he also said BISX-listed AML Foods "just blew it" in their attempt to acquire City Markets' remaining stores and operations, noting that company had first shot at a deal during a period when he was not talking to Mr Roberts.

Asked by Tribune Business just prior to the Easter holidays when the agreement for Super Value to take over the remaining City Markets store sites was likely to be concluded, Mr Finlayson said: "We're hoping it will be done by the end of next [this] week, [this] week Friday. I don't think there should be a problem with that."

Mr Roberts, in an exclusive interview with Tribune Business last week, said the deal was effectively done and only required the relevant Shop Licence approvals from the Government to be consummated. Mr Finlayson also indicated as much, with attorneys understood to be drawing up the final transaction documents and other details being finalised.

"I'm happy with it," Mr Finlayson added. "It saves the jobs, it puts the company in very good hands; the best in the industry.

"We [the Finlaysons] don't walk away with anything from it. It's satisfactory only in the sense that we're taking care of those jobs, and are leaving the company in good hands."

Confirming that the Finlayson family had invested between $19-$20 million in attempting to turn City Markets around since acquiring the business almost 18 months ago, in early November 2010, Mr Finlayson said all that capital was initially pumped in as a form of debt.

"A portion of it had to be converted to equity," he explained, declining to reveal the sum involved. "We couldn't have a bankrupt company. We had to convert a portion of it to equity to keep it solvent.

"At this point, having invested what we've invested, we have no hope of seeing that again. It's very similar to the last investors - they had to put in a hell of a lot more than we put in."

That refers to the BSL Holdings group, under whose four year, four-month ownership, City Markets lost a collective $28 million. Estimates of what the group lost on their investment vary, although some said it was as much as $85 million.

After investing $19-$20 million without success, City Markets' net loss before exceptionals for its 2011 financial year totalling some $16.5 million, Mr Finlayson told Tribune Business it got to the point where his family were questioning "how much more is it going to take" to turn the supermarket chain around.

With their appetite for investing more diminished, Mr Finlayson and his family began searching for buyers, eventually alighting on Mr Roberts and Super Value.

"We think it's going to take an additional $6-$10 million to fix it," Mr Finlayson estimated of what was required to revitalise the New Providence stores.

"It's only four additional locations, but Mr Roberts is willing to do that. He has the expertise and the team to do that. From them doing their due diligence, I'm very impressed with his team. They know what they're doing, and they will be able to fix it. Mr Roberts has the financial wherewithal, the expertise to be able to do that."

Tribune Business previously reported that AML Foods, the BISX-listed owner of the Solomon's SuperCentre and Cost Right formats, started talking to City Markets about a possible takeover of the latter's stores in January.

Mr Finlayson effectively confirmed this, adding that the proposed arrangement with AML Foods would have been more to his family's benefit through allowing them to retain a minority stake in a joint venture partnership.

"They had the opportunity," he told Tribune Business of AML Foods. "I wasn't even talking to Mr Roberts. It was there for the taking, but quite honestly, they just blew it.

"It would have been nice if it had worked out for us with them, because it would have been closer to the joint venture I wanted. They [AML] had the expertise to run the joint venture, and even if we had not got the $20 million back, we would have got something back. We would still have been in the game."

This newspaper previously revealed that talks between AML Foods and City Markets never really went anyway, the side being wildly apart on valuation. It is understood that at the time, the Finlaysons were valuing the five-store City Markets chain at around $14 million.

Meanwhile, Mr Finlayson dismissed the political rhetoric from both the Free National Movement (FNM) and Progressive Liberal Party (PLP), saying that both were on the same page, and on board, with what he was trying to do - save the jobs of 200-300 City Markets workers.

"It's pretty straightforward," Mr Finlayson said. "The Government and the Opposition, don't mind them going back and forth. I think everyone's on side with getting this done, and saving these jobs. Both sides are saying: 'Save the jobs, Mark'."