The Tribune

By NEIL HARTNELL

Tribune Business Editor

AML Foods chairman yesterday said its efforts to acquire City Markets' remaining business fell apart because the latter's principal, Mark Finlayson, "kept changing the terms of the deal" on a daily basis, and had nothing to do with the BISX-listed food retail group refusing to take on the chain's staff.

Responding to assertions that the staff issue caused the failure of AML Foods' bid to acquire City Markets' remaining five stores, Dionisio D'Aguilar said paying the remaining 200-300 employees their collective $4 million severance pay was "his [Mr Finlayson's] job", not that of the BISX-listed food retail group or any other acquirer.

He added that Mr Finlayson appeared to be painting AML Foods as "the bad guys". While Mr D'Aguilar declined to disclose the factors that saw the BISX-listed food group pull out, sources close to the negotiations said these included the Finlayson family's demands that they retain Board control over the proposed joint venture with AML Foods, and that Mr Finlayson and his siblings - Nikki Boeuf and Rae Finlayson - receive some kind of severance payment.

Both requests are likely to strike observers as slightly odd, given that AML Foods - the acquiring company - is profitable, while City Markets racked up a $16.5 million loss before exceptionals in its last completed financial year. The size of the severance payment request was not revealed, but Tribune Business understands it was a six or seven-figure sum.

Confirming that Mr Finlayson had proposed converting City Markets into some kind of 'temp agency', which would hire workers out to any purchaser when they were needed, during negotiations with AML Foods, Mr D'Aguilar said the idea was "very fuzzy".

He added that no purchaser would want to assume responsibility for paying severance pay to employees of a company it was acquiring, especially a business such as City Markets, where it was questionable whether it was "a going concern".

And, with staff moving from one business to another, Mr D'Aguilar said it was the responsibility of the former employer to pay the workers for their accrued years of service.

"There is no businessman that I know of that is going to take on the staff of City Markets, with their accrued years of service, unless that is negotiated in the deal," the AML Foods chairman told Tribune Business. "Most business people, when they buy a business, rarely take on the accrued years of service of the remaining employees of that business."

Referring to City Markets' situation, Mr D'Aguilar described the business as "not a going concern". He acknowledged that "all the employees have gone home now and are screaming for their severance", but added that paying this was not the responsibility of the purchaser unless specifically written into a sales agreement.

"Generally, you may agree to take on those employees, but you don't take on their accrued years of service," Mr D'Aguilar said. "You take them on as if they're new employees of the company.....

"You can't agree to find someone a new job and not pay them severance. You can't leave them in limbo, where they are working for the new company but are not severed by the old. It's a situation that needs cleaning up."

While emphasising that he did not "want to engage in a war of words with Mr Finlayson", it is clear that Mr D'Aguilar and AML Foods feel they have been provoked by what they see as a mischaracterisation of why their efforts to acquire City Markets' remaining stores - four in New Providence, and one in Grand Bahama - failed.

"It had nothing to do with the staff," he told Tribune Business. "The deal broke down because Mr Finlayson kept changing the terms of the deal. Every morning he came in and wanted something else. When we thought we had a deal, we didn't have a deal.

"Of course we weren't going to pay for the staff. That's his [Mr Finlayson's] job. I agree that we weren't going to pay for the staff, but he came up with this quasi temp agency to deal with that. We weren't quite sure how that was going to work.

"The bottom line was this. It made no sense for us to take on the severance pay for the staff, and then pay Mr Finlayson what he wanted. That cost on top of that; it did not make sense. The number that was thrown around was close to $4 million. That's a huge number.

"At the end of the day, you've got to pay the staff. That's the issue. That's the problem. He [Mr Finlayson] got a better deal with Mr Roberts. That's fine, there are no ill feelings there, buy stop implying we are the bad guys because we did not want to take care of the staff.

"That's not our problem. They're not our staff. They're his staff. If you're going from one business to the next, they need to be severed. This temp agency was all very fuzzy."

Some observers have suggested that the 'temp agency' was part of a strategy to encourage City Markets' remaining staff to voluntarily leave the company, thus relieving it of any obligation to pay severance pay. Mr Finlayson rejected this, arguing that it was an attempt to save jobs in reaching a deal with AML Foods.

Still, several persons have argued that the Government should require any purchase price paid by Super Value to be escrowed, so as to ensure the City Markets staff receive the severance pay due to them. They believe the strategy is to wear the latter's remaining workers down by attrition, and frustrate them into leaving, thus removing the severance obligation.

The $19-$20 million invested in City Markets by the Finlayson family was largely injected as debt, likely giving them first call on the company's remaining assets once the employees are paid out.