The Tribune

By NEIL HARTNELL

Tribune Business Editor

CITY Markets' principal yesterday said "there's no question" that a Joint Venture partnership with BISX-listed AML Foods would have been secured if he had been negotiating solely with the latter's chairman, while confirming that the Finlayson family had initially sought Board control.

Mark Finlayson, head of Trans-Island Traders, the Finlayson-owned family investment vehicle that owns a majority 78 per cent equity stake in Bahamas Supermarkets, the operating parent for City Markets, told Tribune Business that AML Foods' chairman, Dionisio D'Aguilar, "wanted that deal and worked really hard for it".

He added that he was "sure" the two would have successfully concluded a joint venture deal if it had been just himself and Mr D'Aguilar involved in the negotiations, but suggested that the latter also had to answer to the rest of AML's Board of Directors.

Suggesting that not every AML Foods director "saw value" in the merits of a joint venture partnership with City Markets' remaining five stores, Mr Finlayson added that his family "conceded" the post-deal Board control they had initially sought to make any deal work.

And, indicating that progress was still being made on Super Value's acquisition of City Markets, Mr Finlayson told Tribune Business that following a meeting between management and the trade union representing the majority of the supermarket chain's line staff yesterday morning, all were now "on the same chain" when it came to worker severance pay and the staff pension plan.'

While not commenting directly on assertions by Mr D'Aguilar earlier this week that negotiations between City Markets and AML Foods broke down because he "kept changing the terms of the deal" on an almost daily basis, Mr Finlayson told Tribune Business: "From my standpoint, especially in relation to Dionisio, Dionisio wanted that deal and really worked hard for it.

"If it had been left up to Dionisio, we'd have had a deal, no question about it. But Dionisio has a lot of different directors with different opinions, and he was not able to get everyone on the same page. If it was a Dionisio D'Aguilar-Finlayson family deal, I think things would have been done in a week, that's for sure.

"He and I had been talking for three months, and while we were talking things were going in the right direction. If it was just him, there's no question in my mind that deal would have been done.

"But he has a Board, and different people see things in different ways, and I think he couldn't get everyone on the same page...... My feeling is that they were ready to do a deal, but there may have been a number of people who didn't see value in it. Where Dionisio saw future value in it, I don't think every director did."

City Markets and AML Foods have conducted an on-again, off-again courtship for the better part of two years, circling each other like potential dance floor partners that never quite come together.

Their links go back even further, as AML Foods was lined up as one of the initial investors in the BSL Holdings buyout group that acquired City Markets from Winn-Dixie for $54 million in summer 2006, only to withdraw its $2.5 million investment at the last minute.

Following its disastrous ownership of the supermarket chain, BSL Holdings included AML Foods among the different groups that its Trinidadian management partner, Neal & Massey, approached in summer 2010 in a bid to offload the company.

AML Foods, in common with others, was offered City Markets for a $1 purchase price and assumption of certain liabilities. Tribune Business understands that the BISX-listed food group had been prepared to do the deal in May/June 2010, after City Markets made a small $50,000 profit in the former month, but Neal & Massey dropped them at the critical moment in search of other suitors. AML's interest waned, and City Markets' resumption of losses scuppered any purchase.

City Markets was eventually scooped up for $1 by the Finlaysons' Trans-Island Traders in November 2010. They then reversed the tables on AML Foods, attempting a 'hostile takeover' for a majority 51 per cent stake in the food group, a move the BISX-listed company ultimately saw off.

That was the road leading to resumed talks between Mr Finlayson and AML Foods earlier this year. Praising the latter's executive management, Mr Finlayson said Mr D'Aguilar had "a really good team, in particular their president, Gavin Watchorn.

"I've been watching his career since he started, and am quite impressed with him and the management staff. He and Dionisio make a good team in terms of president and chairman. Stephen Smollett has a reputation as being the best buyer in the market today, and the joint venture would have made sense," Mr Finlayson added.

He denied assertions that the Finlaysons, through Trans-Island Traders, had sought a six-seven figure 'severance payment' as part of the AML Foods deal, telling Tribune Business the family was destined not to "get anything in the short-term. It was based on the long-term investment".

However, agreeing that the Finlayson family "had no interest" in retaining management control of the City Markets-AML Foods joint venture, Mr Finlayson said he had attempted to structure a similar arrangement that their Associated Bahamian Distillers and Brewers (ABDAB) vehicle had with Heineken in relation to Burns House and Commonwealth Brewery.

"We tried to structure an arrangement like the one we had with Heineken, where we would control the Board, they would have had the management, and there would have been a shareholders' agreement," Mr Finlayson told Tribune Business.

"At the end, we agreed we'd have equal say on the Board and there would be a very strong shareholders' agreement protecting both sides. We had even conceded on that side."

Meanwhile, Mr Finlayson said City Markets was "moving forward pretty well" on closing a deal with Super Value and its president, Rupert Roberts. He added that his attorneys had completed their work, and Super Value's legal counsel was now 'dotting the 'is' and crossing the 'ts'" on the other side.

"We're ready to move out of the business, and he's ready to move in," Mr Finlayson added.

As for the staff severance pay and pension issues, the City Markets principal said all sides met at the Ministry of Labour yesterday between 10am-1pm.

"We've all agreed not to comment any further other than to say we met, and are all moving in the same direction. We are all on the same page, and communication is the key," Mr Finlayson added.