The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Super Value’s president has “not given up hope” that he could yet take over the former City Markets’ lease at the Harbour Bay Shopping Centre, telling Tribune Business yesterday that the rival chain’s demise had given his supermarket business “about a 20 per cent advantage”,.

Disclosing to this newspaper that Super Value’s sales had increased by double digits, or “more than 10 per cent”, for each of the past three years, Mr Roberts said he was still hopeful of establishing a fourth Quality Supermarkets location - at the Harbour Bay Shopping Centre on East Bay Street.

Rather than pass the former City Markets’ lease over to Mr Roberts, Harbour Bay’s landlords, the Mosko family, have instead agreed a deal with BISX-listed AML Foods for the latter’s Solomon’s Fresh Market concept to become the development’s anchor tenant.

Tribune Business understands that the Mosko family effectively terminated the lease held by City Markets due to non-payment of rent for three months - a move that prevented the now-defunct supermarket chain’s majority shareholder from selling its leasehold interest to Mr Roberts.

It also opened the way for AML Foods to enter into what was effectively a bidding war with Mr Roberts for the lease, with the Moskos ultimately deciding in favour of the BISX-listed group’s destination concept, Solomon’s Fresh Market.

This has not gone down well with the Finlayson family-owned Trans-Island Traders, which held a 78 per cent equity stake in City Markets, as it effectively costs them $1.5 million in the deal with Mr Roberts.

Tribune Business sources have disclosed that Mark Finlayson, Trans-Island Traders’ principal, has been threatening to sue the Moskos over the lease termination, but the landlords are sticking to their position that their action is more than justified.

Mr Roberts alluded to the positions held by the two sides yesterday, and told Tribune Business: “We’re still hoping to get Harbour Bay.

“Mr Finlayson has the lease on it, and I hope that he doesn’t go through the legal channels that would be created if he were to go to court.”

Expressing confidence that Mr Finlayson would win any legal action over the Harbour Bay lease if it did get to court, Mr Roberts added: “We haven’t given up on Harbour Bay.”

Emphasising his friendship with the Mosko family, and that he was not criticising them or seeking to get drawn into any quarrel they had with Mr Finlayson, the Super Value president added: “The Moskos our friends of ours.

“It just flipped in the wrong direction. I think the Moskos disliked the fact that the store was down for so long, and the Harbour Bay Shopping Centre did not have an anchor tenant.

“That led them to make a decision to get a tenant right away, but we’re still hopeful on Harbour Bay.”

Tribune Business, though, has been told by sources close to developments that the Mosko family feels its legal case its extremely strong should Mr Finlayson go to the courts.

This newspaper also understands that AML Foods, prior to entering into the Solomon’s Fresh Market lease, obtained two legal opinions suggesting that Mr Finlayson’s prospects of success were extremely slim.

The Harbour Bay leasehold interest and its value, though, are said by sources to be closely tied to the purchase price Mr Finlayson receives from Mr Roberts.

And, given that the loss of Harbour Bay lowers that price, this reduces the sums available to Mr Finlayson from the deal that can be used to pay the estimated $3-$4 million severance pay due to City Markets’ former staff.

This stems from the way the deal was structured. The leasehold interests in the four remaining New Providence-based City Markets stores were said by sources to have been placed in separate subsidiaries of the Finlayson family-owned Trans-Island Traders.

The leases were valued at $1 million for both the South Beach and Seagrapes Shopping Centre stores, and $1.5 million for both the Cable Beach and Harbour Bay sites, creating the $5 million purchase price initially agreed between Mr Roberts and Mr Finlayson.

But, with the leasehold interest in Harbour Bay seemingly lost, that reduces the sum Mr Finlayson and Trans-Island Traders will receive by $1.5 million - down from $5 million to $3.5 million.

The Harbour Bay site’s value lies in its close proximity to affluent communities in eastern New Providence, and the fact it lies on the ‘route to work’ and ‘route to home’ on Shirley Street and East Bay Street, respectively.

AML Foods believes Solomon’s Fresh Market will do at least $20 million in annual sales from the site, and is investing between $5-$6 million in a project that is set to open before Christmas 2012 and create at least 85-90 jobs.

Meanwhile, Mr Roberts yesterday outlined the “great benefits” he had reaped from City Markets’ demise.

“Since City Markets’ failure we’ve been over 10 per cent for the past three years,” Mr Roberts told Tribune Business of the year-over-year sales increases enjoyed by Super Value.

“The crashing of City Markets gave us about a 20 per cent advantage. We’ve been picking up sales for the past three years. As it lost out, we enjoyed it.”