The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The former City Markets’ supermarket chain’s principal yesterday pledged to take “strong legal action” against its ex-Harbour Bay store’s landlords and BISX-listed AML Foods, arguing that his company was current on rental payments when the lease was terminated.

Confirming Tribune Business reports earlier this year, which disclosed that he was contemplating legal action over the lease termination, something that had cost him and the company $1.5 million, Mark Finlayson said numerous letters had been exchanged between his attorneys, and those for the other two parties.

“That’s an open situation,” Mr Finlayson told Tribune Business yesterday, when asked what he planned to do about the loss of the Harbour Bay lease.

“I’m promising legal action on that. There are going to be strong legal ramifications for the landlords and AML. I look forward to either a legal battle or a strong settlement, but in any case both parties put themselves in a very, very bad position at the end of the day.

“Once we get into this thing, we intend to get every penalty and penny that comes from this action..... We’re going for the entire value of that particular location. That particular location was extremely valuable. This one may take a few years.”

Mr Finlayson had been hoping to sell the leasehold interest in the Harbour Bay store to Rupert Roberts, Super Value’s owner, as a site for his Quality Supermarket chain.

But Harbour Bay’s landlords, the Mosko family, terminated the lease on the grounds that City Markets was behind on its rental payments, instead reaching a new agreement with AML Foods for its second Solomon’s Fresh Market store to act as the ‘anchor tenant’ for the shopping plaza.

Tribune Business understands that the transaction between Mr Finlayson’s Trans-Island Traders, which held the 78 per cent majority interest in City Markets, and Mr Roberts was initially worth $5 million.

The leasehold interest in the Cable Beach store was $1.5 million, while those for the South Beach and Seagrapes Shopping Centre sites were priced at $1 million each. That makes $3.5 million, and the balance was due to come from the Harbour Bay store leasehold interest, but the terminationpotentially means that Mr Finlayson and City Markets have lost $1.5 million.

“I can’t exactly verify those numbers, but I can tell you that you are close,” Mr Finlayson responded, when Tribune Business put that to him yesterday.

However, AML Foods executives yesterday shrugged off Mr Finlayson’s threat of legal action.

Dionisio D’Aguilar, the BISX-listed food group’s chairman, said there would be no impact on its $5.5-$6 million Solomon’s Fresh Market investment there.

“We are not terribly concerned,” he said. “We make sound business decisions based on the best legal advice available, and we believe the advice we received was sound. Let the chips fall where they may.”

Representatives for the Mosko family could not be reached for comment. But Tribune Business reported earlier this year that the Mosko family effectively terminated the lease held by City Markets due to non-payment of rent for three months.

That 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.

However, Mr Finlayson yesterday said City Markets was current with its rental payments when it wrote to the landlords earlier this year seeking an extension.

“We were perfectly up to date on the lease payments, but they wrote a letter back saying they wanted us out by the end of March,” Mr Finlayson said.

“I met with them and their lawyers; there were no legal grounds for what they did.”

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.

Still, Mr Finlayson said he was obligated to City Markets investors to “try and get the most out of this transaction”.

“We intend to proceed and get all that is owed to us; both parties,” he added. “It’s going to be an interesting one that may tie this site up for many, many years.

“We’re going to decide who’s going to sue, how we’re going to sue, and we’re going to win.”