The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The National Insurance Board (NIB) is “considering” whether to make an offer to acquire the former City Markets headquarters building on the East-West Highway, Tribune Business can reveal, a development that could benefit the former supermarket chain’s pension beneficiaries.

Sources familiar with developments confirmed to this newspaper that NIB was weighing up whether to bid on the building and its warehouse, in an effort to add it to its collection of investment properties.

“The matter is being considered, although NIB isn’t in negotiations yet,” one source told Tribune Business.

“The property is in an excellent location, and would be a good asset for NIB or any company that wanted it.

“NIB is always looking for great investment properties. It’s something they’re considering, reviewing but they haven’t made an offer. At this point, they’re just looking. They haven’t made any decision.”

Algernon Cargill, NIB’s director, said he was unable to comment on the matter because NIB had yet to make a formal offer to the City Markets’ pension fund’s trustees,

“I advise that I can’t make any comment until an offer is made,” he told Tribune Business.

Acquiring the property from City Markets’ staff pension fund would likely cost NIB a multi-million dollar sum, running into seven, and possibly eight, figures.

The Bahamas’ national social security scheme would, if it went through with a formal offer and was successful, then likely lease it out to a commercial operator to get a return on its invested capital.

Mark Finlayson, principal of 78 per cent majority shareholder in the former supermarket chain, Trans-Island Traders, who is also a trustee for the pension fund, did not return Tribune Business’s calls seeking comment on the matter yesterday.

However, in an interview with this newspaper last week, Mr Finlayson said the trustees were talking to a “very significantly buyer” for the former headquarters building after a previous attempt to sell it to Lightbourn Trading, the Bahamian wholesaler, fell through.

“We’re working on the sale of the head office building. Lightbourn Trading are out. They put us in a position, as trustees, where we couldn’t accept their offer as it was much too low. Legally, we couldn’t accept the offer,” Mr Finlayson said then.

The East-West Highway property is the fund’s main, albeit illiquid, asset, and its liquidation at a true price is key to paying out pension beneficiaries 100 per cent of what they are owed.

The building was conservatively valued in City Markets’ last accounts, using a price below appraisal value, and Mr Finlayson said: “We’re working with a very significant buyer, and we are very positive that it will end in the sale of the building.”

Declining to put a timeline on any potential sale, he added: “We’re pretty confident the trust will be able to meet all its obligations.

“The assets of the trust are more than enough to satisfy all the obligations, and we will satisfy them.”

The property’s conversion into liquid cash via a sale will thus enable the pension fund to meet all its obligations to pension beneficiaries.

However, NIB’s decision to assess a potential purchase may raise eyebrows among some observers. They may believe the Government has prodded NIB to get involved, given its desire to resolve the outstanding severance pay and benefits still owed to former City Markets staff more than eight months after the supermarket chain shut its doors.

A sale of the East-West Highway property might resolve the pension fund issue, but some may question whether it is the best use of social security assets, even though NIB has a $1.5 billion surplus fund.

Meanwhile, Tribune Business can reveal that Sunshine Holdings chairman, Franklyn Wilson, attempted to intervene of his own accord in the dispute between the Finlaysons and their former staff to see if he could resolve the impasse.

This newspaper was initially told Mr Wilson became involved at the behest of the Government, and was acting as its representative in the negotiations, but Mr Wilson said yesterday that this was not correct.

He told Tribune Business that he became involved in his own personal capacity in a bid to achieve a settlement, but indicated his efforts were unsuccessful and that he was no longer playing a role.