The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

City Markets’ principal yesterday threatened to ‘let the courts decide’ if the company was unable to resolve its differences with the Securities Commission over its recently-postponed shareholder meeting, arguing it was impossible to meet the regulator’s requirements.

Pledging that the now-defunct supermarket chain still wanted to meet the Securities Commission and resolve the dispute, Mark Finlayson, head of City Markets’ 78 per cent majority shareholder, Trans-Island Traders, said the two sides had been involved in a “circular argument” for several months.

Disclosing that the regulator forced the company not to hold last Monday’s planned meeting on the grounds that it had not provided the 22 per cent minority shareholders with enough information, Mr Finlayson said it had been called to canvas investor opinion on the “way forward”.

While City Markets and its operating parent, Bahamas Supermarkets, have ceased retail operations, Mr Finlayson told Tribune Business there were potentially “lucrative” actions that the minority investors could participate in.

He described these as potential legal actions over the Harbour Bay store lease, which ultimately went to AML Foods’ Solomon’s Fresh Market rather than City Markets’ preferred ‘purchaser’, SuperValue, and against the Bahamian wholesale industry.

“We’re going to meet with the Securities Commission,” Mr Finlayson said. “It’s just one of those developments where we’ve got to sit down with them and work something out with them. I think everyone’s feeling their way with the new legislation.”

Revealing why City Markets was forced to cancel its shareholder meeting, Mr Finlayson said of the capital markets regulator: “They sent us a letter saying they felt we needed to provide further information to the shareholders.

“The problem is, and this is a circular argument going on for a few months, that we want to have a meeting with the shareholders to discuss what’s going on with the company.

“There are a few options open to us, and they’re [the Securities Commission] saying we can’t have that we can’t have that meeting until we produce proper, audited financial statements. The problem is: This is a company unable to do that.”

Bahamas Supermarkets’ last audited financial statements were for its 2010 financial year. Trans-Island Traders bought the majority holding in the company from the BSL Holdings group in November 2010, but was unable to turn the supermarket chain around.

Pointing out that Bahamas Supermarkets now had just two employees, himself and corporate secretary Barry Newman, Mr Finlayson said that - as a company with no operations and no money - it was simply unable to meet the Securities Commission’s requirements.

“I think it’s very unfortunate. We tried to meet the requirements of the Securities Commission, but were not able to save the company in time,” Mr Finlayson told Tribune Business.

“We were never able to meet those requirements. We’re now in a position where the shareholders should have some input into what the next steps are.”

Pointing out that Bahamas Supermarkets did not advertise Monday’s meeting as an annual general meeting (AGM) or extraordinary general meeting (EGM), Mr Finlayson added: “We’re going to meet with the Commission and find out what their position is.

“Failing that, I think we’re going to have to go to the courts by way of Originating Summons, for the courts to determine how we go about this. This should be in the Commission’s discretion to decide something like this, but if they don’t we will have to go to court.”

Mr Finlayson suggested to Tribune Business that the new Securities Industry Act and regulations had not provided “for a situation like this”.

Acknowledging that winding-up Bahamas Supermarkets was one option available to the company, he added: “We also have further actions against other parties that could be lucrative for the other shareholders.

“There are certain steps that have to be taken, and we need answers from the shareholders on which way to go. There are situations with the severance pay, with the pension fund, and we feel it is proper to meet with the shareholders to discuss these matters and come to a consensus.”

While Trans-Island Traders, as the 78 per cent majority shareholder, could decide these matters by itself, Mr Finlayson said he wanted to get all Bahamas Supermarkets investors involved.

He added that two meetings would have been required. The first would have involved providing Bahamas Supermarkets’ 1,200 shareholders with all the documents and information necessary for them to make an informed decision, with a second gathering required three weeks to a month later to determine the company’s direction.