The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

City Markets’ former principal yesterday said he was “hopeful we should have agreement by the end of the week” on a real estate deal that would settle the pension obligations owed to one group of retirees/beneficiaries.

Mark Finlayson told Tribune Business that significant progress had been made during a marathon six-hour negotiating session on Monday night, which had aimed to resolve all issues surrounding the five-party deal to sell a 70 per cent stake in West Bay Street’s Trinity Plaza property.

Mr Finlayson said the representatives for the two groups of pension plan beneficiaries, the Bahamas Commercial Stores and Warehouse Workers Union and attorney James Thompson, had “put their best foot forward” in a bid to resolve their differences.

He added that the union, which had previously been against the Trinity Plaza sale, had modified its position and agreed to the sale of the 70 per cent equity interest provided there were changes to the agreement with Mr Thompson.

“I think we’re close to an agreement,” Mr Finlayson told Tribune Business. “The union, with the advice of their lawyer, Mr Williams, is agreed. They want a few changes in how he [Mr Thompson] wants the agreement structured.

“I think, and am hopeful, that by the end of the week we should have an agreement. I think it will be resolved by then.”

The other three parties involved in the Trinity Plaza sale - the trustees for the Bahamas Supermarket Profit Sharing Retirement Plan; Mr Finlayson as the benefactor’s representative; and the Associated Bahamian Distillers and Brewers (ABDAB) Board, which will sell the 70 per cent Trinity Plaza stake, have all agreed to the deal provided Mr Thompson and the union are in agreement.

Monday night’s meeting, which began at 5pm and finished at 11pm, appears to have achieved a major reversal of the position held by both parties just over a week ago, when Mr Finlayson said “no agreement is close” between Mr Thompson and the union.

Under the proposed deal, ABDAB will sell its 70 per cent equity stake in Trinity Plaza, which is located at the junction of West Bay Street and St Albans Drive, next to the Rubis gas station, to Mr Thompson.

This will be in exchange for the ABDAB preference shares previously previouslypereviously issued to Mr Thompson’s clients. Under the initial proposed terms, the attorney would then have used 50 per cent of the rental income due to the 70 per cent stake to pay his clients a monthly annuity for the duration of their lives, with the other 50 per cent going to him to cover his costs.

Tribune Business understands that the union, which had previously objected to the redemption of the ABDAB preference shares held by Mr Thompson’s clients, subsequently agreed to this provided the terms were changed.

It wanted roughly 60 per cent of the value attributed to the Trinity Plaza stake held in trust for Mr Thompson’s clients, and not in his name, with the remaining percentage held by the attorney and going to cover his costs.

Mr Thompson, for his part, is understood to have been concerned over the Trinity Plaza’s worth, and whether the valuation attached to the 70 per cent stake would cover what was due to both his pensionpenson beneficiary clients and himself.

He is also thought to have been concerned over liabilities stemming from the Stamp Duty to be incurred on the 70 per cent stake sale, and that this would eat into what he and his clients would receive.

Mr Finlayson said the benefactor would likely pay any Stamp Duty on the sale, given that it needed to be registered so that the interests of Mr Thompson and his clients are secure.

Explaining that this issue was now resolved, Mr Finlayson told Tribune Business: “The union’s clients are satisfied already. He [Mr Thompson] isn’t satisfied with the preference shares.

“He wants to be in a position where he can control the source of income for his clients, and control it independent from the union.”

He added: “From the trustees and benefactor’s standpoint, and ABDAB’s standpoint, as long as there’s an agreement between them - Mr Thompson and the union - we’re more than willing to go along with it.

“Both sides are putting their best foot forward. It’s down to the union’s clients being in no worse a position than his [Mr Thompson’s] clients. It was really just getting them to see eye-to-eye.”

Tribune Business previously revealed that to better secure the $4.7 million liability to City Markets pension plan beneficiaries, the latter were issued with preference shares in ABDAB and its affiliate.

The deal effectively switched the security for the former supermarket chain’s pension beneficiaries from illiquid real estate assets that have proven “impossible” to sell to a more liquid investment.

With no buyer found for the former City Markets head office on East-West Highway, the pension beneficiaries represented by the trade union now have the opportunity to receive dividend payments on those preference shares and, potentially, a cash payout of everything owed to them by May 8 next year.

To protect these liabilities, both pension fund trustees and union representatives now sit on the Boards of ABDAB and the affiliates that issued the preference share debt.

Via a Supreme Court Order on December 17 last year, the trustees for the Bahamas Supermarkets Profit Sharing Retirement Trust (the pension plan) agreed to “come to some sort of settlement” with the beneficiaries before June 17, 2014.

This provided a six-month window to work out a deal, and Mr Finlayson told this newspaper the deal with the union ultimately struck on May 8, 2014, involved the provision of “certain guarantees” to it.

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