The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A group of former City Market employees have “emphatically” and “outright” rejected a preference share offering by the Finlayson family as an alternative security for their pensions, a spokesman told Tribune Business yesterday.

Whanslaw Turnquest, City Markets’ former chief inventory control officer, said the former employees now want all the monies owed to them paid ‘up front’ with interest.

He said the offer by the Finlayson family, City Markets’ last majority owners, was rejected at a meeting on Wednesday night.

“We do not want any interest in any company. We want our monies,” Mr Turnquest said.

“All the pensioners and workers of Bahamas Supermarkets want their severance money and they want their pension money. They do not want any shares. The workers of Bahamas Supermarkets [City Markets’ operating parent] emphatically reject the offer made to them. They want all of the moneys owed to them and they are demanding the interest on the money owed to them.”

Tribune Business revealed this week that the Finlayson family has effectively “watered down” their equity in Associated Bahamian Distillers and Brewers (ABDAB) to better secure the $4.7 million liability to City Markets pension plan beneficiaries.

Mark Finlayson told Tribune Business earlier this week that the union representing pension beneficiaries had been issued with preference shares in ABDAB and its affiliates as a way to secure the obligation to them.

This, together with the injection of capital by new investors, had reduced the ABDAB equity interest held by General Bahamian Companies (GBC), the Finlayson family-owned vehicle, from 70 per cent to around 49 per cent, he confirmed.

The deal, as outlined by Mr Finlayson, has 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 -via their 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.

Mr Turnquest, though, told Tribune Business that an audit of the pension fund was needed.

“We want to know what happened with the money that was originally in the plan. The pension fund was originally founded and protected by a Trust deed. That deed is protected by Trust laws of the Commonwealth of the Bahamas,” he said.

“The trustees have a fiduciary responsibility to the benefactors and beneficiaries of that trust document. No entity, union or operators of Bahamas Supermarkets could determine the outcome of our money.

“We are asking for an audit of the pension fund money. The employees have spoken, line staff and management. It’s been two-and-a-half years and now you ‘re saying that that you want to pay these people into the future. They are not stupid. You cannot issue shares to someone and they know nothing about it. We don’t know who are the owners and standard shareholders of the company.”

It is unclear whether Mr Turnquest speaks for all former City Markets ex-staff and pension plan beneficiaries, or if a majority voted against the preference share deal.

Mr Finlayson told Tribune Business previously that he has been dealing with the union that represented the staff, the the Bahamas Commercial Stores and Warehouse Workers Union.

He said the union represents around 70 per cent of the former staff and pension beneficiaries, while attorney James Thompson represents the remaining 30 per cent that includes Mr Turnquest.

Mr Finlayson said this week that following 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 the two sides with a six-month window to work out a deal, and Mr Finlayson told this newspaper the deal ultimately struck on May 8, 2014, involved the provision of “certain guarantees” to the union.

Accompanying this was the issuance of preference shares to the union, which is receiving any dividends and monies paid out on the beneficiaries’ behalf, passing these to them.

It appears that the union has accepted this proposal, as its general secretary, Donna Moss, has been appointed to the ABDAB Board.

“The basic deal is this,” Mr Finlayson told Tribune Business. “Nothing can be done with these companies until the preference shares are satisfied.

“There’s a total of $4.7 million that remains outstanding. In the first instance, it’s in the form of a pension, and those preference shares more than meet the needs of the pension.

“There’s also an option that, 365 days after the issue, on May 8, 2015, that those shares be bought back for the full $4.7 million by the companies.

“The monies will go directly to the pensioners. They end being a lot better off than before, and have the option of a cash payout or staying in.”

Thus according to Mr Finlayson, the pension beneficiaries can either elect to take a full cash payout that will cover 100 per cent of their interest, or opt to stay in as investors for the long-term.

Mr Finlayson told Tribune Business that ABDAB had issued “the majority of the preference shares”, and owned $40 million worth of real estate to back them.

“It’s a real company with real assets, and so forth, and has been a public company since 1986,” he added, suggesting these factors should give extra comfort to both the union and its pension beneficiaries.

Disclosing that the pension fund trustees have four seats on the ABDAB Board, Mr Finlayson said: “There’s nothing that can happen without their approval. We have a settlement that makes sense, and works for the beneficiaries. We’re in a much better position now.”