By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The sale of City Markets’ leasehold interests has finally been completed, but its principal warned that “less than $2 million” will be left for the remaining creditors - including his family and former staff - to fight over.

Mark Finlayson conceded that “not everyone will walk off happy” once City Markets’ affairs were finally wound-up, but argued that there was now “some light at the end of the tunnel”.

Confirming that the deal to sell the last three City Markets store leases to Super Value owner, Rupert Roberts, had closed “in the last few days”, Mr Finlayson told Tribune Business he and his family “might get something” back from their original $19 million investment once the severance issue was settled.

“It has been completed just in the last few days,” Mr Finlayson said of Mr Roberts’ $3.5 million purchase of the leasehold interests. “The documents have changed hands, the monies have not changed hands, but that should come in the next few days.”

The sale of City Markets’ leasehold interests in four store sites to Super Value had initially been a $5 million deal, but after Harbour Bay was lost it became a $3.5 million transaction involving the Cable Beach, South Beach and Prince Charles Shopping Centre locations.

All three are now open under Mr Roberts’ Quality Supermarkets brand, but Mr Finlayson told Tribune Business that out of the $3.5 million gross deal proceeds, less than $2 million would be left to cover the multi-million dollar sums owed to his family and former staff.

He had estimated as recently as February 2013 that around $2.5 million would be available, so the latest figure is a further downward revision.

And, having warned that the $2.5 million would be insufficient to fully compensate City Markets’ creditors, it appears the pie is shrinking further.

Mr Finlayson, though, reiterated that of the $3.5 million, some 800,000 had gone to the employee pension fund in selling the Cable Beach store equipment that it owned to Quality Supermarkets, while legal fees and associated transaction costs would eat up further monies.

“The trust [staff pension fund] has already been paid the amount for its equipment,” he told Tribune Business. “They were paid around $800,000. The rest of it is mainly for legal and other costs, and also some bills and so forth that need to be covered.

“The amount left is going to be less than $2 million, I’m sure. It’s then a matter of negotiation on the severance, and if anything is left over after that, we’ll [the Finlayson family] get something. It may be more than we expected.”

Trans-Island Traders, the Finlayson family-owned 78 per cent majority shareholder of City Markets’ operating parent, Bahamas Supermarkets, is effectively first in the creditor queue due to its $14 million worth of debentures over the company’s assets.

Trans-Island lent money to City Markets, which it acquired in November 2010, and the debt financing was designed to ensure the family’s stake was not diluted or “watered down”.

Still, Mr Finlayson told Tribune Business that the company’s attorneys and those representing the staff were negotiating in a bid to reach a settlement on the amount of severance pay owed.

“There was a [court] hearing just yesterday [Thursday] in Freeport, and the lawyers are making some progress in terms of negotiations,” Mr Finlayson said. “They are supposed to report back to the judge in June.”

Explaining what he meant by his family recovering more than they initially thought from the City Markets collapse, Mr Finlayson emphasised he was sticking by his position that the Employment Act entitled former staff to receive either their pension or severance - but not both.

“A lot of people have chosen to get their monies from the trust, and with the law they can’t get both,” he added. “Those that do not qualify for, or are not vested in, the [pension] trust, severance is being negotiated for that side.”

The part of the Employment Act that Mr Finlayson is relying upon applies only to non-contributory pensions, where the company contributes 100 per cent of the payments and the employee nothing.

That is exactly the type of pension plan that was in place at City Markets. And Section 26 (4) of the Employment Act states: “Where an employer provides a gratuity or non-contributory pension for an employee, the employee is not entitled to both redundancy pay and the gratuity or non-contributory pension, but the employee shall select the one which he prefers.

And Mr Finlayson pointed out that prior to realising what the Employment Act contained, he and his family had made four different severance payment offers - two of which were for $1.4 million - but all were rejected by employee representatives.

“One way or the other I’m confident it will be resolved.” he told Tribune Business of the severance situation. “I know everyone is not going to walk off happy, but we’re all subject to the law, the labour law that’s been in place since 2001.

“I think on all sides there’s going to be some light at the end of the tunnel. To be honest with you, I am relieved. I’ve kind of moved on in the sense that I’m working on some other things right now. It will be nice to put it all behind us and move on to other ventures.”

Mr Finlayson said he never anticipated how complex resolving the City Markets winding-up would be, adding: “I could never have anticipated the hard work.”

He explained that this stemmed from many matters being left “incomplete” when City Markets’ ownership changed hands, both in 2006 when BSL Holdings acquired the business from Winn-Dixie, and in 2010 when Trans-Island bought it from BSL Holdings.

Given that he has resigned as a trustee of the City Markets’ staff pension plan, Mr Finlayson declined to comment on its status, other than to indicate the sale of the company’s former headquarters on the East-West Highway - its main asset - was key to it meeting its obligations to beneficiaries.

But he also revealed that no progress had been made in talks with the Securities Commission on getting permission for Bahamas Supermarkets to hold a shareholders meeting.

Indicating that he was set to bypass the regulator’s executives and appeal directly to its Board, Mr Finlayson said: “We’re still waiting to meet with the Securities Commission in regards to that.

“I don’t know where it’s going to go. We’ve done everything we could possibly do to work with the Securities Commission. I’m trying to see if we could get a meeting with the chairman and Board members on it. It doesn’t seem like it’s working with the executive director of the Securities Commission [Dave Smith]. He’s taken his position and is making it very difficult.”

Tribune Business revealed earlier this year that the Securities Commission forced Bahamas Supermarkets not to hold the planned meeting on the grounds it had not provided the 22 per cent minority shareholders with enough information.

Mr Finlayson, though, argued that it was impossible to meet the regulator’s requirements. He said the two sides had been involved in a “circular argument” for several months.

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

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.