CITY Markets pension fund trustees have no legal standing to sell the defunct supermarket chain’s former head office to AML Foods for $3 million, it was alleged yesterday.
Whanslaw Turnquest, the company’s former chief inventory control officer, claimed in a February 28, 2018, affidavit that the former guardians for the employee pension plan - known as the Bahamas Supermarkets Ltd Profit Sharing Retirement Plan - had conveyed the property to another entity on May 1, 2014.
That transaction occurred before the January 2015 appointment of Dennis Williams and Rosalie McKenzie, the current trustees, who signed the deal to sell the 6.195 acre East-West Highway site to BISX-listed AML Foods on behalf of the pension plan.
However, Mr Turnquest is claiming that the duo have no right or ability to sell the former City Markets headquarters due to the 2014 deal, which conveyed the property to an entity called BSL Retirement Plan Ltd.
“By a conveyance dated May 1, 2014, between former trustees of the retirement plan, Christine Turnquest-Knowles and Constance Rolle, and BSL Retirement Plan Ltd, the former trustees conveyed their right, title and interest in the said property to BSL Retirement Plan Ltd, in which a substantial number of beneficiaries held shares,” he claimed.
“This conveyance was executed before the current trustees [Mr Williams and Ms McKenzie] were allegedly appointed on January 16, 2015. This meant that title passed (for whatever amount of land) to the company [BSL Retirement Plan Ltd] long before the trustees said they were appointed as per advice from our attorneys.”
The resulting uncertainty is understood to have prompted the parties involved to turn to the Supreme Court. Tribune Business was told that a hearing is scheduled before Supreme Court Justice Ian Winder tomorrow morning in a bid to clear up the title/sale concerns identified by Mr Turnquest in his affidavit.
Gavin Watchorn, AML Foods’ president and chief executive, did not respond to Tribune Business’s message seeking comment. Darren Bain, an attorney with Lignum Advisors, who is said to be acting for the BISX-listed food and franchise group on the matter, declined to comment. “I’m not at liberty to speak,” he said. “I’ve nothing to say on that matter at the moment.”
Tribune Business, though, was told that the 2014 transaction involving BSL Retirement Plan Ltd placed ownership of the former City Markets property in the hands of the supermarket chain’s pension beneficiaries since they own that entity.
If that stands, the proceeds from the $3 million sale to AML Foods would go directly to the pensioners rather than the trustees. However, this newspaper understands that Mr Williams and Ms McKenzie are challenging that 2014 deal and, if successful, this would establish their right as trustees to sell the former head office and collect the proceeds - not the beneficiaries.
AML Foods has been aggressively acquiring real estate throughout New Providence as part of its expansion plans, which focus on developing a presence in communities it does not yet serve through a more neighbourhood-style format.
The group unveiled a five-year growth plan in its latest annual report, which includes the objectives of opening stores in south and south-west New Providence. It has already acquired a 4.506 acre site on Charles Saunders Highway, between Seabreeze Estates and Pinewood Gardens, for that purpose.
And AML Foods is also seeking “a new, more modern facility” for its Cost Right format once its Town Centre Mall lease expires in early 2020. The former City Markets headquarters site, located centrally close to major population centres and roads, would potentially ‘tick the boxes’ for a new Cost Right and corporate head office.
Disputes over ownership and title to the former City Markets head office are nothing new, with the property once representing the pension fund’s most valuable asset. Years of being unoccupied, since the supermarket chain collapsed in 2012, mean the building has deteriorated massively, with much of its infrastructure either damaged of looted.
Ms McKenzie was president of the Bahamas Commercial Stores and Warehouse Workers Union, the union that represented City Markets line staff, with Mr Williams the union’s attorney, prior to both taking over as pension plan trustees in early January 2015.
Tribune Business reported in May 2016 that the duo had been seeking a Supreme Court Order that the East-West Highway building was still owned by the pension plan or, in the alternative, that other parties be blocked from selling it and/or remit the proceeds to themselves.
This action was eventually dropped, but resulted from differences with Mark Finlayson, principal of Trans-Island Traders, City Markets’ last owner, over who owned the East-West Highway property.
Mr Finlayson stuck to the position that the pension plan’s interest in the former company head office was exchanged for preference shares in Associated Bahamian Distillers and Brewers (ABDAB), a company majority controlled by his family.
The deal effectively switched the security for the former supermarket chain’s pension beneficiaries from illiquid real estate assets that had proven difficult to sell to a more liquid investment in ABDAB.
With no buyers then emerging for the East-West Highway site, the pension beneficiaries - via the trade union that represented the majority of the former workers - were in theory given the opportunity to receive dividend payments on those $2.6 million worth preference shares and, potentially, a cash payout of everything owed to them.
Mr Williams, though, argued that the conveyances for the East-West Highway property’s division, and sale, to two ABDAB companies were “invalid” and that the pension fund remained the true owner.
He was especially concerned over the separate sale of the back parking lot and delivery area, which the new trustees were “only made aware of... in the last few weeks” - some seven to eight months after the deal took place.
“The trustees are advised by [attorneys] that the property is absolutely owned by the City Markets pension plan,” Mr Williams told Tribune Business via e-mail in 2016.
“There are no concerns related to the transaction purportedly transferring the East-West Highway property, as the trustees were duly advised by two counsels that the transaction is null, void illegal and of no effect.
“The properties will be placed in the market in very short order and sold for the benefit of the beneficiaries.”