ABDAB board meets to decide position on Finlayson proposals
The board of directors and shareholders of Associated Bahamian Distillers and Brewers Limited(ABDAB) finally had their chance to decide on whether or not they would accept either of their president’s proposals which ultimately would have them share in City Market’s future.
Yesterday’s late board and annual general meetings of ABDAB would have addressed two proposals made by its President Mark Finlayson. Under the proposals outlined earlier byGuardian Business, the company’s shareholders would have received options to acquire Trans-Island Traders outright, or its 78 percent interest in Bahamas Supermarkets Limited(BSL), the parent company of City Market.
A source close to the companies toldGuardian Businessyesterday that ABDAB shareholders may have been concerned about both proposals, as ultimately they could lead to ABDAB owning an AML Foods stake, albeit indirectly.
According to the source the value of that acquisition at almost 50 percent above current market prices was not enticing to the majority of ABDAB’s board.
The plans Finlayson announced to grow City Market are for either the development of three ABDAB-owned properties into 55,000-square-foot super centers, or alternatively to acquire control of competitor AML Foods Limited. The ABDAB properties include the former Burns House location on JFK Drive, a property on the corners of Abundant Life Road and the East-West Highway(the former Bethel Robertson location), and a Freeport property.
BSL has around$12 million available for either the AML acquisition or the development of three super centers. If the AML acquisition attempt is ever approved and is successful, it would result in a quick increase in market share for City Market, and spare both chains a battle over market share. The ABDAB properties, with the exception of the JFK location, are in eye-sight of AML Solomon’s Supercenter stores.
Finlayson had indicated a preference for the acquisition of the interest in BSL as opposed to the outright ownership of Trans-Island, its majority shareholder. He said he believed this would have a broader benefit to the 22 percent minority shareholders of BSL. Trans-Island acquired the majority 78 percent interest in BSL for$1in November 2010, though its current price remained at$5.01 up to yesterday. Finlayson said previously the establishment of a market value reflective of what someone would actually pay for the shares would be beneficial to BSL’s minority shareholders.
Finlayson also toldGuardian Businessin an earlier interview that under either option ABDAB shareholders would not have to fork over settlement in cash, as the positions in either Trans-Island or its shares in BSL would be exchanged for an additional stake in ABDAB. Finlayson and his family own about 70 percent of ABDAB, he said, through General Bahamian Companies, of which 92 percent is owned by his family.
ABDAB has essentially become a real estate holding company after having been involved in a number of businesses and industries since its formation in 1979. When the company sold Burns House Limited(BHL)andCommonwealth Brewery Limited(CBL)to Heineken International B.V. in May 2010, it secured ownership in the earlier-mentioned properties as part of the consideration for the deal.
ABDAB’s chairman is Sir Garet Finlayson, and its board consists of many notable Bahamian businessmen, including Mark Finlayson, Sir David Gibbons, Franklin Wilon, Barry Newman, James Smith, Sir Arlington Butler, and Reno Brown. The company’s share price has moved from$10.00 in 1997 to$29.00 most recently, reaching$41 between 2002-2007. The company has paid$69.4 million in dividends from 1995.