Published On:Monday, November 01, 2010
The move by an affiliate of Bahamas Food Services (BFS) and its principal, Ben Frisch, to acquire the 78 per cent majority shareholding in City Markets "doesn't make sense at any level", one competitor believes, as Tribune Business sources confirmed that rival retailers were already taking steps to stop buying meat and other produce from the wholesaler.
The signing of a Memorandum of Understanding (MoU) between Associated Grocers of the Bahamas, a BFS/Mr Frisch affiliate, and BSL Holdings over the purchase of the latter's 78 per cent equity holding in Bahamas Supermarkets, City Markets' operating parent, has produced a variety of reactions within the Bahamian grocery retail and wholesale industry - including "outrage", "paranoia" and incredulity.
Among the latter category was Robin Hood principal and president, Sandy Schaefer, who was initially disbelieving about the identity of City Markets' purchaser until Tribune Business presented him with its evidence.
Mr Schaefer questioned why anyone would want to assume the "high debt burden" currently on City Markets' books, which includes some $10.54 million in accounts payables owed mostly to Bahamian suppliers, plus RoyalBank of Canada's bank loans.
"If indeed it is a wholesaler, it doesn't make sense to me on any level," Mr Schaefer told Tribune Business. "I don't see what is to be gained financially by any enterprise when acquiring such a high debt burden to begin with. They're putting themselves behind the 8-ball to begin with - to encumber yourself with such a heavy debt burden.
"What will come out of it, I don't know. To me, it's merely delaying the inevitable." Mr Schaefer estimated that any buyer would require some $50-$60 million to acquire City Markets and "revamp the stores. Unless you can to that, you're in for a very long haul".
Another leading retailer, who requested anonymity, was just as incredulous about the move by BFS and Mr Frisch. "They wouldn't trade their lucrative wholesale business for a non-existent retail business," the source said. "That would be beyond stupid. The Solomon Brothers shot themselves in the foot. They'd [BFS] shoot their head off trading a good wholesale business for a retail business that doesn't exist.
"I don't know why anybody would buy it because the other retailers, Supervalue, Abaco Markets, Robin Hood, Premier Foods have their sales, so why should anybody buy their expenses? I would've thought it would have to go through liquidation as I think the parts are more valuable than the whole."
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