Abaco Markets’ Board is considering whether to sell the former Solomons SuperCentre property in Freeport that was heavily damaged by Hurricane Frances, a move that could eventually lead to a significant reduction in the company’s debt and paying off $7.9 million in principal owed to preference shareholders.
David Thurlow, the company’s president, told The Tribune in an exclusive interview that Abaco Markets had received interest in the former Solomons property “from a number of quarters”.
Although the company was not currently involved in active negotiations to sell the property, a valuation had been done, and the Board was to “decide whether to sell it or not”. Abaco Markets has out “on hold” any moves to redevelop the former Solomons property, having confined activities to just putting the roof back on.
Mr Thurlow pointed out that the proceeds from any sale could be used to further reduce the company’s net debt, which had further declined during the first nine months of the current fiscal year from $15.2 million to $10.3 million as at October 31, 2005.
The Tribune was told yesterday that Abaco Markets’ net bank debt had declined further during the fourth quarter, and was likely to close the fiscal year that ends today at about $9.7 million.
And the sale of the former Solomons property in Freeport would enable Abaco Markets to further reduce that figure, potentially freeing up cash flow from operations to pay off holders of $7.9 million in preference share debt early.
Lowering its debt to reasonable levels levels would also pave the way for Abaco Markets to
reqegotiate its banking facilities. Currently, the company has an arrangement with its preference shareholders to pay back the $7.9 million principal in instalments – $2 million at the end of 2006 2007 and 2008, with the remainder due in 2009. Dividend payments on the preference shares are made quarterly.
Net cash from operating activities in the nine months to October 31, 2005, increased from $4.7 million in the same period during 2004 to $6.1 million this time around.
This enabled Abaco Markets to fund $1.6 million in capital spending to finish the three year, $7 million store improvement programme. Capital expenditure in the forthcoming fiscal year, which finishes on January 31, 2007, will be $600-700,000, half of what it was this year, most of it related to reinvestment in equipment.
Meanwhile, Mr Thurlow said that Abaco Markets had attempted to give itself an advantage over its competitors despite undergoing three years of financial hardship by investing in information technology.
He said: “What we’re trying to do from the long-term perspective is use IT for our competitive advantage.
“Despite our financial condition we’ve been able to invest significantly in the business in terms of IT and the stores; which we perceive our competitors not doing to the same extent.”
Mr Thurlow said the initiative had begun with the launch of an electronic gift card last November, and upgrades to the company’s IT platform involving the centralisation of all records.
This would provide the platform for developing a customer loyalty card and a streamlined way for processing and accepting cheque payments.
By NEIL HARTNELL Tribune Business Editor
