Abaco Markets Leases Cost Rite Abaco Building

Hoping to pay off a $1.7 million loan at the Royal Bank of Canada before it is matured, Abaco Markets Limited announced last Friday that they are planning to lease the former Cost Rite Abaco building for the next three years.

According to a statement issued by Abaco Markets last Friday, the former Cost Rite Abaco store, which officially closed its doors last month as a result of decreased profits, has been leased to Price Right Limited.

All equipment that was once used by Cost Rite will be sold to Price Right.

The lease includes an option to purchase the building at the end of the lease for $2.8 million.

Additionally, an agreement was reached with Price Right Ltd. to purchase the equipment of the former business for $350,000.

"We are pleased that a transaction could be agreed so quickly after our closing of the store in early March," says Mr. Gavin Watchorn, President of Abaco Markets Limited.

"This will allow us to turn a previous loss making store into a profitable rental center. We will use the sales proceeds, along with the proceeds from the liquidation of the inventory, to make additional repayments on our Royal Bank outstanding bank debt," he said.

Mr. Watchorn told the Journal that Abaco Markets has a $1.7 million debt with Royal Bank of Canada.

"It (sale proceeds) will help but we didn’t need the sale to meet the debt repayment. We took out that loan for the Solomon’s Freeport building. We have a five-year term and we are approximately a year into it. We expect to pay that loan off before its maturity," Mr. Watchorn said.

He said that Cost Rite Abaco has been in the Abaco Markets family for quite some time and despite all that it had done to keep its head above water, it just couldn’t survive.

He said that had Abaco Markets completed the deal with another company wishing to purchase the business, Cost Rite Abaco would still be opened today.

However, that particular transaction fell through and no agreement between both parties could be reached, Mr. Watchhorn added.

"It was a tough decision for us given that the company was with us for many years, and it was our starter company with Abaco. However, it was the best decision for Abaco Markets and we made a decision to stem the losses of the company," Mr. Watchorn said.

As for Abaco Markets, he said that the company is doing very well despite the economic situation being faced in the country and globally.

He said that he is glad that this new deal was completed so quickly after the company’s closure.

On March 9, Abaco Markets announced the closure of Cost Rite Abaco, which left some 14 persons unemployed.

The owners said that the company failed to perform despite a significant investment of $1 million and restructuring.

Watchorn said Cost Rite Abaco continued to lose money – both in terms of lagging sales and high inventory losses.

The company tried many options to keep its doors open from wholesale to the revamped Club model to the reintroduction of retail products with no success, he said.

Abaco Markets reported that its Board had been contemplating closing the store for some time but, in an effort to avoid such action, the Group sought out potential purchasers for the business and had been in discussions with a particular group for several months.

When a potential sale became a possibility, the Company decided to keep the location open in the hope of concluding a sale. However, it became clear that a sales agreement would not be reached and the store’s performance had continued to deteriorate.

All former employees of Cost Rite Abaco received full severance packages with the majority of the 14-person staff receiving their packages immediately and some remaining on staff to assist with the transfer of both products and equipment to the Group’s other locations.

Those remaining staff has since been let go, Mr. Watchorn told The Journal.

The Company also offered continued coverage on the Group’s health insurance plan for up to 6 months to enable affected employees to find alternative coverage.

While that particular business had been failing for some time, Abaco Markets itself has been thriving despite the lagging economy with a net profit for the quarter ending January 2009, of $1.533m compared to that of $628k for the same period the previous year.