Pugwash Coop Votes to Sell to Sobeys
A large and emotional crowd reluctantly agreed tonight to dissolve the Pugwash Co-operative and sell its assets to Sobeys.
The Catholic church hall was filled to overflowing causing a delay in the start of the meeting as coop members registered their right to vote.
Sobeys became involved with the local coop when it succeeded Coop Atlantic as the wholesale supplier. The local store was adopted into the Sobeys Foodland program with its pricing and promotional programs.
With tonight’s vote, Sobeys will seek a franchisee to take over the facility as a Foodland store.
The move may have been precipitated by the Nova Scotia Liquor Commission (NSLC) which proposed expansion and a new lease for its attached Pugwash outlet.
The coop board realized their store was aging and in need of numerous upgrades in order to keep pace with the changing demands of the grocery business.
The board postponed the coop’s annual meeting in May of 2018 and began to look at the cost of expansion and improvements for the NSLC and the grocery operation. By November they realized they would likely have to borrow, perhaps as much as two million dollars to effect the required changes.
Despite rising sales and margins under the Sobeys program, the board feared plunging the membership into such onerous debt. They also feared the .5 percent profit margin would make it difficult to find a lender.
They decided to ask Sobeys if they could find a franchisee to take over the Pugwash operation. Not only did Sobeys say yes, but they also presented an offer, in late May, to purchase the assets of the coop which led to the meeting tonight seeking approval from the membership.
Sobeys offered to purchase the land and building for $557,460.00. They would also buy the equipment, currently estimated at $54,540.00 and inventory of about $223,129.00 which would be adjusted at the time of closing.
The net proceeds would be distributed among the 2200 coop members or those who can be identified as members. Given the coop’s 73 year history, some members have died while others have dispersed across the country or beyond.
There is one main wrinkle in the discussion which brings us back to the NSLC. The Commission has the first right of first refusal on two fronts. The provincial outlet could opt to match or exceed the Sobeys offer, or it could object to Sobeys assuming their lease. In either scenario, the Sobeys deal is off and the coop would continue to operate as usual. The NSLC was just advised of the offer and will have thirty days to respond.
Concern for the Community
Three main issues arose during the emotional discussion: concern for a continued commitment to community fundraising and involvement; a desire that none of the existing staff lose a job; and that there be some commitment to keeping a grocery store in Pugwash for the long-term.
Sobeys representative Lori Rhyno, who has worked with the coop as the supervisor of stores on the north shore, says “We want a store in Pugwash. If we didn’t, then we wouldn’t be here with this offer tonight.”
Rhyno said everything currently offered through the coop will be offered through a Foodland store. She says, “Foodland is really about community.”
Rhyno assured the audience that every member of the current staff would be offered a position with the new store at the same rate of pay, with the same benefits and seniority.
The only member of the staff who will leave is Steve Arkens the current manager. Rhyno said this is typically because a franchise operator is usually the owner-manager.
An audience member said, “You are losing a great leader,” prompting a round of applause.
Sobeys Commitment to the Future
The Sobeys plan calls for renovations and expansion after a new franchise operator gets settled. Rhyno says Sobeys would undertake that work and not burden the franchisee with such costs.
Board member Bill Mundle says this decision did not come easy. He said, “When you look at our undertakings to succeed and continue to succeed it would cost us two million dollars. I would not want to be part of any board that would put us in such debt.” He added, “I don’t like it, it breaks my heart.” He added, “I believe the decision we have made is the best for this community and we will continue to have a store.”
No Easy Vote
The decision of the members present required a two-thirds majority, 81 votes to pass. After a couple of fumbled attempts to count raised hands and standing voters, they collected ballots which were counted by the coop’s auditor. The motion to sell the property and assets to Sobeys was approved 84 to 33. The subsequent motion to disband the coop was approved with a single dissenting vote.
The current board of directors will continue the negotiations to completion with an anticipated closing date set for September 8th.
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