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December 21, 1998
(Forest Resources and Agrifoods)


Government partners with FCC and the owners of IPL in financial package.

Kevin Aylward, Minister of Forest Resources and Agrifoods, today announced that government, in partnership with IPL shareholders, the Farm Credit Corporation and the Bank of Nova Scotia, have reached agreement on a financial package designed to enhance the long term viability of IPL and the poultry industry in this province.

The province currently consumes about $70 million worth of poultry products a year. Less than $40 million worth is produced and processed in the province. "We should be producing more and reducing our dependence on imported products. We know we can produce high quality fresh, frozen and value-added poultry products. Self-sufficiency in poultry products is an achievable objective," stated Minister Aylward. "There is lots of room in the Canadian market place, and in other countries, for high quality poultry products from Newfoundland and Labrador."

Canadians consume about $2.6 billion worth of poultry products a year. "We sometimes have a tendency to focus only on the contributions made to our economy by oil and gas, information technology, manufacturing and communications," said the minister. "The major contribution made by the agriculture sector is too often taken for granted. The agriculture sector has contributed a lot, and has a lot more to give. The Agriculture Awareness Campaign in Newfoundland and Labrador has demonstrated over the past year - WE ARE GROWING!"

A total capital investment of almost $22 million in the poultry industry of this province has been allocated and includes:

  • Construction of state-of-the-art barn complex at Cochrane Pond, at a total cost of approximately $11.3 million.

  • Complete renovation and overhaul of the former Farm Products plant at Pleasantville, at a total cost of approximately $7 million.

  • Purchase of grain storage and feed mill facilities in Mount Pearl and Conception Bay at a cost of approximately $3.6 million.

IPL has experienced overruns on its capital plan, and the transformation from a government owned and money-losing enterprise to a modernized privately-owned operation has taken a little longer than expected.

IPL needs another $3.5 million. This determination was made after a thorough review of financial data and discussions with IPL, the Farm Credit Corporation and the Bank of Nova Scotia. The $3.5 million requirement will be met in the following manner:

  1. IPL shareholders will invest another $1 million of their own money. The shareholders have already come forward with $600,000 in cash, and will finance the remaining $400,000 through the Bank of Nova Scotia on a one year term loan. If the Bank of Nova Scotia requires a one year guarantee on this loan, we are prepared to support it.  

    This additional $1 million in equity brings the shareholder investment up to approximately $5 million.

  2. The Farm Credit Corporation (FCC) will lend IPL another $1 million. The FCC is not requesting government to guarantee this loan, but quite understandably, does expect to obtain security over certain IPL assets. This we are prepared to do.

  3. This will bring the Farm Credit Corporation investment in IPL up to a total of $3.1 million, none of which is guaranteed by the province.

  4. Government will increase its loan guarantee to the Bank of Nova Scotia, on behalf of IPL, by $1.5 million. This brings the total value of government loan guarantees up to $12.5 million, which we don't ever expect to be called upon to honor. The loan guarantees won't cost a cent when IPL succeeds.

  5. The Bank of Nova Scotia will maintain its $7.5 million operating line of credit to IPL, $6.5 million of which is not guaranteed in any way by the province.

  6. As security for its $12.5 million loan guarantee, the province has first charge on approximately $19 million in capital assets. Representatives of government, the Farm Credit Corporation and the Bank of Nova Scotia will continue to work closely with IPL shareholders to secure the future of the company and the poultry industry in this province.

"Without IPL we will become almost totally dependent on imported poultry products. The people of Newfoundland and Labrador should not have to depend on imported chicken. Our own home-grown agriculture sector is now well equipped to meet our needs, and continue to support some 400 jobs in this province," stated Minister Aylward.

"It's time we lifted the dark cloud over IPL which has been created by the recent exchanges in the House of Assembly. Let's allow IPL to get on with its business as a private company operating in this province," said the minister. "I would like to commend the IPL shareholders and employees, the Farm Credit Corporation and the Bank of Nova Scotia for the confidence they have displayed in continuing to support the poultry industry in this province."

Media contact: Cynthia Layden-Barron, Communications, (709) 729-6183

1998 12 21                      2:40 p.m.


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