Government releases letters which outline FPI commitments

Beaton Tulk, Minister of Industry, Trade and Rural Development, and Minister of Fisheries and Aquaculture (acting), today released written correspondence between the government and Fisheries Products International (FPI) Ltd.

"When the new Board of Directors was elected in May 2001, they made several commitments to government and to the people of the province," said Minister Tulk. "Included, were written commitments to the province making guarantees about the future protection of FPI plants and employees in Newfoundland and Labrador." 

The province is releasing the following documents:
 
� an open letter to all shareholders of FPI Limited; 
� a letter from Mr. Derrick Rowe to Minister Gerry Reid, dated May 9, 2001; 
� a letter from Mr. Derrick Rowe to Minister Gerry Reid, dated May 18, 2001; and, 
� a letter from Minister Gerry Reid to Mr. Derrick Rowe, dated January 4, 2002.

"We are releasing this correspondence so as to clearly outline the commitments made by FPI - commitments to which this government will hold them accountable," added Tulk. "As well, the letter from Minister Reid to Mr. Rowe, outlines government's response to the proposed investment plan by FPI."

See attached backgrounders.

Media contact: Elizabeth Matthews, Communications, (709) 729-3733, or (709) 727-3438.

BACKGROUNDERS FOLLOW

CLEARWATER FINE FOODS                                                                       DERRICK H. ROWE
757 Bedford Highway                                                                                    7 Rostellan Drive
Bedford, Nova Scotia                                                                                    St. John's, Newfoundland


AN OPEN LETTER TO THE SHAREHOLDERS OF FPI LIMITED

Dear fellow FPI shareholders:

At the annual meeting of shareholders to be held on May 1, 2001, you have a very important decision to make concerning your investment in FPI Limited.

We mailed a dissident proxy circular to you on April 4, 2001. During the past several weeks, you have been provided with a lot of information and, unfortunately, misinformation. A smokescreen has been created, obscuring what this process is really about - electing a board of directors with the vision, enthusiasm and commitment needed to revitalize FPI. In this letter, we will set the record straight, so that you can make an informed decision about the future of your company based on the straight facts.

The issue before you is simple -- is it time to replace FPI's current board with new directors who will focus on enhancing and capturing shareholder value?

IF YOU HAVE ANY QUESTIONS, OR REQUIRE ANY ASSISTANCE IN VOTING YOUR
SHARES, PLEASE CALL, TOLL-FREE, FROM ANYWHERE IN NORTH AMERICA
1-800-322-2885

THE STRAIGHT FACTS

Clearwater wants FPI to be a bigger, more profitable company.

Clearwater owns over 2 million shares of FPI purchased at cost of approximately $19.2 million. This is a very substantial investment. Clearwater made this investment because it believes that FPI is worth much more than its trading price. Before public notice of the proxy contest, FPI's shares traded at $9.30. The trading price has since risen to $11.40, but even at this higher level the common shares of FPI trade substantially below the book value of the company, which was nearly $13.00 per share as of December 31, 2000. On this basis alone, Clearwater could have concluded that its investment in FPI made good economic sense. But Clearwater believes that FPI can further enhance FPI's underlying value. FPI is a company with lots of potential that can be unlocked by a board of directors willing to aggressively identify and pursue a strategic course that will permit FPI to take advantage of its opportunities and capture shareholder value.

Clearwater and FPI both carry on businesses that operate in the seafood industry. However, Clearwater and FPI are NOT "significant" competitors as the current board of FPI has alleged. There is limited overlap between their respective businesses. Clearwater is predominantly a harvester and primary processor of shellfish and FP1 is predominantly a secondary processing and marketing company. There is very little, if any, overlap in the customers and markets of Clearwater and FPI.

The alternate slate will be responsive to shareholders' concerns.

As noted above, Clearwater and FPI are not in fact significant competitors. Furthermore,. service by directors on boards of companies which may compete is an increasingly common phenomenon in globalizing industries. However, based on our discussions with shareholders, we understand that some of you have concerns about the potential for conflicts of interest arising if John Risley is elected a director of FPI. As such, if elected, the alternate directors will immediately implement the following measures in order to be responsive to your concerns:

� A by-law will be passed to require that at all times a majority of directors are independent of the company and its significant shareholders, to be defined as shareholders holding directly or indirectly more than 10% of the shares of FPI.

� A by-law will be passed to require that the Chairman be independent of FPI and its significant shareholders.

� A by-law will be passed to establish a committee of the board having the mandate to vigorously monitor and deal with any potential conflicts of interest that may arise with respect to any director. This committee will be comprised of individuals completely independent of any significant shareholder. The committee would initially be comprised of Messrs. Rex C. Anthony, John C. Crosbie, P.C., O.C., QC. and Frank C. Sobey.

� If at any time this committee independently determines that there is a potential conflict of interest between FPI and any director, the committee will be required to so inform the board and such director will be excluded from participation in the board's review and consideration of the relevant matter.

� The committee will be responsible for reviewing all written material before it is circulated to board members to ensure that a director associated with a significant shareholder does not receive any information that is competitively sensitive.

� If the committee determines that it is not in the best interests of FPI for any director to have access to any type of information of the company, it shall preclude such director from seeking or receiving any such information from FPI.

� The committee will also be responsible for identifying future nominees for election as directors of FPI.

This policy will be in addition to the various provisions of the Corporations Act (Newfoundland), which strictly regulate conflicts of interest between a director and the company and shareholders that he serves, and rules of common law, which for over a century have provided that if potential conflicts are properly managed individuals can serve as directors of competing companies. The dissidents believe that these arrangements will fully protect the interests of FPI and ensure that any conflicts of interest are dealt with in a pro-active and diligent manner.

We are committed to enhancing value for ALL shareholders.

We have proposed an alterative slate of directors for election at the annual meeting of FPI to enhance the value of FPI for all shareholders. Contrary to the suggestions of the current board of FPI, Clearwater is NOT attempting to take control of FPI for its own purposes, or at all. We believe that an objective review of the facts set out below clearly supports this position. But we invite you to draw your own conclusions.

� The alternative slate of directors that the dissidents are proposing includes Rex C. Anthony, Jeffrey P. Benson, Frank J. Coleman, John C. Crosbie, P.C., O.C., Q.C., R.Wayne Myles, Brendan J. Paddick, Derrick H. Rowe and Peter Woodward. Each of these individuals is a distinguished member of the Newfoundland business community and strongly committed to the Province and its people. These individuals, together with Eric F. Barratt, James A. Good, William P. Rosenfeld and Frank C. Sobey, out-of-province nominees, want to be members of the FPI board because they believe that when FPI adopts strategic plans to enhance its efficiency and the competitiveness of its operations, all shareholders will benefit. These individuals are independent of Clearwater and are certainly not "yes men" for John Risley.

� Derrick H. Rowe recently purchased over $500,000 worth of shares of FPI. Mr. Rowe made this purchase because he believes that a gap exists between the current share price and the underlying value of FPI. It is inconceivable that Mr. Rowe would have made this investment if he believed that Clearwater was attempting to take control of FP1 for its own purposes or that the interests of the dissidents were not aligned with the interests of all shareholders.

� There is no "Plan B" as alleged by Mr. Young.

Clearwater is not acting in concert with other shareholders of FPI.

Clearwater and the dissidents are not acting in concert with any other shareholders of FPI in connection with the proxy solicitation, and there is absolutely no basis for any such suggestion.

The current directors of FP1 are - once again - attempting to contrive a technical legal obstacle to ensure that you are unable to hold them accountable at the annual meeting of FPI to be held on May 1, 2001. In its letter to shareholders dated April 9, 2001, the current board of FPI states: "The Board of FPI is required to disqualify and disregard any and all votes cast by persons or companies who together hold more than 15% of FPI's common shares, if the Board is of the opinion that such group of persons or companies is acting in concert...". The implication is clear: if the current board is not re-elected by the shareholders of FPI, it may "disqualify and disregard" a sufficient number of votes steps to ensure that it is re-elected. Such injudicious action, by the current board would leave Clearwater no choice but to take legal proceedings against those members of the board who participate in such action. The groundless threats of disenfranchisement should not deter shareholders from freely exercising their voting rights at the meeting.

The current board of directors is not concerned about enforcing the 15% share restriction; on the contrary, the directors were content with Clearwater's share purchases as long as such purchases supported the share price, and they did not raise any issue about Clearwater supposedly acting in concert with others until confronted with the prospect of being removed from office at the upcoming annual meeting. If there was any credible basis for the board's recent statements concerning the 15% limitation, the board would have already taken appropriate and judicious steps to enforce the law - indeed, the directors had a duty to do so. Clearwater will vigorously contest any attempt by the current board of FPI to disenfranchise the company's shareholders at the annual meeting.

FPI's current board is waging a campaign of fear.

We realise that FPI's strength and potential is derived from its strong partnership with the communities and people of Newfoundland. We do not intend to close any of FPI's processing plants in Newfoundland or otherwise. On the contrary, we are committed to reinvesting and enhancing these facilities. Suggestions made by Mr. Young that we intend to shut Newfoundland-based operations are scare tactics of the worst kind, and are absolutely untrue.

Mr. Young claims that he can predict that in the future we will not do what we say. It defies reason that the likes of John Crosbic, P.C., O.C,, Q.C. and the other prominent and respected business leaders from Newfoundland who comprise the majority of the proposed slate of directors would be intent on presiding over actions detrimental to their communities.

We believe that shareholders should have the right to nominate and elect the board of directors of FPI and that the incumbent board should not interfere with this fundamental right so as to require shareholders to sue their own company in order to exercise their basic rights of corporate democracy.

To entrench his position as Chairman and CEO of FPI, Victor Young is:

� waging a campaign of fear in Newfoundland in the hopes of persuading the Government of Newfoundland to somehow intervene to deny shareholders the opportunity to consider electing an alternative board;

� on the basis of misinformation as to what we would do if elected, creating fear and uncertainty among the employees, suppliers, customers and shareholders of FPI; and

� waging a legal campaign (at the expense of the company) to try to preclude the shareholders from having the opportunity to consider the alternate slate at the forthcoming annual meeting of shareholders and threatening to utilize further legal tactics to preclude shareholders from exercising their right to vote.

These actions by Mr. Young significantly adversely affect the company's relationships with its stakeholders. Clearwater will institute legal proceedings against the members of the current board that acquiesce in any such conduct that is detrimental to FPI or its shareholders.

IF YOU HAVE ANY QUESTIONS, OR REQUIRE ANY ASSISTANCE IN VOTING YOUR SHARES, PLEASE CALL, TOLL-FREE, FROM ANYWHERE IN NORTH AMERICA
1-800-322.2885

Yours very truly,

CLEARWATER FINE FOODS INC.


John Risley, President                                                                                            Derrick H. Rowe

FISHERY PRODUCTS INTERNATIONAL


Wednesday, May 09, 2001


Honourable Gerry Reid
Minister of Fisheries and Aquaculture
Province of Newfoundland and Labrador
P,O. Box 8700
St, John's, NF
A12 4J6

FAX: 709-729-0360                                                                            Original Sent by Courier

Dear Minister:

This correspondence follows the meeting of May 2nd, 2001 between you and your colleagues, 
and the majority of the new Board of Directors of Fishery Products International (FPI).

One of the questions raised by the Province which was not addressed in our publicly disclosed documents, namely the Proxy Circular dated April 3, 2001 and the subsequent letter to Shareholders, was with respect to harvesting and processing of quotas. I can confirm the policy and commitment of the Board of Directors that:

� all current and future quotas and resource allocations held by FPI in waters adjacent to Newfoundland and Labrador shall be harvested and processed within Newfoundland and Labrador.

Sincerely,


Derrick H. Rowe
Chairman of the Board

FISHERY PRODUCTS INTERNATIONAL


May 18, 2001

Honourable Gerry Reid
Minister of Fisheries and Aquaculture
Province of Newfoundland and Labrador
P.O. Box 8700
St. John's, NF A1B 4J6

Dear Minister:

I am writing further to our meeting of May 2, 2001 with you and several of your Cabinet and caucus colleagues to confirm the commitments of FPI's newly elected Board of Directors to implementing our public undertakings, and those made to FPI shareholders and the people of Newfoundland and Labrador prior to the election of the new Board on May 1, 2001.

As Chairman of the FPI Board, I wish to assure you that the Board is highly conscious of its responsibilities to our employees, to the communities in which we operate, to the many Newfoundlanders and Labradorians who depend, directly or indirectly on our operation across our Province and to other stakeholders.

The Board is aware that FPI is a Newfoundland Corporation formed by and subject to the provisions of the Fishery Products International Limited Act, which is an act of the legislature of the Province of Newfoundland and Labrador. In this regard, F'PI has special responsibilities which we as a Board are obligated and committed to fulfill.

We have taken office recognizing that our company has a long history of responsible corporate
activity. Stewardship and respect for community has been a hallmark of FPI since its inception and will remain central to the FPI philosophy. In this regard, on behalf of the Board, I am prepared to meet with you or your designate, quarterly or more frequently if you desire, to discuss the direction of the company and major issues impacting on the company, the communities in which FPI operates, and the state of the Newfoundland and Labrador Fishery. This Board is fully committed to the principle of cooperation and consultation and will ensure the government is properly informed of major decisions by the Board which impact upon provincial policy, regulatory matters or jurisdiction.

As you know, a particular concern of government and communities has related to harvesting and processing of quotas. In this regard, I wrote you on May 9th the commitment set out in my letter to you of May 9, 2001 that all current and future quotas and resource allocations held by
FPI in waters adjacent to Newfoundland and Labrador shall be harvested and processed within
Newfoundland and Labrador.

The members of the new Board have assumed their responsibilities with a strong sense of the importance of FPI to the communities of Newfoundland and Labrador. Nine of the thirteen Board members are Newfoundlanders, most of whom are well known throughout our Province for their contributions to business and the community. I believe the new Board is remarkable for the quality and independence of its members.

In this regard, I am pleased to advise you and your col!eagues that Father Desmond McGrath,
who has been a member of the Board of FPI since its inception, has recently agreed to join the current Board. We look forward to his experience and wisdom in ensuring FPI's future growth.

As you know, as nominees, our Board made a number of commitments in the document entitled "An Open Letter to the Shareholders of Fishery Products International Limited," which is attached to the letter . All these commitments are being implemented, and, where necessary, will be incorporated in the bylaws of the Company. For example, a Board Committee on Corporate Governance has been established with the mandate to monitor and deal with any potential conflicts of interest that may arise with respect to any director. This Committee is chaired by Mr. Rex C. Anthony and comprised of Mr. Anthony, the Hon. John C. Crosbie, P.C., O.C., Q.C., and Mr. Frank C. Sobey. The mandate of this Committee is as set out in the Open Letter to Shareholders.

As you. know, the new Board has committed to FPI shareholders to pursue strategies to increase the growth and value of the Company. We believe FPI has the human and other resources required to improve substantially its performance. To accomplish this goal will require substantial new investments in plants and equipment, innovative approaches to management and the support of our employees. Our goal is to grow our Company in a manner which provides security to our current workforce while at the same time increasing employment in Newfoundland and Labrador.

Let me note here that I have had the opportunity in the past week to visit our operations on the South Coast. I was extremely encouraged by the quality of FPI's people in the plants and on our vessels, as well as heartened by the warm reception I received. I Look forward to visiting our remaining operations in the coming weeks. The new Board is committed to a process of consultation with our employees, particularly at the plant level, to learn from them how operations might be enhanced.

I look forward to an ongoing dialogue with you and other members of the Government. The success of FPI depends on the support of the Government of Newfoundland and Labrador. Our goal is to maintain an atmosphere of trust and cooperation, based on clear communications and consultation.

Yours truly,

Derrick H. Rowe
Chairman

GOVERNMENT OF
NEWFOUNDLAND AND LABRADOR

      Department of Fisheries and Aquaculture
      Office of the Minister

January 4, 2002

Mr. Derrick H. Rowe
Chairman of the Board
Fishery Products International
70 O'Leary Avenue, P.O. BOX 550
St. John's, Newfoundland
A1C 5L1

Dear Mr. Rowe:

I have recently been briefed with respect to your proposed investment plan for your groundfish operations. I am writing to advise you that given the resulting significant human resource impacts, and the lack of any demonstrated and effective plan by FPI to deal with the affected workers, the Government of Newfoundland and Labrador finds your proposed approach to be totally unacceptable.

The plan which your officials have outlined is inconsistent with commitments you have made to Government and which your company made publicly to the people of this province. Specifically, your May 18, 2001 letter to me stated "Our goal is to grow the company in a manner which provides security to our current workforce while at the same time increasing employment in Newfoundland and Labrador." I fail to find security in a plan which would result in the elimination of up to 40% of your groundfish workers. Furthermore, Mr. Risley made the following public comments on May 2, 2001 which were reported on a local radio station and in the Globe and Mail, respectively: "None of the FPI employees have anything to fear" and "We are going to do this (expand the company) by investing in the company, not by laying people off". I am at a loss to understand how your proposed plan is consistent with these commitments, which I and my Cabinet colleagues accepted in good faith and to which we intend to hold FPI fully accountable.

I understand that your plan involves investments over a 3-4 year period but virtually all the employees being impacted will be displaced this year. This indicates to me a lack of consideration vis-a-vis the fallout to a large number of people who have, in many cases, spent their working lives with FPI.

If you choose to proceed with the plan which your officials have laid out, the Government will have no other choice but to explore any and all options to protect these workers.

Sincerely,

Gerry Reid, Minister

2002 01 10                         5:00 p.m.