Equity investment in Country Ribbon Inc.

Forest Resources and Agrifoods Minister Rick Woodford and Finance Minister Joan Marie Aylward today announced that government has agreed in principle to invest $4.5 million in preferred shares in Country Ribbon Inc. "This is a strategic investment in the livestock industry in the province, which will stabilize the company�s working capital position and enable it to finance its capital expenditures," said Minister Woodford.

Minister Woodford said that government�s equity investment, along with an equity investment from other partners, will strengthen the company�s financial position to enable it to continue progress towards achieving a profitable chicken industry in Newfoundland and Labrador.

"The irony is that it is the history of the operation prior to Country Ribbon Inc. taking it over that is the main stumbling block in the company�s ability to negotiate operating lines of credit and, consequently, without government�s financial support the company would have been forced to shut down," said the minister.

Minister Woodford pointed out that Country Ribbon is a key player in the agrifoods livestock sector and if it were to close, not only would approximately 350 jobs be lost, but other producers who depend on Country Ribbon�s feed and grain facilities would be affected.

"The closure of Country Ribbon would be a major blow to other farmers, forcing them to find alternate feed sources, and pay higher feed costs," said Minister Woodford. "We feel the livestock industry is too important to this province to risk such a potential impact."

Minister Aylward said that due to circumstances beyond its control, Country Ribbon has not been able to find working capital through normal banking channels. She said government�s decision to provide equity financing was made only after a thorough review of the company�s financial statements, its business plan and the substantial progress it has made over the past three years.

"Country Ribbon�s achievements since taking over the chicken operation include positive net earnings in two of the last three years, a substantial investment in the operation, improved labour relations and a strong management team supported by its owners, which have more than 70 years experience in the chicken industry," said Minister Aylward.

Minister Woodford concluded that the decision to assist Country Ribbon Inc. is a prudent one, which demonstrates government�s commitment to the growth and development of a profitable chicken industry and the province�s agrifoods sector.

Media contact:

Sonia B. Glover, Communications, Forest Resources and Agrifoods, (709)729-6183.
Josephine Cheeseman, Communications, Finance, (709) 729-0329

2003 08 08                                       9:00 a.m.