NLIS 2
October 25, 2004
(Fisheries and Aquaculture)

 

Province completes Arnold�s Cove transaction involving groundfish allocations

The Government of Newfoundland and Labrador has fulfilled a Memorandum of Understanding signed in June whereby the province has acquired the historic rights to the Groundfish Enterprise Allocations (quotas) associated with the Arnold�s Cove fish plant. These allocations have in turn been leased to a local company, Icewater Seafoods, says Trevor Taylor, Minister of Fisheries and Aquaculture.

"In June, I announced the provincial government�s intent to acquire High Liner Food�s groundfish quotas associated with the Arnold�s Cove fish plant. It was our intention that the province would also lease these quotas to Icewater Seafoods, a locally-owned and operated start-up company in Arnold�s Cove," said Minister Taylor. "This transaction has now been finalized and there are a number of benefits to the residents of Newfoundland and Labrador, particularly in rural communities ranging from Southern Harbour to Clarenville. Our approach ensures that the quotas and the historical rights to this fish will remain in Newfoundland and Labrador.

"This is a good example of how a strategic investment by the provincial government in our province�s rural economy will have the highest economic and job impact. We would also like to acknowledge that High Liner Foods has been a good corporate citizen in its efforts to facilitate this transaction."

The Arnold�s Cove fish plant, considered to be one of the most advanced in the world, employs approximately 400 people. As stated in a June 9 news release, the government�s investment is consistent with its policy of not providing loan guarantees, direct financial assistance, or subsidies to primary processing companies.

BACKGROUNDER
Arnold�s Cove transaction

2002:

High Liner Foods Inc. announced that it intended to divest itself of the Arnold�s Cove groundfish facility. This announcement was consistent with the company�s plans to redirect efforts from primary fish processing to value added processing and marketing.

Late 2003: 

High Liner Foods Inc. had still not found a buyer for the Arnold�s Cove facility and was prepared to decommission the plant if necessary. It indicated that it would be prepared to offer the plant assets to the current plant manager at nominal cost if the manager, Mr. Bruce Wareham, developed a satisfactory business proposal that included an agreement to sell finished products to High Liner. In the absence of such a proposal, High Liner would sell the plant and associated assets, including the groundfish enterprise allocations (quotas) on the open market, or decommission the operation.

Spring 2004: 

The provincial cabinet provided approval in principle for the Minister of Fisheries and Aquaculture to negotiate an agreement that would see the province acquire the Arnold�s Cove groundfish quotas from High Liner, so that the allocations would remain available to provincial interests. The quotas would then be leased on a long term basis to Icewater Seafoods, a company established by Mr. Wareham. Based on an independent valuation of the quotas and associated historic rights, the province decided to invest $3.5 million in support of this venture.

June 2004: 

The Minister of Fisheries and Aquaculture, Trevor Taylor, held a news conference to announce that a Memorandum of Understanding (MOU) had been signed between the province, Icewater Seafoods, and High Liner foods. Minister Taylor explained that, in addition to helping to preserve approximately 400 jobs in rural areas, in the long-term the province would benefit from the quotas associated with Arnold�s Cove in the event of a recovery of groundfish stocks. Minister Taylor also emphasized that the government�s planned investment would be consistent with its policy of not providing loan guarantees, direct financial assistance, or subsidies to primary processing companies.

October 2004: 

The Newfoundland and Labrador Industrial Development Corporation (NIDC), a provincial Crown corporation, acquired the groundfish enterprise allocations associated with the Arnold�s Cove fish plant. A transfer agreement was completed that saw High Liner Foods Inc. transfer, at nominal cost, all of the allocations and the historical rights associated with them, as well as its groundfish harvesting licence and seven associated vessel designations (licences), to the NIDC. The NIDC has subsequently leased these allocations to Icewater Seafoods Inc. / Icewater Harvesting Inc. for a period of 20 years. In exchange for a sum of $3,500,000, using funds advanced by the province, a subscription agreement has been signed whereby the NIDC will acquire preference shares from Icewater Seafoods with dividends payable based on profits.

Media contact: Alex Marland, Communications, (709) 729-3733

2004 10 25                 10:00 a.m.


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