Fisheries and Aquaculture
December 20, 2007

Binding Agreements Finalized For Sale of FPI Assets

The Provincial Government has concluded agreements related to the sale of the assets of Fishery Products International (FPI) Limited and has officially approved the sale of those assets to Ocean Choice International (OCI) Incorporated and High Liner Foods Incorporated (High Liner). This will bring the Newfoundland and Labrador fishing industry into a new era of stability. The agreements contain definite benefits for the workers and communities and provide for an unprecedented commitment that adjacent fish will be brought ashore for the benefit of the fishing industry participants in the province.

The Provincial Government has finalized binding agreements with OCI and High Liner, as outlined in the Memoranda of Understanding (MOU) achieved between both companies and the Provincial Government earlier this year. Under the definitive agreements, that have now been executed, the marketing and secondary manufacturing operations will be sold to High Liner while the primary operations, including the shrimp, scallop and groundfish operations, will be acquired by OCI.

"After months of necessary deliberation and thorough discussions with the companies, we are extremely pleased that these agreements have been finalized," said the Honourable Tom Rideout, Minister of Fisheries and Aquaculture. "As indicated when the MOUs were signed, our government is satisfied with the protections and benefits that we have achieved for the workers and communities who were historically dependent upon FPI."

The Provincial Government will now proceed to proclaim the legislation that will formally repeal the Fishery Products International Limited Act.

The terms and conditions of the final agreements are generally consistent with the MOUs signed in May, with several additions having been negotiated. FPI will pay its portion of premiums for health benefits for retirees and the company will address any deficits in pension plans. The total package will be worth at least $3.8 million to pension plan members. Furthermore, when the pension plans are concluded, FPI�s employees in Newfoundland and Labrador will have the same access to FPI�s pension surplus as retirees in other provinces. This is a benefit that the Provincial Government was able to negotiate on behalf of the employees.

Under the agreements, both flexibility and stability will be returned to the communities where FPI formerly operated, as negotiated this past spring. Recent levels of employment will be guaranteed over the next five years in these communities. An enhanced and stabilized operating plan has been achieved for Burin. Both High Liner and OCI will invest millions in capital expenditures and research and development initiatives. Furthermore, the Provincial Government has secured $3 million from FPI which has been put toward employee wages in a new collective agreement.

In addition, FPI�s groundfish quotas will be transferred to a company owned 49 per cent by the Provincial Government and 51 per cent by OCI. A nine-year condition of licence has been achieved, requiring OCI to land the quotas in this province in a form ready for processing. This sets a precedent for the groundfishery and has never been done before in Canada.

"Our government is confident that the sale of FPI�s assets bodes extremely well for the future of the Newfoundland and Labrador fishery," said Minister Rideout. "In recent years, it became clear that the publicly-traded company formed in 1987, while suitable 20 years ago, was no longer conducive to the current environment. FPI had been pursuing a business strategy that was incompatible with the public policy objectives of our government and the communities that depend on the company. It was therefore crucial to restore a level of predictability and certainty to the industry and employees."

"We are pleased to have received the approval from the Government of Newfoundland and Labrador and we look forward to resuming operations in the province through our purchase of the marketing arm of FPI," said Henry Demone, President and Chief Executive Officer of High Liner Foods Incorporated. "This is great news for High Liner, FPI and the Province of Newfoundland and Labrador.  We look forward to again working co-operatively with the Provincial Government and with our new employees. High Liner is focused on being the leader in value-added frozen seafood in North America. This acquisition represents an important part of what I am confident will be a bright future for High Liner and Burin will play a role in building that future."

"OCI is extremely pleased that these transactions have now been finalized," said Martin Sullivan, President of Ocean Choice International. "The Provincial Government put forward a number of concerns that it wanted to have addressed and we worked co-operatively to ensure that we were able to meet these particular requirements. OCI looks forward to expanding its operations to include FPI�s former facilities and we are confident, based on our current track record, that we can operate these new assets on a viable basis into the future."

"Since the MOUs were signed in May, we have already begun to see some stability restored to the fishing industry," continued Minister Rideout. "The Burin plant has reopened and the Marystown facility, which has been idle since late 2005, has also resumed operation. Indeed, we have already begun to rectify the uncertainty that has been associated with FPI in recent years. Both OCI and High Liner are committed to their new operations and we are confident in the important roles that both companies will play in our future fishery."

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Media contact:
Lori Lee Oates
Director of Communications
Department of Fisheries and Aquaculture
709-729-3733, 690-8403
oatesll@gov.nl.ca

BACKGROUNDER
Summary of Benefits Negotiated by
the Provincial Government for the Sale of FPI Assets

Throughout this process of the sale of FPI�s assets, the Provincial Government worked diligently to negotiate several significant benefits and securities for the workers and communities that were historically dependent upon FPI. Some of these include:

  • Approximately $3.8 million has been negotiated for pension plan members. FPI will pay its portion of health benefits and will allocate funds to address deficiencies in its pension plans.
  • The province has negotiated protections that provide provincial members of the FPI pension plan with the same rights to any pension surplus as would be available in other jurisdictions.
  • $3.0 million has been negotiated for the employees of FPI that were put toward employee wages in the new Collective Bargaining Agreement.
  • Employment levels that will remain at levels recently seen at all former FPI facilities over the five-year commitment period from 2007 to 2011. This includes the Marystown facility, which has recently reopened following a two-year shutdown.
  • An enhanced and stabilized operating plan is in place for Burin. The Burin plant will be kept open for a minimum of five years with a minimum annual throughput of 17.5 million pounds in the first full year of operation. Under FPI, Burin would likely have seen significantly reduced activity and employment for 2007 and beyond;
  • Capital and research and development expenditures of $8 million from OCI and $3 million from High Liner.
  • An unprecedented commitment that adjacent fish will be brought ashore for the benefit of the fishing industry participants in Newfoundland and Labrador. A nine-year condition of licence has been achieved, requiring OCI to land the groundfish quotas in this province and in a form conducive to shore-based processing.
  • The Provincial Government has a first right of refusal to purchase the shrimp and scallop operations should OCI wish to sell these businesses after five years.
  • The Provincial Government has negotiated a commitment from OCI to land shrimp quotas and crew the vessels from this province, in perpetuity.
  • The Provincial Government has negotiated a requirement that High Liner and OCI enter into a marketing arrangement that will provide local processors with access to their marketing networks.
  • All major FPI shareholders have signed undertakings that will preclude them from pursuing a takeover of High Liner for the next five years.

    • 2007 12 20                                                    4:00 p.m.

     

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