Government supports aquaculture development on Connaigre Peninsula

Fisheries and Aquaculture Minister Trevor Taylor and Kathy Dunderdale, Minister of Innovation, Trade and Rural Development and Minister responsible for the Rural Secretariat, today announced that Natures Sea Farms Inc., a subsidiary of the Barry Group Inc., is the first company to qualify for a working capital loan guarantee under a new provincial program designed to assist in the development of the province�s salmonid aquaculture industry.

�Aquaculture offers opportunity and hope for rural communities devastated by the decline of the wild fisheries. We will do everything we can as a government to help people and communities capture those opportunities,� Minister Taylor said. �This province has the capacity to be the largest producer of aquaculture products in Canada. With less than 10 per cent of aquaculture space currently being utilized, we are committed to developing this industry for the benefit of our rural communities.�

Natures Sea Farms Inc. has reached a tentative purchase and sale agreement to acquire the assets of North Atlantic Sea Farms Corporation., which is currently in receivership. Receivers Ernst & Young have been operating the facility since October 2004. The loan guarantee being provided under the Aquaculture Working Capital Loan Guarantee Initiative is contingent on the sale being concluded with the receiver. The receiver requires court approval to finalize the sale.

�This arrangement will help ensure the long-term viability of aquaculture operations on the Connaigre Peninsula and in the Bay d�Espoir area, and ensure the continued employment of over 100 residents with the operation. Our government committed to finding long-term solutions to problems facing the Connaigre Peninsula region, especially in light of the recent difficulties in Harbour Breton, and today�s announcement demonstrates our faith in the future of that area,� Minister Taylor said. �This initiative was established last fall in recognition of the importance of the aquaculture industry to rural economies and the significant upfront operating costs involved in its development. We are encouraged to see the traditional seafood sector take the initiative to move in to grow the aquaculture industry in the province.�

The operation consists of a salmon hatchery and aquaculture operations in the Pool's Cove and Bay d'Espoir/Gaultois Passage areas, as well as a fish processing plant in St. Alban's. Government has reached an agreement with Natures Sea Farms Inc. that will see the new owners invest $1 million upfront in the operation. Government is prepared to guarantee 80 per cent of a maximum $9 million line of credit, after the bank has realized on its security. The company must also finalize their banking arrangements.

Natures Sea Farms Inc. announced this morning that they reached a purchase and sale agreement with the receivers, pending court approval. �We are impressed by the regulatory environment established to support the orderly development of finfish aquaculture on the south coast of the province, and we wish to build upon the established base,� said Bill Barry, president of Barry Group Inc. �We want to acknowledge the support being provided by the province to make this transition possible through its new Aquaculture Working Capital Loan Guarantee Initiative.�

�With the assistance government is providing by way of a loan guarantee, we are confident the aquaculture industry has a strong future on the Connaigre Peninsula and Bay d�Espoir regions,� Minister Dunderdale said. �We are committed to developing and supporting the aquaculture industry in this province for the benefit of our coastal communities and rural economy, and to creating an environment in which this industry can grow and flourish.�

The parent company of Natures Sea Farms Inc. has managed aquaculture operations in the United States and has successful fishing enterprises in Newfoundland and Labrador and other Atlantic Provinces. A significant upfront investment is required in aquaculture operations to grow the product and get it into the marketplace. Feed comprises 70 per cent of the operating costs, making it crucial for industry to have access to financing at reasonable rates. Typically, a salmonid enterprise requires $2 to $3 million in capital funding and access to up to $8 to $10 million in working capital, depending on the size of the operation.

The Aquaculture Working Capital Loan Guarantee Initiative is available to companies that can demonstrate strength in all aspects of their business, including their ability to grow and sell fish and turn a profit. To qualify for support under the initiative, companies must meet eligibility requirements satisfactory to the province.

�The loan guarantee government is providing to Natures Sea Farms Inc. is not just an investment in one business. It is an investment in a growing sector of the province and it is an investment in the Connaigre Peninsula and Bay d�Espoir areas,� Minister Dunderdale said.

Media contact:
Tracy Barron, Fisheries and Aquaculture, (709) 729-3733, 690-6157
Lynn Evans, Innnovation, Trade and Rural Development, (709) 729-4570, 690-6290

2005 08 24                               10:35 a.m.