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Fisheries and Aquaculture
Innovation, Trade and Rural Development

November 1, 2007

Changes to Fisheries Loan Guarantee Program
Allow Harvesters to Access More Capital

The Provincial Government has made changes the Fisheries Loan Guarantee Program that will provide harvesters access to additional capital for their fishing enterprises. These are necessary changes that were identified as part of the Fishing Industry Renewal (FIR) consultation process, in order to keep pace with inflation and, new vessel design and enhancement. A key change includes an increase in the maximum loan guarantee limit from $1.3 million to $2 million.

"In April when we announced the new Fishing Industry Renewal Strategy, we said that a key component of the strategy would be an enhanced provincial Fisheries Loan Guarantee Program," said the Honourable Tom Rideout, Minister of Fisheries and Aquaculture. "Our government has delivered on that commitment in order to provide harvesters with options and flexibility in pursuing their business activities."

The Fisheries Loan Guarantee Program provides a provincial guarantee on loans from participating commercial banks to harvesters for the purpose of construction, purchase or upgrade of vessels and the purchase of new equipment.

"The maximum loan guarantee limit under this program was last increased in the early 1990s," said Minister Rideout. "During the past 15 years, new vessel construction costs have increased significantly. As well, the recent change in federal policy on the maximum length of vessels from 64�11" to 89�11" will result in higher construction costs."

Furthermore, during the Fishing Industry Renewal consultation process, harvesters strongly supported the strengthening of the federal policy on separation of those who own processing plants from those who own vessels. Many fishing enterprises currently have debt financed through seafood processing businesses. This in effect gives the processor the first right of refusal for any species the harvester lands and was not an ideal situation for ensuring competition within the industry.

Loans previously obtained by harvesters from fish processors for new vessel construction upgrades or new equipment will now be eligible for refinancing through bank loans under the program to a maximum of 85 per cent of the appraised value of the assets.

"As the minister responsible for administering the Fisheries Loan Guarantee Program, I�m pleased that the concerns of the fishing community have been addressed and I am confident that this will benefit the entire province," said the Honourable Trevor Taylor, Minister of Innovation, Trade and Rural Development. "The Provincial Government is committed to creating an environment that encourages the development of a successful fishing industry and addressing challenges faced by harvesters."

In addition to the changes announced today, there could be further enhancements to the Fisheries Guaranteed Loan Program to provide for the financing of enterprise combining and the use of licences as security for financing that fall within the jurisdiction of the Federal Government.

The new loan guarantee program is just one aspect of the Provincial Government�s Fishing Industry Renewal Strategy. As part of this strategy, a comprehensive suite of programs has been designed to bring fundamental change in the province�s fishery. The strategy includes programs and initiatives to address enhanced marketing, research and development, occupational health and safety and the implementation of fish auctions. To address the challenges in the industry, the Provincial Government�s total renewal undertaking is an estimated $140 million. Included in this, the enhanced Fisheries Loan Guarantee Program could require an additional $100 million in loan guarantees from the province.

"Addressing the issues in the fishery continues to be a priority for the Provincial Government," said Minister Rideout. "Our government will continue to work with all stakeholders to effectively address the issues of the industry. This is vitally important to the future of rural Newfoundland and Labrador."


Media contacts:

Lori Lee Oates
Director of Communications
Department of Fisheries and Aquaculture
709-729-3733, 690-8403
Scott Barfoot
Director of Communications
Department of Innovation, Trade and Rural Development
709-729-4570, 690-6290

2007 11 01                                                2:10 p.m.

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