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Gov't Rejects Ocean Choice International's Proposals

10 February 2012

CANADA - After an extensive evaluation and review, the Provincial Government announced that it is not satisfied that the redfish and yellowtail proposals presented by Ocean Choice International (OCI) provide the maximum possible benefit for the province.

“The Provincial Government sees no other option but to reject the groundfish proposals submitted by Ocean Choice International,” said Darin King, Minister of Fisheries and Aquaculture. “This decision is based on consideration for what is in the best interest of the people of this province. The Government wanted to secure a long-term commitment on former Fishery Products International quotas. These quotas are currently held between the province and OCI, through the Quota Holdco agreement established in 2007. We also sought enhanced benefits in relation to Fortune, and adequate support for displaced workers at Marystown and Port Union.”

On 25 January, the Provincial Government met with officials from Ocean Choice International and clearly outlined its position in relation to the proposals. Unfortunately, the company showed no flexibility at that time. The company was given time to reconsider but has not come forth with a revised proposal to date.

“We recognise that this is a difficult situation for OCI,” said Minister King. “Their predecessors, Fishery Products International, faced similar challenges and had comparable financial results. The economic circumstances for yellowtail and redfish remain challenging, particularly with the appreciation of the Canadian dollar and high fuel costs.”

OCI’s financial circumstances for groundfish operations have been independently verified by the financial consulting firm Deloitte. The market outlook for redfish and flatfish has also been independently verified by the McDowell Group, a research-based consulting firm. The McDowell Group report can be found at http://www.fishaq.gov.nl.ca/publications/nl_flounder_and_redfish_report.pdf.

The Provincial Government requested 10 million pounds of flatfish to be processed in Fortune which is marginal compared to the overall global harvest of 750,000 tonnes. The Provincial Government’s analysis shows that the overall groundfish operation will achieve positive, albeit modest earnings before interest, taxes, depreciation, and amortisation.

Secondly, OCI indicated the desire to have the landing obligations associated with the company’s licence extinguished when the Quota Holdco agreement is due for renewal in approximately five years. While the Provincial Government is willing to consider multi-year exemptions, it believes that under the current circumstances it is possible that quotas would be lost to the province entirely and the resource could be landed elsewhere without any value to the people of Newfoundland and Labrador.

Minister King also noted that he is disappointed that no action has been taken for displaced workers with regards to the Provincial Government’s request for the company to provide a top-up to the current Fish Plant Worker Employment Support Program. The company and the union have not met to advance these discussions.

“The Provincial Government’s analysis shows positive results by moving yellowtail production to Fortune and an export exemption being granted for the remainder of yellowtail landings and redfish,” said Minister King. “However, given the current circumstances, I have no choice but to reject OCI’s proposals. While government recognises that reorganisation and rationalisation in the fishing industry is essential to our long-term success, we will continue to ensure the best possible outcome for the province for the present and for the future. Our government remains receptive if OCI wishes to reconsider their position.”

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