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RSNL1990 CHAPTER F-14

FISHERIES RESTRUCTURING ACT

Amended:

2001 cN-3.1 s2

CHAPTER F-14

AN ACT TO RATIFY, CONFIRM AND ADOPT AN AGREEMENT ENTERED INTO BETWEEN THE GOVERNMENT OF THE PROVINCE AND THE GOVERNMENT OF CANADA RESPECTING THE RESTRUCTURING OF THE NEWFOUNDLAND AND LABRADOR FISHERY

2001 cN-3.1 s2

Analysis



Short title

        1. This Act may be cited as theFisheries Restructuring Act.

1983 c28 s1

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Agreement ratified

        2. The Agreement executed and delivered by and between the government of the province and the Government of Canada and set out in the Schedule to this Act is ratified, confirmed and adopted from September 26, 1983 .

1983 c28 s2

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Effect of law

        3. The Agreement set out in the Schedule to this Act has the full effect of law for all purposes as if expressly enacted in this Act.

1983 c28 s3

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Schedule

AGREEMENT BETWEEN THE GOVERNMENT OF
CANADA AND THE GOVERNMENT OF NEWFOUNDLAND
AND
LABRADOR CONCERNING THE RESTRUCTURING
OF THE
NEWFOUNDLAND FISHERY SEPTEMBER 26, 1983

Government's Objectives

The common objectives of both governments in participating in restructuring are:

(a) To find a just and lasting solution for the rebuilding of the deep sea fishery which recognizes the fundamental role which the fishing industry plays in Newfoundland and Labrador ;

(b) To see restructuring proceed in an orderly way with minimum disruption to harvesting, processing and marketing;

(c) To create a company whose primary objective is to strengthen the Newfoundland fishery, a company that is economically viable, efficient and modernized so that it will be highly competitive especially in international markets;

(d) Notwithstanding paragraph (c), the company may acquire assets outside of Newfoundland and Labrador provided that the acquisition of such assets represents a sound commercial business decision and does not disrupt the historical pattern of harvesting and processing in Newfoundland ;

(e) To ensure maximum employment stability and productivity through employee participation in the company;

(f)  To ensure that the company is well managed on a commercial basis with management being left to manage;

(g) To pursue divestiture to the private sector of both governments' ownership in the company as soon as possible;

(h) To provide new opportunities for independent processors to have effective access to international markets;

(i)  To have the company internally organized in a way which leaves open the option of a variety of innovative industry structures for the Newfoundland and Labrador fishery of the future.

1.              New Company

                      It is the intention that a new operating company will be formed from the companies and assets set forth in Schedule A.

2.              Corporate Structure

                      (a)                  Shareholdings

                      There would be two companies formed with head offices in Newfoundland -- an operating company incorporated under the laws of Newfoundland and a holding company incorporated under the laws of Canada . The operating company ("the Company") would hold the assets set forth in Schedule A. All the shares of the Company would be held by the holding company. Once restructuring is completed the shares of the holding company would be held in the following manner:

 

 

Class A
Preferred Shares


Common Shares

Class B
Preferred Shares

 

Series (1)

Series (2)

 

 

Government of Canada

--

($75.3M)

60%

--

Government of Newfoundland

--

($31.5M)

25%

--

Bank of Nova Scotia

($14.8M)

--

12%

$29.3M

Employees* (estimated)

--

($ 4.0M)

3%

--

*Represents an amount to be negotiated for first year of a 'social compact' with the union. It is assumed that additional shares may be issued over the period of the life of the social compact.

                      The investment by each of the participants as set forth above results from:

  (i)                 the Government of Canada investing $75.3 million of cash;

  (ii)                the Government of Newfoundland converting out standing loans and                                  equity investment in the existing companies in the amount of $31.5                                      million;

  (iii)               the Bank of Nova Scotia converting outstanding loans in the existing                                  companies in the amount of $44.1 million;

  (iv)              employees agreeing to enter into an employee deduction scheme to                                     purchase shares.

                      (b)                 Redemption of Bank of Nova Scotia Shares

                      Regarding the purchase by the Government of Canada of the Class A Preferred                 Shares held by the bank as set forth in clause 6(b) of the letter addressed to the                  Bank of Nova Scotia by the Task Force on Atlantic Fisheries and dated June 24,                       1983 the Government of Canada would give to the Government of Newfoundland             a right to purchase, at the same time, up to 50% of such shares from it at the same                 price the shares were purchased from the Bank.

                      (c)                  Newfoundland Guarantees

                      Regarding the guarantees and Sub-charters set forth in Schedule B which have                 been provided by the Government of Newfoundland it would be the intention of              Governments to obtain releases of such guarantees from the appropriate parties                       once restructuring has taken place.

                      (d)                 Board of Directors

                      The membership of the Boards of Directors of the Company and the holding                      company would be the same. Each Board of Directors would consist of 11                     members; 5 members to be appointed by the Government of Canada; 3 to be                       appointed by the Government of Newfoundland; 1 to be appointed by the Bank o            Nova Scotia; 1 to be selected by employee shareholders and the Chairman, who            will also be the Chief Executive Officer of the Company, to be appointed jointly                       by both governments. In the event that after three months consultation, the two               governments fail to agree on the Chief Executive Officer, the Chief Executive                       Officer shall be chosen by a panel consisting of one nominee from each        government who shall agree on a third person to chair the panel.

                      Public Servants would not be eligible to sit on the Board of Directors.

                      (e)                  Significant Corporate Decisions that could have a Negative Social Impact

                      Plant closures, plant mergers, mechanization or trawler transfers resulting in a                    significant permanent change in employment in excess of 100 people, or one-half          the work force, as the case may be, associated with any single plant location                       would be subject to the approval of both governments.

                      In the event that one of the governments opposes the action contemplated, then              the Government opposing that action shall assume the additional costs associated           with the continuation of the existing level of operations, such costs, including the                       loss of income to the Company, to be determined by reference to a firm of    Chartered Accountants, agreed to by both Governments.

3.              Relations Between Government Shareholders and The Company

                      (a)                  Business Plan

                      Prior to the business plan being presented to the Board for approval, management           would consult with the Governments and the Governments with each other,                      regarding the contents of the plan. Adoption of the business plan would require                       approval of at least seven members of the Board of Directors.

                      (b)                 Consultation

                      Management would consult with Governments on a quarterly basis regarding the             companies' activities.

                      (c)                  Authorized and Issued Capital

                      There would be no change in the authorized or issued capital without the consent            of both Governments. Where additional shares are issued, those shares that are                    taken up by Governments would be taken up by both Governments on a pro rata                       basis.

                      (d)                 No Material Change

                      The Company cannot engage in a business other than the fishery, without the                  consent of both Governments and the Bank of Nova Scotia.

                      (e)                  Dividends

                      Except as specified in the letter of understanding with The Bank of Nova Scotia                dated June 24, 1983 , there would be no dividends paid on the issued and        outstanding shares of the Company without the approval of both Governments                and The Bank of Nova Scotia.

                      (f)                  By-Laws

                      The by-laws of the Company would not be altered without the approval of both                Governments and The Bank of Nova Scotia.

                      (g)                 Wind-up

                      The Company would not be wound up without the approval of both Governments           and The Bank of Nova Scotia.

4.              Divestiture of Shares or Assets

                      It would be the objective of both Governments to return the business either in                  whole or in part to private investors in the shortest possible time.

                      In the event that the Board of Directors of the Company approve the sale of                      plants or a significant portion of the trawler fleet belonging to the company, and            such sale is unacceptable to either Government, the Government opposing would                       have an option to purchase the assets referred to above at the same price and on             the same terms.

                      In the event that the Directors of the holding company approve the sale of the                  shares in the operating company, each Government and the Bank shall have the                  right to veto such sale provided, however, that a Government or the Bank which                       approve such sale shall have the right to cause the vetoing shareholder to   purchase their pro-rata interest in such shares and to have their holding company             shares purchased for cancellation at a price equal to the sale price.

                      Without the unanimous consent of the two Governments and the Bank, no shares           of the holding company shall be sold to third parties.

5.              Corporate Organization

                      The operating company would be organized into three or more divisions      consisting of a common services division including marketing, and two or more                   processing/harvesting divisions each with portions of the Company' enterprise                allocation, as decided by management from time to time, and would have        separate accounts. Each division would be run by a vice-president reporting to the            Chief Executive Officer. The processing/harvesting divisions would be         established so as to facilitate a possible sale of groups of plants and trawlers in           the future. In the event of a sale the purchaser of the group of assets shall have the         right to purchase services from the common services division subject to mutually          agreeable terms and conditions.

6.              Fishing Industry Structural Study

                      The two Governments agree to fund a study on a 70/30 basis (federal/provincial)              to examine various organizational alternatives for the harvesting, processing and              marketing sectors of the Newfoundland fishing industry.

7.              Marketing

                      Notwithstanding Government objective (d), the marketing arm of the operating                  company would have as its first priority the marketing of the Company's own products; its second priority would be to act as a vehicle through which      independent fish companies in Newfoundland, meeting certain standards of                    product quality and other commercial requirements, may market their product                       upon mutually agreeable terms and conditions; and as its third priority the   Company could also market for non-Newfoundland based companies if to do so                 constituted a sound commercial business decision for the Company. The     Company would be charged with the responsibility of developing marketing             strategies, techniques and standards on a non-discriminatory basis.

                      In order to ensure the fair and effective working of the marketing system for                       independent processors a Newfoundland Market Planning and Co-ordination                  Council will be established by the Company. At each Council meeting there shall                       be a report on the marketing activity of the Company and an opportunity given to            the independent processors to express their views on marketing strategies and                    related issues. The Council shall meet quarterly.

                      The Council would have as its members the following:

                      - Representatives of the independent processors;

                      - 3 Representatives from the Board of Directors of the company including at                                             least one provincial nominee;

                      - 1 Representative from the union;

                      - 2 Representatives from the management of the Company.

                      The Minutes of Council meetings will be circulated to members of the Board of                 Directors of the Company.

8.              Fish for Resource Short Plants

                      Whenever part of the Company's trawler fleet is not fully utilized and is        otherwise available such trawlers will be utilized for the harvesting and supply of                fish at an agreed upon price, which shall be equivalent to the Company's      harvesting costs, as determined by the management of the Company, to   independently owned plants under the Resource Short Plant Program. If the                       owner of an independent plant disputes those costs, the Company shall ask an                 independent firm of chartered accountants to review management's determination             of the costs and make a report to the Company's Board of Directors. This report                       shall be made available to the Governments on a confidential basis. No more than             one report may be required each year.

9.              Social Compact

                      The two Governments would jointly seek a 'social compact' with the              Newfoundland Fishermen, Food & Allied Worker's Union recognizing the need                  for employees to contribute to the financial strength, stability and productivity of            the Company. Provision would be made for: (a) equity participation by             employees through cash contributions from payroll deductions; and (b) employee          representation on the Board of Directors.

10.            Resource Utilization Task Force

                      The two Governments would establish a Resource Utilization Task Force     composed of equal representation. The first priority of the Task Force would be                   to review resource avail ability to fish plants on the Burin Peninsula and to report             within one year.

                      The mandate of the Task Force would be to review and report upon the        following:

                      (a)                  the displacement of foreign fishing effort;

                      (b)                 the harvesting of underutilized species and the development of markets for                        these species; and

                      (c)                  measures for the utilization of the resource in a manner which would                                    promote local employment and would enhance the long term economic                                      viability of the fishing industry.

11.            Plant Utilization

                      (a)                  Recognizing the social importance of the plants at Harbour Breton,                                      Gaultois, Ramea and St. Anthony due to the lack of alternative employment                        opportunity in the areas the Company would be obligated to keep the plants                                           at Harbour Breton, Gaultois, Ramea and St. Anthony open for the                                            foreseeable future.

                      (b)                 The company will reopen the Burin plant as a secondary processing                                    operation and trawler refit centre. The existing secondary processing                                        operation would be upgraded and expanded so as to meet the Company's                            further processing requirements for the Canadian markets. Capital                                           improvements in this regard would begin immediately.

                      (c)                  Following the settlement of the present labour dispute the plant at Grand                            Bank would be reopened as a primary processing facility for at least 18                                   months during which time its future would be assessed by the Company in                          light of the work of the Resource Utilization Task Force and other factors                           pertaining to the operation of the Company.

                      (d)                 The plant at St. Lawrence would reopen as an inshore feeder plant and                                would process overflow offshore landings if available and appropriate.

                      (e)                  The plant at Fermeuse would operate as an inshore plant and would be                               eligible to receive fish under the 'Resource Short Plant Program'.

                      (f)                  The future of the plants at Hermitage and Belleoram will be assessed in                               light of their impact on inshore fish supply to Harbour Breton and Gaultois.

                      (g)                 Subject to the restructuring of the Nova Scotia fishing industry the                                                            obligation of H.B. Nickerson & Sons Limited to supply Triton with 6                                        million pounds annually of off shore northern cod will be honoured.

12.            Factory Trawlers

                      Factory trawlers will not be permitted to harvest northern cod.

13.            Plant Construction

                      The existing processing licence freeze will be continued.

14.            Trawler Replacement

                      Both Governments shall employ every effort to ensure that a major share of the                 Atlantic trawler replacement program shall be undertaken at the Marystown                      shipyard.

15.            Northern Fisheries Development Corporation

                      (a)                  The two Governments will work together to establish a Northern Fisheries                          Development Corporation (NFDC), and would consult regarding its scope,                              mandate, ownership and area of operation.

                      (b)                 NFDC could be created to include the plant at St. Anthony and those plants                                            on the Labrador coast which the private sector is not prepared to operate                              including several now owned and operated by the Government of                                                                  Newfoundland.

                      (c)                  NFDC would not operate as a monopoly; any plant now in the private sector                                           would be free to remain outside the NFDC.

                      (d)                 A supply of offshore northern shrimp is important to the economic viability                                             of NFDC and thus means shall be sought to provide such supply.

16.            Burin Peninsula Development Fund

                      The two Governments will establish jointly (on a 70/30 basis -Federal Provincial)               a multi-million dollar 'Burin Peninsula Development Fund' to diversify the    economic base and to provide new employment opportunities for the people in                 the area.

17.            Fish Allocations

                      It is the understanding of the two Governments that the inclusion of the Riverport           Scallop Operation in the Newfound land based fishing company shall not be used        as a factor in establishing the allocation of fish stocks adjacent to the Province of                       Newfoundland and Labrador .

                      It is also the understanding of the two Governments that neither the signing of                 this Agreement, nor any action of the new Company pursuant to this Agreement              will be used as a factor in determining the allocation of fish stocks adjacent to the                       Province of Newfoundland and Labrador .

                      In summary, this Agreement shall not have any impact on fish stock allocation                  decisions.

IN WITNESS WHEREOF the Honourable A. Brian Peckford, P.C., M.H.A., Premier of Newfoundland and Labrador and Minister for Intergovernmental Affairs, and the Honourable James Morgan, M.H.A., Minister of Fisheries of Newfoundland and Labrador, have hereunto set their hands on behalf of Newfoundland, and the Honourable Pierre De Bane, P.C., M.P., Minister of Fisheries and Oceans of Canada has hereunto set his hand on behalf of Canada on the 26th day of September, 1983.

SIGNED on behalf of Newfoundland                        
by the Honourable A. Brian Peckford,                                            
P.C., M.H.A., Premier of New-                                    
foundland and
Labrador and Minister                                            
for Intergovern-mental Affairs, and the                    
Honourable James Morgan, M.H.A.,                                              
Minister of Fisheries, in the presence                                                                   
of:                                                                                                           Sgd. A. Brian Peckford
                                                                                                                Premier of
Newfoundland
                                                                                                                and
Labrador and Minister
                                                                                                                for Intergovernmental Affairs

Sgd. David G. Norris

Sgd. William Matthews                                                 Sgd. James Morgan
                                                                                                                Minister of Fisheries of
                                                                                                               
Newfoundland and Labrador

SIGNED on behalf of Canada by the                         
Honourable
Pierre De Bane, P.C.,                                                     
M.P., Minister of Fisheries and                                                        
Oceans of Canada, in the presence of:

Sgd. Michael J. Kirby                                                    Sgd. Pierre De Bane         
                                                                                                                Minister of Fisheries and                                                                                                                Oceans of
Canada

Schedule A

Fishing Companies and Plants*

 

Fishery Products Limited

North Atlantic Fisheries Limited

Catalina

Charleston

Twillingate

Dildo

Trepassey

Black Tickle**

Marystown**

Williams Harbour **

Burin

Bridgeport **

St. Lawrence

Port Albert**

Harbour Breton

Woody Point **

Port au Choix

Rocky Harbour**

St. Anthony

 

 

 

The Lake Group Limited

Triton Seafoods Limited

Bide Arm

Triton

Englee

 

Bonavista

Great Harbour Deep Seafoods Ltd .

Fermeuse

Great Harbour Deep

Grand Bank

 

Fortune

Riverport Scallop Fleet***

Gaultois

 

 

 

John Penny & Sons Limited

 

Ramea

 

 

 

T.J. Hardy Ltd.

 

Port aux Basques

 

Rose Blanche

 

Cow Head

 

Anchor Point**

 

Flowers Cove**

 

 

 

                      *This schedule is deemed to include all fishing vessels owned or leased                             by the companies.

                      **Plants leased from the Government of Newfoundland.

     ***Subject to agreement being reached on the restructuring of the Nova                                             Scotia fishing industry.

Schedule B

GUARANTEES AND SUB-CHARTER S

 


Guarantor Lessor



Company


Financial
Arrangement



Asset

Balance
Outstanding (
31-8-83 )

 

NIDC

Fishery Products Limited

 

Sub-Lease

5 Vessels

$5,070,244

Province

Fishery Products Limited

 

Guarantee
(Roy Marine)

Port-aux Choix
Plant
3 Trawlers

1,728,000

Province

Fishery Products Limited

 

Guarantee
(CIBC)

Hr. Breton
– 3 Trawlers

2,033,000

Province

John Penny & Sons Limited

 

Guarantee
(BNS)

Ramea Plant
(2nd )

3,047,267

Province

North Atlantic Fisheries Ltd.

 

Guarantee
(BNS)

NAFL Plants
(2nd )

1,000,000

Province

Triton
Seafoods Limited

 

Guarantee
(Royal B)

Triton Plant

1,000,000

Province

Great Harbour Deep Seafoods Limited

Guarantee
(BMO)

Floating

50,000

 

 

 

 

___________

$13,928,511

 

1983 c28 Sch