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April 26, 2011
For immediate release
Government moves to protect workers, taxpayers in wake of OCI closure
Innovation and Advanced Learning
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Government is moving quickly to protect workers and taxpayers following the sudden closure of the Ocean Choice International plant, says Innovation and Advanced Learning Minister Allan Campbell.
“Our first priority is to the displaced workers. In the days to come, a series of steps will be taken to ensure their interests are protected,” Mr. Campbell said. “Additionally, Government is meeting with representatives of the fishery sector to ensure that the industry is protected. Finally, we are protecting the taxpayers of Prince Edward Island from the pressure tactics exerted by OCI – a Newfoundland-based multinational.”
∙ On Wednesday, from 1 to 3 p.m. and 7 to 9 p.m., Skills PEI will host a meeting with all Ocean Choice workers at the Eastern Kings Sportsplex, 203 Main Street, Souris. One-on-one follow-up meetings will be offered to each worker to assess individual needs and match workers with employment opportunities.
∙ Government is now contacting businesses – both in the seafood processing industry and in other fields – to identify and support employment opportunities for OCI workers.
∙ Through a combination of wage and transportation assistance, placement with local businesses and other measures, Government will use every means available to provide immediate employment opportunities to affected workers.
∙ Consultations with the Prince Edward Island Fishermen’s Association, buyers and Island processors are being scheduled.
∙ In order to protect the interests of Island taxpayers, government lawyers have been instructed to immediately begin actions to collect on debts owed to the Province by OCI.
∙ Lawyers have also been instructed to take steps to realize the personal guarantees and securities when the previous administration placed much of the Island processing industry in the hands of OCI.
“Approximately $10 million is owed to Islanders by OCI. We expect to collect that money on behalf of Islanders,” Mr. Campbell said.
“I also want Islanders to know that government worked very hard over the past several weeks to reach an appropriate arrangement with OCI. Unfortunately, the company’s demands were an echo of the actions that took place in 2003 – when the former administration secretly handed millions to Polar Foods in the months preceding a provincial election. This government has no intention of giving in to such pressure.”
Chronology of Ocean Choice PEI Inc. Agreement
Polar Foods International Inc. was placed in receivership by the Binns Government on February 27, 2004. Ernst & Young Inc. was appointed receiver by the Binns Government and initiated an RFP to sell the Polar operation as a going concern, to be operational at the beginning of the North Shore lobster season on May 1, 2004.
Several proposals were received. None were acceptable, but the government of the day decided to pursue further negotiations with Ocean Choice International Inc.
An agreement (the “OCI Agreement”) was reached in mid-March 2004 incorporating the following terms:
(a) A purchase price of $17.5 million, of which $4 million would be paid at closing, a minimum of $750,000 be paid annually for 10 years, and $6 million paid as a balloon payment at the end of 10 years;
(b) The purchaser would be a new company, Ocean Choice PEI Inc., with the debt being personally guaranteed by Ches Penney, Iris Petten, Martin Sullivan and Blaine Sullivan;
(c) The plants acquired by OCI to be operated would be the Souris and Beach Point plants in PEI, as well as the plant in Arisaig, Nova Scotia. The lobster processing licenses held by the remaining Polar plants in Anglo Tignish, Howard’s Cove, Gaspereaux and Morell would be permanently cancelled;
(d) To protect OCI’s position against new competitors, the Binns Government agreed that no new lobster or groundfish processing licenses would be issued for the 10 year term of the note payable by OCI to the Government;
(e) Ocean Choice International Inc., as parent of Ocean Choice PEI Inc., agreed that all lobster purchases by the Ocean Choice Group of Companies in the Maritime provinces would be processed in OCI’s PEI plants (excluding sales of live market and banded canner lobsters to arms-length third party purchasers), and Ocean Choice International Inc. also agreed that the Ocean Choice Group of Companies would not operate any other lobster processing plant in the Maritime provinces;
(f) The Binns Government agreed not to provide any financing to competitors of OCI, except for existing support to existing processors. The Binns Government also agreed that any new financing provided to competitors of OCI would be provided to OCI on the same terms, based on the relative volume of raw material purchases in Prince Edward Island;
(g) Failure by OCI to honour its financial and operating commitments, sale of substantially all of the purchased Polar assets to an arms-length purchaser or a change in control of OCI or Ocean Choice International Inc. would entitle the Government, after providing OCI with 14 days notice, to demand payment of the unpaid balance of the promissory note, and release the Government from its commitment respecting the issuance of new lobster or groundfish processing licenses, and financing to competitors of OCI.
The OCI Agreement was finalized and signed on March 24, 2004. The actual transfer of assets and payment of the cash portion of the purchase price was completed on April 23, 2004.
In 2009, OCI closed its operation in Beach Point but continued to process seafood at the Souris location.
Over the past month, OCI has demanded additional financial concessions from the Government of Prince Edward Island. The Government has refused to grant additional concessions, taking the position that OCI is required to live up to the terms of the OCI Agreement.
With OCI’s announcement that it will not operate the Souris plant this year, Government has today announced a series of measures, including legal proceedings against OCI and the personal guarantors.