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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

Agreement ratified

Effect of law

Schedule

Short title

This Act may be cited as the Fisheries Restructuring Act.

1983 c28 s1

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Agreement ratified

September 26, 1983

1983 c28 s2

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Effect of law

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.

New Company

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

Schedule A.

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)

*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

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,

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

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.

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.

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.

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

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.

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

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.

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.

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.

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.

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.

Factory Trawlers

Factory trawlers will not be permitted to harvest northern cod.

Plant Construction

The existing processing licence freeze will be continued.

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.

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.

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.

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

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

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

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

(2 nd

3,047,267

Province

North Atlantic Fisheries Ltd.

Guarantee

(BNS)

NAFL Plants

(2 nd

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

Earl G. Tucker, Queen's Printer