The Newfoundland and Labrador government has given permission for Fishery Products International to sell most of its assets and break up the publicly traded company, Premier Danny Williams said Monday.

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Ocean Choice International and High Liner Foods have tentative deals to purchase FPI's plants and equipment. ((CBC))

Under an agreement announced Monday in St. John's, Ocean Choice International will buy most of FPI's fish plants, while High Liner Foods will purchase a secondary processing plant in Burin as well as FPI's lucrative U.S.-based marketing division.

The agreement in principle will see the provincial government take a minority stake in a holding company controlled by Ocean Choice, which will take on FPI's groundfish quotas. That provision settles a dispute between the province and the federal government over the future of what has been Newfoundland and Labrador's flagship company.

Newfoundland and Labrador had insisted on claiming complete control of the groundfish quotas.

After the sale goes through, Ocean Choice will have to land and process groundfish caught through FPI's existing quotas in the province. If it fails to do so, the Newfoundland and Labrador governmenttakes control of those quotas for two years.

The terms involving the quota fall in line with a counterproposal that federal Fisheries Minister Loyola Hearn made earlier this month.

Williams told reporters that the agreement announced Monday actually worked out to be better for the province than its original demand.

"We in fact feel that we actually strengthened it," Williams said.

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Danny Williams, speaking in the legislature Monday, said the agreement on FPI's quotas works well for Newfoundland and Labrador. ((CBC))

"I'm not just saying that, you know, to try and basically accommodate for the fact that we didn't get the quotas at the end of the day, but the federal government wasn't prepared to pass the quotas over [so] we got into a negotiation with them and [we]

feel that we ended up better off, quite frankly."

The federal and provincial governments had been on difficult terms over the issue, with Hearn refusing to cede Canada's constitutional authority over harvesting to a provincial government.

Hearn, who tabled his counterproposal on May 8, said last week that he did not understand why the provincial government had not yet signed off on those terms.

Penalties included in tentative deal

The Newfoundland and Labrador governmenthas some control over FPI — which trades on the TSX — because of provincial legislation called the FPI Act. FPI was a provincial Crown corporation before it was privatized in 1987.

Under the agreement announced Monday, Ocean Choice and High Liner have agreed to keep FPI's plants open and maintain employment levels for the next five years. Ocean Choice is purchasing five plants and an offloading facility.

If either company breaches those conditions, it could face penalties that would range in the millions of dollars.

As well, the agreement forbids High Liner and Ocean Choice from selling off any FPI assets for at least five years.

The agreement is conditional on FPI concluding its tentative deals with the purchasing companies.

Earlier this month, the Fish, Food and Allied Workers union negotiated a new labour agreement with Ocean Choice, the St. John's company that is poised to become the employer of most of FPI's approximately1,700 plant-basedemployees.

Ocean Choice's offer also includes taking over FPI's valuable offshore shrimp and scallop quotas, which were not in dispute between the federal and provincial governments.

In the house of assembly Monday afternoon, Liberal Leader Gerry Reid criticized Williams and Fisheries Minister Tom Rideout for folding on a vow to obtain unfettered control of FPI's groundfish quotas.