High Liner Provides Update on FPI Transaction



    LUNENBURG, NS, Nov. 13 /CNW/ - High Liner Foods Incorporated (TSX:HLF)
today announced it proposes to obtain the written consent to the FPI
transaction from holders of a majority of the High Liner common shares. High
Liner has obtained conditional approval from the Toronto Stock Exchange to
list the common shares to be issued in the FPI transaction.
    One of the conditions to the Toronto Stock Exchange approval is that High
Liner obtains approval from its shareholders to issue its shares to FPI. High
Liner is relying upon an exemption from the requirement to hold a meeting of
shareholders contained in the policies of the Toronto Stock Exchange. This
exemption requires that High Liner obtain written evidence that holders of
more than 50% of its voting securities are familiar with the terms of the
proposed transaction and are in favour of it. High Liner expects to obtain
this written evidence. The exemption also requires that High Liner issue this
press release disclosing that it has relied upon the exemption in advance of
the closing of the transaction.
    As previously announced, High Liner signed an agreement on August 24,
2007 with FPI Limited and its subsidiary, Fishery Products International
Limited (collectively referred to as FPI) to purchase FPI's marketing and
manufacturing business. The purchase price to FPI is a combination of:

    
    1.  $83.16 million in cash (subject to adjustments, including a working
        capital adjustment based on an assumed working capital at closing of
        $84 million); and

    2.  the issue to FPI of:

        (a)  3 million common shares of High Liner, and

        (b)  1.2 million Series A Preference Shares of High Liner.
    

    FPI's marketing and manufacturing business consists of its North American
value-added food service and retail frozen seafood businesses. In 2006, the
business had sales of $452.9 million and gross profit of $43.5 million. The
proposed transaction is expected to expand High Liner's market presence in
both Canada and the United States, particularly in the U.S. food service
market, and add variety to its products in both the retail and food service
markets.
    High Liner has also entered into agreements with Ocean Choice
International, purchaser of FPI's primary group assets, to allocate
intellectual property and ensure continuity of supply of Atlantic Canadian
seafood from the primary group to the manufacturing and marketing business.
High Liner will make a payment of $15 million in cash to Ocean Choice under
these agreements.

    
    Other major terms of the transaction include:

    -  The total cost for accounting purposes to High Liner for the
       acquisition is estimated to be $158 million, made up of a purchase
       price to FPI of $143 million (based on an estimated High Liner share
       price of $10.00 and the cost will be adjusted for accounting purposes
       at closing based on the market price at that time and on estimated
       working capital acquired and closing costs) and the payment to Ocean
       Choice of $15 million;

    -  High Liner has received commitments for term debt of $53.6 million to
       partially finance the cash portion of the transaction and a
       $120 million working capital facility to fund the balance of the cash
       portion of the purchase price as well as to fund working capital
       requirements and capital expenditures. The commitments are subject to
       completion of definitive documents and customary closing conditions;

    -  In addition to FPI's marketing and sales operations and their
       associated working capital, the assets to be acquired by High Liner
       include secondary processing facilities in Burin, Newfoundland and
       Labrador, and Danvers, Massachusetts and a leased cold storage
       facility in Peabody, Massachusetts;

    -  High Liner will operate the Burin facility in accordance with an
       agreement with the Government of Newfoundland and Labrador; and

    -  Once the transaction closes, Newfoundland and Labrador's FPI Act,
       which restricts the sale of FPI's assets and the ownership and/or
       transfer of shares in FPI Limited, will not apply to High Liner or the
       FPI assets purchased by High Liner.
    

    As a consequence of these transactions, High Liner will issue to FPI
3,000,000 common shares of High Liner and 1,200,000 Series A Preference Shares
of High Liner. Each Series A Preference Share will be redeemable for 2.5
Non-Voting Equity Shares of High Liner to be created at the Company's 2008
annual meeting, will pay non-cumulative dividends at 2.5 times the dividend
payable per common share, and have preference on liquidation equal to $25 par
value plus any declared and unpaid dividends. Each Series A Preference Share
will be redeemable at any time by High Liner for 2.5 common shares or, if the
Non-Voting Equity Shares are or will be listed on the Toronto Stock Exchange
or another recognized stock exchange at or about the effective time of
redemption, for 2.5 Non-Voting Equity Shares. If the Series A Preference
Shares are not listed on the Toronto Stock Exchange or another recognized
stock exchange at the time of redemption, each Series A Preference Share will
be redeemable by the holder at any time after the 90th day following the first
Annual General Meeting of High Liner to be held after the issuance of the
Series A Preference Shares, payable at the option of High Liner as follows:
(a) in cash equal to 2.5 times the five trading-day volume weighted average
price of the common shares on the date that the notice of redemption is
received by High Liner; (b) for 2.5 common shares; or (c) if the Non-Voting
Equity Shares are or will be listed on the Toronto Stock Exchange or another
recognized stock exchange at or about the effective time of redemption, for
2.5 Non-Voting Equity Shares. High Liner plans to list the Non-Voting Equity
Shares within 90 days after High Liner's next Annual General Meeting.
    The Non-Voting Equity Shares will have essentially the same rights,
privileges and conditions as the common shares except that they will be
non-voting. The Non-Voting Equity Shares will be redeemable at any time by
High Liner in exchange for one common share per Non-Voting Equity Share. If
the Non-Voting Equity Shares are issued in exchange for Series A Preference
Shares prior to becoming listed on the Toronto Stock Exchange or another
recognized stock exchange, and are not so listed at the time of redemption,
each Non-Voting Equity Share will be redeemable by the holder at any time
after the 90th day following the first Annual General Meeting of High Liner to
be held after the issuance of the Series A Preference Shares, payable at the
option of High Liner either in cash per Non-Voting Equity Share equal to the
five trading-day volume weighted average price of the common shares on the
date that the notice of redemption is received by High Liner or for common
shares on a one-for one basis.
    If all of the Series A Preference Shares and Non-Voting Equity Shares are
redeemed by High Liner for Common Shares, this would result in an additional 3
million Common Shares of High Liner being issued, which when combined with the
initial 3 million Common Shares would aggregate 6 million Common Shares or
approximately 57.8% of the Common Shares now outstanding and 36.6% of the
Common Shares that would then be outstanding, which could materially affect
control.
    FPI has confirmed to High Liner that it does not currently own, directly
or indirectly, or exercise control or direction over, any High Liner shares
and that it is not currently an insider of High Liner. As a consequence of the
transactions described above, FPI will become an insider of High Liner.
    The acquisition of FPI's marketing and manufacturing business remains
subject to certain third party consents and other customary closing
conditions. The Government of Newfoundland and Labrador must also be satisfied
with the terms of the agreement before it proclaims the amendment to the FPI
Act allowing the sale to proceed. There can be no assurance that any of these
approvals or consents will be obtained or that the other conditions to closing
will be satisfied, and there can be no assurance that the proposed transaction
will be completed.

    About High Liner Foods Incorporated

    High Liner Foods Incorporated is one of North America's largest
processors and marketers of prepared, value-added frozen seafood. High Liner's
branded products are sold throughout the United States, Canada and Mexico
under the High Liner(R) and Fisher Boy(R) labels and available in most grocery
and club stores. The Company also sells its High Liner(R) food service
products to restaurants and institutions. The Company is also a major supplier
of private label seafood products to North American food retailers and food
service distributors. High Liner Foods is a publicly traded Canadian company,
trading under the symbol HLF on the Toronto Stock Exchange.

    This document contains forward-looking statements. These statements
contain words such as "anticipate", "expect", "could", "should", "may",
"plans", "will", or similar expressions that are based on and arise out of our
experience, our perception of trends, current conditions and expected future
developments as well as other factors. These statements include those relating
to the creation, issuance and listing of additional shares, which may be
impacted by failure to obtain shareholder or exchange approval or ability to
meet the exchange's requirements for public float or other listing
requirements. These statements are not a guarantee of future performance. By
their nature, forward-looking statements involve uncertainties and risks that
the forecasts and targets will not be achieved. Readers are cautioned not to
place undue reliance on forward-looking statements, as a number of important
factors, as discussed herein and in our other continuous disclosure documents,
could cause actual results to differ materially from those expressed in such
forward-looking statements. We include in publicly available documents filed
from time to time with securities commissions and the Toronto Stock Exchange,
a thorough discussion of the risk factors that can cause anticipated outcomes
to differ from actual outcomes. We disclaim any intention or obligation to
update or revise forward-looking statements.

    For further information about the company, please visit our Internet site
at www.highlinerfoods.com or send e-mail to investor@highlinerfoods.com.

    %SEDAR: 00001789E




For further information:

For further information: Kelly Nelson, FCA, Vice President Corporate
Services and Chief Financial Officer, High Liner Foods Incorporated, Tel.:
(902) 634-8811, investor@highlinerfoods.com; Lawrence Chamberlain, Investor
Relations, The Equicom Group Inc., Tel.: (416) 815-0700 ext. 257,
lchamberlain@equicomgroup.com


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