Olymel-Westco partnership to go ahead with plans to build its own slaughterhouse in New Brunswick

SAINT-FRANÇOIS-DE-MADAWASKA, QC, Sept. 1 /CNW Telbec/ - Given that Nadeau Maple Lodge has rejected several proposals that would have enabled it to continue processing birds from Westco at its slaughterhouse, the partnership formed by Olymel and Westco has announced that it is actively pursuing preparations to complete construction of its new slaughtering facility in New Brunswick. The two partners expect to receive authorizations shortly so that they can begin construction on their new slaughterhouse in Clair, in northern New Brunswick.

Construction of this new slaughterhouse would enable Westco to complete integration of its operations in New Brunswick, an objective the company has been pursuing for several years. Over a year ago, Olymel and Westco had made an offer to Nadeau Maple Lodge to purchase its slaughterhouse at St-François-de-Madawaska, but the offer was rejected by Maple Lodge, the Ontario firm that controls Nadeau. During the summer, in the aftermath of a decision by the Competition Tribunal recognizing Westco's right to sell its birds to the buyer of its choosing, Olymel and Westco made several new proposals to Maple Lodge. Proposals included an offer to buy the slaughterhouse, a possible partnership agreement involving joint operation, a draft agreement on slaughtering at fair market value during construction of the new slaughterhouse, and payment of a premium along the lines of what Nadeau offers elsewhere. All these offers were rejected.

"Unfortunately, we have to conclude that Nadeau Maple Lodge does not wish to do business with Westco. The Olymel-Westco partnership must thus accept the Ontario group's obstinate refusal, and as a result, Groupe Westco has no alternative but to build a new slaughterhouse in northern New Brunswick if it wishes to complete its egg-to-plate integration and preserve hundreds of jobs in the poultry industry in partnership with Olymel. We really did everything possible to reach an agreement with Maple Lodge and develop a business relationship that was acceptable to all concerned, but they were simply not receptive," noted Westco President and CEO Thomas Soucy.

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    WESTCO CHICKENS BEING SLAUGHTERED IN OLYMEL FACILITIES IN QUÉBEC ON A
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In light of this situation, starting this week Westco and Olymel will gradually transfer Westco's poultry production to Olymel slaughterhouses in Quebec. Once construction of the slaughterhouse is completed, Westco production will again be slaughtered in New Brunswick. Representatives of the Olymel-Westco partnership are currently in contact with the union representing Nadeau employees, which will also be required to represent employees at the new slaughterhouse, in order to keep union officials abreast of developments.

"Our first choice has always been to process our chickens in New Brunswick, and that is why we are building a 30 million dollar slaughterhouse at Clair. The Maritimes poultry industry and workers as well as consumers all stand to benefit considerably from this investment and the resulting consolidation of our industry," Mr. Soucy added.

On June 8, the Competition Tribunal acknowledged that Westco was entitled to sell its chickens to the buyer of its choice, and was under no obligation to supply Nadeau Maple Lodge. Moreover, in another judgment handed down on August 20, the New Brunswick Court of Appeal confirmed the decision of the New Brunswick Farm Products Commission that Westco and other producers are not obliged to allocate a part of their production to Maple Lodge, reiterating the principle that poultry producers are free to sell their production to whomever they wish.

About Westco

Groupe Westco inc. is a New Brunswick company with its head office in Saint-François-de- Madawaska. The result of a common vision for expansion by many poultry producers, the company has become a model of success and profitability. Westco owns its own hatcheries, breeding farms, and shipping companies, and is also one of the largest poultry production organizations in Canada. The company has a strong commitment to the community, and sponsors several social programs and contributes to fund-raising initiatives in its region.

About Olymel l.p.

Olymel l.p. is a leader in the slaughtering, processing and distribution of pork and poultry meat products in Canada, with facilities in Québec, Ontario, and Alberta. The company employs more than 10,000 persons and exports nearly half its production, mainly to the United States, Japan and Australia, as well as some sixty other countries. Its sales stood at $2.5 billion this year, with a slaughtering and processing capacity of 160,000 hogs and 1.7 million birds every week. The company markets its products mainly under the Olymel, Lafleur, and Flamingo brands.

SOURCE Olymel l.p.

For further information: For further information: Olymel L.P.: Richard Vigneault, Communications, (514) 497-1385, (450) 771-0400; Groupe Westco Inc.: Martin Daraiche, Senior Advisor, NATIONAL, Public Relations, (418) 648-1233 extension 230, Cell.: (418) 571-8528


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