Exemption Orders (Discretionary)
GREATER LENORA RESOURCES CORP.
2001 BCSECCOM 768
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - National Instrument 43-101 - Relief granted from the requirement in subsection 4.1(1) to file a technical report upon first becoming a reporting issuer - Issuer to become a reporting issuer as a result of plan of arrangement where assets spun out of existing reporting issuer - Business of new reporting issuer substantively a continuation of business of existing reporting issuer
Applicable British Columbia Provisions
National Instrument 43-101 Standards of Disclosure for Mineral Projects, ss 4.1(1) and 9.1(1)
IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ONTARIO AND QUÉBEC
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF GREATER LENORA RESOURCES CORP. AND 3851419 CANADA INC.
MRRS DECISION DOCUMENT
WHEREAS the securities regulatory authority or regulator (the “Decision Maker”) in each of British Columbia, Ontario and Québec (the “Jurisdictions”) has received an application from Greater Lenora Resources Corp. (“Greater Lenora”) and 3851419 Canada Inc. (“MinCo”) for a decision pursuant to securities legislation of the Jurisdictions (the “Legislation”) that the requirement contained in subsection 4.1(1) of National Instrument 43-101 (“NI 43-101”) to prepare and file a technical report upon becoming a reporting issuer shall not apply to MinCo in connection with an arrangement (the “Arrangement”) under section 192 of the Canada Business Corporations Act (the “CBCA”) among Greater Lenora, MinCo and 3796299 Canada Inc. (“3796299”);
AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Director under the Securities Act (Ontario) is the principal regulator for this application;
AND WHEREAS Greater Lenora and Minco have represented to the Decision Makers that:
1. Greater Lenora is a corporation continued under the CBCA with its registered office in Kirkland Lake, Ontario. The authorized capital of Greater Lenora consists of an unlimited number of common shares (the “Common Shares”) and an unlimited number of preferred shares (the “Preferred Shares”). As at June 6, 2001, the Corporation had outstanding 11,467,124 Common Shares, 1,500,000 options to acquire Common Shares (the “Options”) and 314,020 Warrants to acquire Common Shares (the “Warrants”). No Preferred Shares are issued or outstanding.
2. Greater Lenora is engaged in the exploration and development of mineral properties primarily located in Canada. A description of the mineral properties of Greater Lenora is contained on pages 28 to 34 of the Management Information Circular (the “Circular”) prepared in connection with the Arrangement.
3. Greater Lenora is, and has been for a period in excess of 12 months, a reporting issuer or the equivalent thereof in the Jurisdictions. Greater Lenora is not a reporting issuer or the equivalent thereof in any other province or territory.
4. The Common Shares are listed and posted for trading on The Toronto Stock Exchange.
5. MinCo is a corporation incorporated under the CBCA with its head office in Toronto, Ontario. The authorized capital of MinCo consists of an unlimited number of common shares (the “MinCo Common Shares”) and an unlimited number of preferred shares. As at June 6, 2001, there was one MinCo Common Share issued and outstanding; which is held by Greater Lenora. There are no MinCo preferred shares issued and outstanding.
6. MinCo was incorporated in order to participate in the Arrangement.
7. MinCo is not currently a reporting issuer or the equivalent thereof in any of the Jurisdictions.
8. The TSE has conditionally approved the listing of the MinCo Common Shares to be issued in connection with the Arrangement.
9. 3796299 is a corporation incorporated under the CBCA with its head office in Vancouver, British Columbia. The authorized capital of 3796299 consists of an unlimited number of common shares and an unlimited number of preferred shares. As at June 6, 2001 there was one 3796299 common share issued and outstanding, which is held by Glacier Ventures International Corp, a publicly-traded company listed on the TSE. There are no 3796299 preferred shares issued or outstanding.
10. 3796299 is not a reporting issuer or the equivalent thereof in any of the Jurisdictions.
11. The proposed transaction is the investment by 3796299 in Greater Lenora and the reorganization of Greater Lenora into two corporations, one, MinCo, with the existing assets of Greater Lenora and the second, the former Greater Lenora, which intends to acquire an operating business in the information communications area. Under the terms of an arrangement agreement (the "Arrangement Agreement") among Greater Lenora, MinCo, 3796299 and Glacier Ventures International Corp., Greater Lenora and MinCo agreed, subject to court and shareholder approval, to effect the Arrangement. The result of the Arrangement to the shareholders of Greater Lenora will be that they will hold all of the shares of MinCo, a new corporation virtually identical to the existing Greater Lenora. In addition, they will hold 55% of the voting common shares (the “Voting Shares”) and 45% of the non-voting shares (the “Non-Voting Shares”) of Greater Lenora following the arrangement. 3796299 will hold 45% of the Voting Shares and 55% of the Non-Voting Shares of Greater Lenora following the arrangement. Pursuant to the Arrangement, Greater Lenora will transfer all of its assets and liabilities to MinCo. Following the Arrangement, Greater Lenora will have no assets or liabilities and will seek to recapitalize itself in order to acquire an operating business in the information communications area.
12. The Arrangement requires approval by the Supreme Court of British Columbia (the "BC Court"). On June 5, 2001, the BC Court granted an interim order (the "Interim Order") with respect to certain matters relating to the conduct of the Greater Lenora Meeting (as defined below).
13. The holders of Common Shares, Options and Warrants approved the Arrangement at the annual and special meeting held on June 28, 2001, in Toronto, Ontario (the "Greater Lenora Meeting"). 3796299 will be asked to approve the Arrangement by written consent resolution. Greater Lenora holds the sole outstanding common share of MinCo and will consent in favour of the Arrangement.
14. The Arrangement was approved by at least two-thirds of the votes cast by holders of Common Shares, Options and Warrants at the Greater Lenora Meeting.
15. A management information circular (the "Circular"), was forwarded to holders of Common Shares, Options and Warrants in connection with the Greater Lenora Meeting and contains, among other things, prospectus level disclosure of the business and affairs of each of MinCo and Greater Lenora, and of the particulars of the Arrangement, including pro forma financial information respecting MinCo and Greater Lenora following the Arrangement.
16. Prior to the Effective Date of the Arrangement, 3796299 will have invested $300,000 in Greater Lenora in exchange for a convertible note (the “Convertible Note”). In accordance with the Arrangement Agreement, $150,000 of the investment has been delivered to Greater Lenora and the balance of $150,000 is to be delivered prior to the effective date of the Arrangement. Pursuant to the Arrangement, the Convertible Notes are convertible into 45% of the Voting Shares and 55% of the Non-Voting Shares following the Arrangement. If for some reason the Arrangement does not occur, then depending upon certain conditions, the Convertible Notes will be repaid to 3796299 in cash or converted into Common Shares at the average trading price of the Common Shares.
17. The following describes the principal steps of the Arrangement.
(a) Greater Lenora will transfer and assign to MinCo all of its assets, except for the shares of RJK Explorations Ltd. (the “RJK Shares”) which it owns, and MinCo will assume all of the liabilities of Greater Lenora except for the Convertible Notes, and Greater Lenora will issue to MinCo a non-interest bearing promissory note payable on demand which may be satisfied by the transfer of the RJK Shares (the “RJK Note”), all in exchange for (i) a non-interest bearing promissory note (the “Adjustment Amount Promissory Note”) in an amount (the “Adjustment Amount”) equal to the value of the RJK Note plus the fair market value of the current assets less liabilities of Greater Lenora; and (ii) 2,200 MinCo Preferred Shares.
(b) Greater Lenora will amend its share capital to create Voting Shares, Non-Voting Shares and preferred shares (the “Greater Lenora Preferred Shares”).
(c) Each Common Share will be exchanged with Greater Lenora for one Voting Share, one Non-Voting Share and one Greater Lenora Preferred Share.
(d) Optionholders will have their Options exchanged for options of MinCo on the basis that the number of MinCo Common Shares issued upon the exercise of the option will be equal to the number of Common Shares that such optionholder was previously entitled to acquire. The option plan of Greater Lenora will then be cancelled.
(e) Warrantholders will have their Warrants exchanged for warrants of MinCo on the basis that the warrantholder will be entitled to receive on exercise of the warrant that number of MinCo Common Shares at the exercise price as is equal to the number of Common Shares that the warrantholder was previously entitled to acquire at the exercise price the warrantholder was previously required to pay. The Warrants will then be cancelled.
(f) All Greater Lenora Preferred Shares will be exchanged with MinCo on the basis of one MinCo Common Share for each Greater Lenora Preferred Share.
(g) The one MinCo Common Share held by Greater Lenora will be cancelled.
(h) MinCo will redeem the MinCo Preferred Shares held by Greater Lenora in exchange for a $2,200,000 promissory note payable by MinCo to Greater Lenora. The redeemed MinCo Preferred Shares will be cancelled.
(i) Greater Lenora will redeem the Greater Lenora Preferred Shares held by MinCo at an aggregate redemption price of $2,200,000 plus the Adjustment Amount. The redemption amount will be paid by setting off the $2,200,000 promissory note owing from MinCo to Greater Lenora and the Adjustment Amount Promissory Note.
(j) The RJK Shares will be transferred by Greater Lenora to MinCo in exchange for setting off the RJK Note.
(k) On the day following the Effective Date, 3796299 will convert the Convertible Notes into that number of Voting Shares and Non-Voting Shares such that 3796299 will own 45% of the Voting Shares and 55% of the Non-Voting Shares.
18. Minco will become a reporting issuer in the Jurisdictions upon completion of the Arrangement.
19. Greater Lenora will file and disseminate a press release (the “Release”) prior to the completion of the Arrangement which will update the status of operations on properties material to Greater Lenora. The Release will be prepared in accordance with NI 43-101 and will be prepared by or under the supervision of a qualified person (the “QP”). The Release will identify the QP as well as the qualified persons employed or engaged by Greater Lenora to work on its material properties. The Release will not contain any new information that would result in Greater Lenora being obligated to file a technical report pursuant to section 4.2 of NI 43-101.
AND WHEREAS under the System, this MRRS Decision Document evidences the decision of each of the Decision Makers (collectively, the “Decision”);
AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the Decision has been met;
THE DECISION of each of the Decision Makers under the Legislation is that MinCo is exempt from the requirement in subsection 4.1(1) of NI 43-101 in connection with becoming a reporting issuer upon completion of the Arrangement provided that Greater Lenora files the Release prior to the completion of the Arrangement.
DATED July 23rd, 2001.
Kathryn Soden