Exemption Orders (Discretionary)
RBC DOMINION SECURITIES INC.
2001 BCSECCOM 646
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - Issuer is a "connected issuer," but not a "related issuer," of the registrants that are to act as underwriters in a proposed distribution of subordinate voting shares of the Issuer - Issuer is not a "specified party" as defined in proposed Multi-Jurisdictional Instrument 33-105 Underwriting Conflicts - Registrant underwriters exempted from independent underwriter requirement provided that, at the time of the distribution, the Issuer is not a "specified party" as defined in the proposed Instrument, and, in the case of each registrant, is not a "related issuer."
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c. 418, s. 48
Securities Rules, B.C. Reg. 194/97, s. 78(2)(b)
IN THE MATTER OF THE SECURITIES LEGISLATION OF ALBERTA, BRITISH COLUMBIA, NEWFOUNDLAND, ONTARIO AND QUÉBEC
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF RBC DOMINION SECURITIES INC., SALOMON SMITH BARNEY INC., CIBC WORLD MARKETS INC., TD SECURITIES INC., BMO NESBITT BURNS INC. AND SCOTIA CAPITAL INC.
AND
DECOMA INTERNATIONAL INC.
MRRS DECISION DOCUMENT
WHEREAS the securities regulatory authority or regulator (the “Decision Maker”) in each of the provinces of Alberta, British Columbia, Newfoundland, Ontario and Québec (the “Jurisdictions”) has received an application from RBC Dominion Securities Inc. (“RBC”), Salomon Smith Barney Canada Inc. (“Salomon”), CIBC World Markets Inc. (“CIBCWM”), TD Securities Inc. (“TDS”), BMO Nesbitt Burns Inc. (“BMONB”) and Scotia Capital Inc. (“Scotia”) (collectively, the “Filers”) for a decision, pursuant to the securities legislation of each of the Jurisdictions (collectively, the “Legislation”), that the requirement (the “Independent Underwriter Requirement”) contained in the Legislation which restricts a registrant from acting as an underwriter in connection with a distribution of securities of an issuer made by means of prospectus, where the issuer is a connected issuer (or the equivalent) of the registrant unless a portion of the distribution at least equal to that portion underwritten by non-independent underwriters is underwritten by an independent underwriter, shall not apply to the Filers in respect of a proposed distribution (the “Offering”) of Class A Subordinate Voting Shares (the “Offered Securities”) of Decoma International Inc. (the “Issuer”), pursuant to a prospectus (the “Prospectus”);
AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Ontario Securities Commission (the “OSC”) is the principal regulator for this application;
AND WHEREAS the Filers have represented to the Decision Makers that:
1. The name of the Issuer is Decoma International Inc.
2. The Issuer is a reporting issuer under the Legislation of each Jurisdiction and is not in default of any requirements of the Legislation.
3. The business of the Issuer is the manufacture and supply of exterior appearance systems for the North American and European automotive industries.
4. The Company was incorporated under the Business Corporations Act (Ontario) on July 30, 1997 and its head and registered office is located at 50 Casmir Court, Concord, Ontario L4K 4J5.
5. The Class A Subordinate Voting Shares of the Issuer are listed on the Toronto Stock Exchange and the Nasdaq.
6. The head office of the lead underwriter (i.e., RBC) for the Offering is in Toronto, Ontario.
7. The authorized capital of the Company is currently comprised of an unlimited number of Shares, an unlimited number of Class B Shares, an unlimited number of Preferred Shares which are issuable in series. As at December 31, 2000, 19,551,649 Shares, 31,909,091 Class B Shares and 3,500,000 Preferred Shares were issued and outstanding.
8. The Issuer filed an amended preliminary prospectus (the “Preliminary Prospectus”) dated May 10, 2001 in the Jurisdictions. On May 11, 2001, a preliminary mutual reliance review system decision document was issued by the OSC, as principal regulator under National Policy 43-201, evidencing the issuance of receipts for the Preliminary Prospectus by the Decision Maker in each of the provinces of Canada (other than Québec). A receipt dated May 11, 2001 was issued in respect of the Preliminary Prospectus by the Québec Securities Commission.
9. The Filers along with Griffiths McBurney & Partners (“GMP”) (collectively, the “Underwriting Syndicate”) are proposing to act as underwriters in connection with the Offering. The Offered Securities offered pursuant to the Offering are expected to be allocated to the Underwriting Syndicate in the following proportions:
| RBC | - | 22.5% |
| Salomon | - | 12.5% |
| CIBCWM | - | 17.5% |
| TDS | - | 17.5% |
| BMONB | - | 12.5% |
| Scotia | - | 12.5% |
| GMP | - | 5.0% |
10. RBC is a direct wholly-owned subsidiary of a Canadian chartered bank (“RBC Bank”) which provides credit facilities to the Issuer in an aggregate amounts of Cdn.$215 million and £2 million. Consequently, the Issuer may, in connection with the Offering, be considered a connected issuer (or equivalent) in respect of RBC under the Legislation. As at March 31, 2001, the Issuer and its subsidiaries had approximately Cdn.$113 million of debt outstanding under such credit facilities.
11. Salomon is a direct wholly-owned subsidiary of a Canadian chartered bank (“Salomon Bank”) which provides credit facilities to the Issuer in an aggregate amount of Euro$40 million and Cdn.$15 million. Consequently, the Issuer may, in connection with the Offering, be considered a connected issuer (or equivalent) in respect of Salomon under the Legislation. As at March 31, 2001, the Issuer and its subsidiaries had approximately Cdn.$10 million of debt outstanding under such credit facilities.
12. RBC and Salomon and their banking affiliates have been arranging for the syndication of a credit facility in the amount of up to Cdn.$300 million and have invited other banks affiliated with the Filers to join the lending syndicate (the “Lending Syndicate”) which will provide credit facilities to the Issuer. Based on this, the Issuer may, in connection with the Offering, be considered a connected issuer (or equivalent) of each of the Filers.
13. The nature and details of the relationship between the Issuer, RBC and RBC Bank and between the Issuer, Salomon and Salomon Bank are described in the Preliminary Prospectus and will be described in the Prospectus. As the composition of the credit facility described in paragraph 12 has not been completed and is not expected to be completed prior to the filing of the Prospectus, the Prospectus will disclose the nature of the proposed credit facility described in paragraph 12 and the nature and details of any potential relationship between the Issuer and the Filers and other affiliated banks which may arise as a result of that credit facility.
14. None of RBC Bank, Salomon Bank or the Lending Syndicate participated in, nor will they participate in, the decision to make the Offering or in the determination of its terms.
15. The Filers will not benefit in any manner from the Offering other than the payment of their underwriting fees in connection with the Offering.
16. The Issuer is not a related issuer (or equivalent) of the Filers or any of the other members of the Underwriting Syndicate.
17. The Prospectus will contain the information specified in Appendix “C” of draft Multi-Jurisdictional Instrument 33-105 Underwriting Conflicts (the “Proposed Instrument”).
18. The Issuer is not a “specified party” as defined in the Proposed Instrument.
AND WHEREAS pursuant to the System this MRRS Decision Document evidences the decision of each Decision Maker (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 the Decision Makers, under the Legislation, is that the Independent Underwriter Requirement shall not apply to the Filers in connection with the Offering provided the Issuer is not a related Issuer, as defined in the Proposed Instrument, to the Filers at the time of the Offering and is not a specified party, as defined in the Proposed Instrument, at the time of the Offering.
DATED this 31st day of May, 2001.
Howard Wetston Paul Moore