Exemption Orders (Discretionary)
CIBC WORLD MARKETS INC.
2001 BCSECCOM 598
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 debt securities 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 requirements 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 BRITISH COLUMBIA, ALBERTA, ONTARIO, QUÉBEC AND NEWFOUNDLAND
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
CIBC WORLD MARKETS INC., HSBC SECURITIES (CANADA) INC.,
RBC DOMINION SECURITIES INC., SCOTIA CAPITAL INC. AND TD SECURITIES INC.
AND
IN THE MATTER OF NEXEN INC.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of British Columbia, Alberta, Ontario, Québec and Newfoundland (the "Jurisdictions") has received an application from CIBC World Markets Inc., HSBC Securities (Canada) Inc., Scotia Capital Inc., TD Securities Inc. and RBC Dominion Securities Inc. (collectively, the "Applicants") for a decision under the securities legislation of the Jurisdictions (the "Legislation") that the requirement (the “Independent Underwriter Requirement”) contained in the Legislation which restricts a registrant from participating in a distribution of securities by an issuer, made by means of a prospectus, where the issuer is a connected issuer (or the equivalent) of the registrant unless a specified portion of the distribution is underwritten by one or more independent underwriters, shall not apply to the Applicants in connection with each proposed distribution of an aggregate amount of up to $500,000,000 of debt securities (the "Debt Securities") of Nexen Inc. (the "Issuer") pursuant to a shelf prospectus (“Shelf Prospectus”) filed or to be filed in all of the provinces of Canada in accordance with the procedures (the "Shelf Procedures") set out in National Instrument No. 44-102 (“NI 44-102”);
AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the "System"), the Ontario Securities Commission is the principal regulator for this application;
AND WHEREAS the Applicants have represented to the Decision Makers that:
1. The Applicants are registrants under the Legislation and their head offices are located in the Province of Ontario.
2. The Issuer is a corporation incorporated under the laws of Canada, is a reporting issuer in each Jurisdiction and to Applicant’s knowledge is not in default of any requirement of the Legislation.
3. The Issuer is a global energy and chemicals company involved in:
(a) the exploration for and development of crude oil, natural gas and related products around the world;
(b) the development and production of synthetic crude oil from oil sands in Canada; and
(c) the manufacture, marketing and distribution of industrial chemicals.
4. The Issuer's outstanding common shares are listed on The Toronto Stock Exchange and The New York Stock Exchange and its preferred securities are listed on The New York Stock Exchange.
5. On April 12, 2001, the Issuer had a market capitalization in excess of $4.2 billion.
6. The Issuer intends to enter into a dealer agreement with the Applicants whereby the Issuer will agree to issue and sell, and the Applicants will agree:
(a) to sell Debt Securities as agents on a best efforts basis; or
(b) to purchase Debt Securities as principals,
from time to time.
7. The Issuer has filed or will file a preliminary short form shelf prospectus (the "Preliminary Shelf Prospectus") and the Shelf Prospectus with the securities regulatory authorities in each of the provinces of Canada in order to qualify the Debt Securities for distribution in those provinces. The Shelf Prospectus will provide that the Issuer may sell the Debt Securities to or through the Applicants purchasing as principal, and may also sell the Debt Securities to one or more other purchasers, directly or through agents including the Applicants.
8. The Issuer currently has credit facilities (collectively, the "Credit Facilities") with Canadian chartered banks (the "Banks") of which the Applicants are subsidiaries. As at April 12, 2001, the following amounts were outstanding under the Credit Facilities:
Canadian Imperial Bank of Commerce $ 48 million
Bank of Nova Scotia $123 million
HSBC $ 14 million
Royal Bank of Canada $114 million
Toronto Dominion Bank $181.5 million
9. The proceeds from each distribution (the “Offering”) of Debt Securities, before deducting the underwriting fees and expenses of the offering thereof, are not presently known and will depend on the principal amount of Debt Securities distributed from time to time pursuant to one or more prospectus supplements. The proceeds of such Offering(s) will be used by the Issuer to repay indebtedness and for the capital expenditure and investment programs of the Issuer and of its various subsidiaries.
10. Accordingly, with respect to one or more Offerings, the Issuer may be considered a connected issuer (or the equivalent ) within the meaning of the Legislation and draft Multi-Jurisdictional Instrument 33-105 - Underwriting Conflicts (the “Proposed Instrument”). The Issuer is not a related issuer (or the equivalent), within the meaning of the Legislation and the Proposed Instrument, of any of the Applicants.
11. The proportionate percentage share of any Offering to be underwritten by each of the Applicants is not presently known, and may vary as between one or more such Offerings, to be determined at the time of each such Offering.
12. The Applicants, if and when acting as underwriters in respect of an Offering, may not comply with the Independent Underwriter Requirement.
13. The nature and details of the relationship between the Issuer, the Applicants and the Banks will be described in the Preliminary Shelf Prospectus and the Shelf Prospectus as prescribed by the Proposed Instrument which disclosure, to the extent not previously satisfied in the Preliminary Shelf Prospectus and the Shelf Prospectus, shall be satisfied by including the information specified in Appendix “C” to the Proposed Instrument in a shelf prospectus supplement pertaining to a particular distribution of Debt Securities, if any, as permitted by National Instrument 44-102. The Preliminary Shelf Prospectus and the Shelf Prospectus will contain a certificate signed by each Applicant in accordance with Method 1 to National Instrument 44-102.
14. The Applicants will receive no benefit relating to any Offering other than the payment of their fees in connection therewith.
15. The decision to issue Debt Securities, including the determination of the terms of each Offering, will be made through negotiations between the Issuer and the Applicants without involvement of the Banks.
16. The Issuer is not “specified party" within the meaning of the Proposed Instrument.
AND WHEREAS under the System, this MRRS Decision Document evidences the decision of each Decision Maker (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 the Decision Makers pursuant to the Legislation is that the Independent Underwriter Requirement shall not apply to the Applicants in connection with the Offerings provided that:
1. The Shelf Prospectus contains the information required by Appendix C to the Proposed Instrument; and
2. At the time of an Offering:
(a) the Issuer is not a specified party (as defined in the Proposed Instrument); and
(b) the Issuer is not a related issuer (as defined the Proposed Instrument) of any of the Applicants.
DATED this 15th day of May , 2001.
Howard I Wetston Robert W. Korthals