Exemption Orders (Discretionary)
CIBC WORLD MARKETS INC.
2001 BCSECCOM 219
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - Relief granted from the underwriting conflict provisions of the Rules on the basis that if the proposed multi-jurisdictional instrument 33-105 were in effect, no such relief would be required. An independent underwriter will underwrite at least 20% of each offering and the disclosure prescribed by part 2 of 33-105 will be made.
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)
IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, ONTARIO, QUEBEC 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.
AND
WEBHELP INC. AND WEBHELP CANADA INC.
MRRS DECISION DOCUMENT
WHEREAS the securities regulatory authority or regulator (the “Decision Maker”) in each of British Columbia, Alberta, Ontario, Quebec and Newfoundland (the “Jurisdictions”) has received an application from CIBC World Markets Inc. (the “Filer”) for a decision, pursuant to the securities legislation of the Jurisdictions (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 related 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 Filer in respect of a proposed distribution (the “Offering”) of common shares (the “Common Shares”) of Webhelp Inc. (“Webhelp”) and exchangeable shares (the “Exchangeable Shares”) of Webhelp Canada Inc. (“Webhelp Canada”), 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 is the principal regulator for this application;
AND WHEREAS the Filer has represented to the Decision Makers that:
1. Webhelp was incorporated under the laws of the State of Delaware on May 27, 1999, under the name Blue Sky Ventures, Inc. On December 2, 1999, the name of Webhelp was changed to Webhelp.com Inc. On October 20, 2000, the name of Webhelp was changed to Webhelp Inc. Webhelp is currently not a reporting issuer under the Act.
2. Webhelp Canada was incorporated under the laws of the Province of Ontario on November 19, 1999. Webhelp Canada is a wholly owned subsidiary of Webhelp and is currently not a reporting issuer under the Act.
3. The head office of the Filer is located in Toronto, Ontario.
4. On March 22, 2000, Webhelp filed a registration statement on Form F-1 (the “Registration Statement”) with the United States Securities and Exchange Commission, and on March 28, 2000, Webhelp filed a preliminary prospectus qualifying the Common Shares with the securities regulatory authority in each of the provinces of Canada. The preliminary prospectus was withdrawn on June 17, 2000. The Registration Statement was amended on August 31, 2000. An updated preliminary prospectus qualifying the Common Shares was filed with the securities regulatory authority in each of the provinces of Canada on September 22, 2000. At the time of the initial filings, Webhelp had contemplated an initial public offering of common shares in Canada and the United States. It is now contemplated that there will be an offering in Canada of both Common Shares by Webhelp and Exchangeable Shares by Webhelp Canada (collectively, the “Offered Shares”). The Common Shares may also be offered in the United States on a private placement basis.
5. Webhelp and Webhelp Canada filed a preliminary prospectus (“the Preliminary Prospectus”) qualifying the distribution of the Offered Shares with the securities regulatory authority in each of the provinces of Canada on October 24, 2000, and will file the Prospectus as soon as possible thereafter.
6. There is currently no public market for the Offered Shares. An application has been made to list the Offered Shares for trading on the Toronto Stock Exchange.
7. The Filer along with RBC Dominion Securities Inc. (“RBC DS”) and Yorkton Securities Inc. (“Yorkton”) (collectively, the “Underwriters”) are proposing to act as underwriters in connection with the offering.
8. The approximate proportionate share of the Offering underwritten by each of the Underwriters is expected to be as follows:
| Underwriter Name | Proportionate Share of the Offering |
| The Filer | 50% |
| RBC DS | 35% |
| Yorkton | 15% |
9. An affiliate of the Filer (the “Affiliate”), CIBC World Markets Corp., acquired an aggregate of 3,671,329 shares of Webhelp Series B preferred stock in December 1999, at a purchase price of $8.17 per share, for an aggregate purchase price of approximately $30,000,000. On October 24, 2000, the Affiliate acquired an additional 611,888 shares of Series B preferred stock. The Series B preferred stock is voting and there are 4,283,217 shares issued and outstanding, of which the Affiliate owns 100%. Each share of Series B preferred stock is convertible into 1.241 shares of Common Stock and the shares of Series B preferred stock held by the Affiliate will automatically be converted into an aggregate of 5,316,642 shares of Common Stock upon completion of the Offering.
10. On October 24, 2000, the Affiliate was issued a warrant to purchase shares of Common Stock. The warrant entitles the Affiliate to purchase Common Stock at the initial public offering price for a period of five years after completion of the Offering. The Affiliate will be entitled to purchase additional shares of Common Stock only to the extent that the value of Webhelp before giving effect to the Offering is below $155.5 million.
11. Accordingly, Webhelp and Webhelp Canada may each be considered to be a “related issuer” of the Filer within the meaning of the Legislation.
12. Neither Webhelp nor Webhelp Canada is a “related issuer” nor a “connected issuer”, as each term is defined in the Legislation in respect of RBC DS and Yorkton. RBC DS and Yorkton (the “Independent Underwriters”) are both independent underwriters as defined in draft Multi-Jurisdictional Instrument 33-105 Underwriting Conflicts (the “Proposed Instrument”).
13. Because Webhelp and Webhelp Canada may be considered related issuers of the Filer, the underwriting syndicate may not comply with the proportional requirements of the Legislation.
14. The nature and details of the relationship between Webhelp, Webhelp Canada, the Filer, the Affiliate and the Independent Underwriters will be described in each of the Preliminary Prospectus and the Prospectus, and the Prospectus will contain the information required by Appendix C to the Proposed Instrument.
15. The decision to issue the Offered Securities, including the determination of the terms of the distribution, were made through negotiations among Webhelp, Webhelp Canada and the Underwriters without the involvement of the Affiliate.
16. The Filer is registered under the Act in the categories of “broker” and “investment dealer”.
17. The Filer will not benefit in any manner from the Offering other than the payment of its fees in connection therewith.
18. RBC DS will underwrite at least 20 percent of the dollar value of the Offering and the Independent Underwriters will participate in the due diligence relating to the Offering and in the structuring and pricing of the Offering. The Prospectus will identify the Independent Underwriters and will disclose the role of the Independent Underwriters in the structuring and pricing of the Offering and in the due diligence activities performed by the Underwriters.
19. The certificate in each of the Preliminary Prospectus and the Prospectus will be signed by the Underwriters, including each of the Independent Underwriters.
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 Filer in connection with the Offering provided:
(i) RBC DS and Yorkton participate in the offering as stated in paragraph 18 above;
(ii) the Prospectus contains the disclosure stated in paragraph 18 above; and
(iii) the relationship between the Webhelp, Webhelp Canada and the Filer is disclosed in the Prospectus.
DATED at Toronto on this 13th day of December, 2000.
John A. Geller Robert W. Davis