Exemption Orders (Discretionary)
SHININGBANK ENERGY INCOME FUND
2001 BCSECCOM 390
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - Relief from the requirement to provide identical consideration to all holders of securities that are of the same class to permit the payment of sale proceeds in lieu of units of the offeror to holders of shares of the offeree resident in the United States of America
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c. 418, ss. 107(1) and 114(2)(c)
IN THE MATTER OF THE SECURITIES LEGISLATION OF ALBERTA, BRITISH COLUMBIA AND ONTARIO
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF SHININGBANK ENERGY INCOME FUND, 923720 ALBERTA INC. AND IONIC ENERGY INC.
MRRS DECISION DOCUMENT
1. WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of British Columbia, Alberta, and Ontario (the "Jurisdictions") has received an application from Shiningbank Energy Income Fund ("Shiningbank") and 923720 Alberta Inc. ("Acquireco") for a decision under the securities legislation of the Jurisdictions (the “Legislation”) exempting Shiningbank and Acquireco from the requirement contained in the Legislation to offer holders of a class of securities subject to a take-over bid identical consideration (the "Identical Consideration Requirement") in connection with an offer to purchase the common shares of Ionic Energy Inc. ("Ionic");
2. AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the "System"), the Alberta Securities Commission is the principal regulator for this application;
3. AND WHEREAS Shiningbank and Acquireco have represented to the Decision Makers that:
3.1 Shiningbank is a trust organized under the laws of the Province of Alberta;
3.2 the head office of Shiningbank is in Calgary, Alberta;
3.3 Shiningbank is a reporting issuer in each of the Jurisdictions;
3.4 Shiningbank is authorized to issue up to 300,000,000 units (“Shiningbank Units”);
3.5 as of March 12, 2001, there were 19,703,712 Shiningbank Units outstanding;
3.6 the Shiningbank Units are listed and posted for trading on The Toronto Stock Exchange (the “TSE”);
3.7 Shiningbank is not in default of any requirement under the Legislation;
3.8 Acquireco is a corporation incorporated under the Business Corporations Act (Alberta);
3.9 Acquireco is a wholly-owned subsidiary of Shiningbank;
3.10 Ionic is a corporation incorporated under the Business Corporations Act (Alberta);
3.11 the head office of Ionic is in Calgary, Alberta;
3.12 Ionic is a reporting issuer in each of the Jurisdictions;
3.13 the authorized capital of Ionic includes an unlimited number of common shares (“Ionic Shares”);
3.14 as of March 8, 2001, there were 24,803,843 Ionic Shares outstanding;
3.15 the Ionic Shares are listed and posted for trading on the TSE;
3.16 to the knowledge of Shiningbank, Ionic is not in default of any requirement under the Legislation;
3.17 Shiningbank and Acquireco have made a take-over bid for all of the Ionic Shares currently outstanding or issuable upon the exercise of outstanding options (the “Bid”);
3.18 under the Bid, the holders of Ionic Shares may elect to receive 0.306 of a Shiningbank Unit or $5.10 in cash for each Ionic Share;
3.19 a maximum of $45,000,000 is payable as consideration under the Bid;
3.20 to the best information of Shiningbank, there are three registered holders of Ionic Shares (the “U.S. Shareholders”) resident in the United States of America (the “United States”);
3.21 to the best information of Shiningbank, the U.S. Shareholders currently hold a total of 2,134,800 Ionic Shares, representing approximately 8.6% of the total number of outstanding Ionic Shares;
3.22 Shiningbank has reason to believe that certain of the U.S. Shareholders or persons holding Ionic Shares beneficially through the U.S. Shareholders may sell some or all of the Ionic Shares held by them prior to the expiry of the Bid;
3.23 any Shiningbank Units which might be issued under the Bid to the U.S. Shareholders will not be registered under the Securities Act of 1933 in the United States. Accordingly, the delivery of Shiningbank Units to the U.S. Shareholders without further action by Shiningbank may constitute a violation of the laws of the United States;
3.24 Shiningbank is eligible to use the multi-jurisdictional disclosure system adopted by the United States. However, if Shiningbank delivered Shiningbank Units to the U.S. Shareholders under the Bid it would become subject to the Investment Company Act in the United States;
3.25 compliance with the Investment Company Act would require changes to Shiningbank’s trust indenture and business operations and would result in significant ongoing obligations;
3.26 Shiningbank proposes to deal with any Shiningbank Units issuable to the U.S. Shareholders under the Bid in the following manner:
3.26.1 if the total number of Shiningbank Units does not exceed 2% of the currently outstanding number of Shiningbank Units, Shiningbank will deliver them to the depository for the Bid (the “Depository”). The Depository will then pool and sell the Shiningbank Units on the TSE on behalf of the U.S. Shareholders. Immediately following such sale, the Depository will provide the applicable U.S. Shareholders with their respective share of the proceeds of the sale, less any commissions and withholding taxes; or
3.26.2 if the total number of Shiningbank Units exceeds 2% of the currently outstanding number of Shiningbank Units, Shiningbank will deliver them to the Depository. The Depository will then pool and sell the Shiningbank Units through one or more investment dealers, arranged for by Shiningbank, to available purchasers on a best efforts basis. Immediately following such sale, the Depository will provide the applicable U.S. Shareholders with their respective share of the proceeds of the sale, less any commissions and withholding taxes;
3.27 any sale of Shiningbank Units described in paragraph 3.26 will be completed within five trading days of the date that Shiningbank takes up the Ionic Shares tendered by the applicable U.S. Shareholders under the Bid;
3.28 any sale of Shiningbank Units described in paragraph 3.26 will be done in a manner intended to maximize the consideration to be received from the sale by the applicable U.S. Shareholders and minimize any adverse impact of the sale on the market for the Shiningbank Units;
3.29 except to the extent that relief from the Identical Consideration Requirement is granted herein, the Bid is being made in compliance with the requirements under the Legislation concerning take-over bids;
4. AND WHEREAS under the System, this MRRS Decision Document evidences the decision of each Decision Maker (collectively, the "Decision");
5. 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;
6. THE DECISION of the Decision Makers under the Legislation is that, in connection with the Bid, Shiningbank and Acquireco are exempt from the Identical Consideration Requirement insofar as U.S. Shareholders who would otherwise receive Shiningbank Units under the Bid receive instead cash proceeds from the sale of those Shiningbank Units in accordance with the procedures set out in paragraph 3.26.
DATED this 4th day of April, 2001.
Eric T. Spink, Vice-Chair Thomas G. Cooke, Q.C., Member