Exemption Orders (Discretionary)

QUEBECOR WORLD INC.


2001 BCSECCOM 306


Headnote

Mutual Reliance Review System for Exemptive Relief Applications - Relief granted from certain underwriting conflict provisions of the Rules on the basis that if proposed Multi-Jurisdictional Instrument 33-105 Underwriting Conflicts was in effect, no such relief would be required. The proportionality requirements of the Rules are not met because no independent underwriter is underwriting an amount equal to that of the largest portion being underwritten by a non-independent underwriter. Issuer is a “connected issuer” but is not a “related issuer” of the applicant underwriters, and is not a “specified party” as defined in 33-105.

Applicable British Columbia Provisions

Securities Act, R.S.B.C. 1996, c. 418, s. 48
Securities Rules, B.C. Reg. 194/97, s. 78


IN THE MATTER OF THE CANADIAN SECURITIES LEGISLATION OF THE PROVINCES OF ALBERTA, BRITISH COLUMBIA, NEWFOUNDLAND, QUÉBEC AND ONTARIO

AND

IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF QUEBECOR WORLD INC.

AND

IN THE MATTER OF

RBC DOMINION SECURITIES INC.
BMO NESBITT BURNS INC.
TD SECURITIES INC.
CIBC WORLD MARKETS
CREDIT SUISSE FIRST BOSTON SECURITIES CANADA INC.
NATIONAL BANK FINANCIAL INC. SCOTIA CAPITAL INC. DESJARDINS SECURITIES INC.

MRRS DECISION DOCUMENT

WHEREAS the securities regulatory authority or regulator (the “Decision Maker”) in each of the jurisdictions of Alberta, British Columbia, Newfoundland, Québec, and Ontario (the “Jurisdictions”) has received an application from RBC Dominion Securities Inc. (“RBC”), BMO Nesbitt Burns (“Nesbitt”), TD Securities Inc. (“TD”) CIBC World Markets (“CIBC”), Credit Suisse First Boston Securities Canada Inc. (“Credit Suisse”), National Bank Financial Inc. (“NBF”), Scotia Capital Inc. (“Scotia”) and Desjardins Securities Inc. (“Desjardins”) (collectively, the “Filers”) for a decision pursuant to the securities legislation of the Jurisdictions (the “Legislation”) that the requirement (the “Independent UnderwriterRequirement”) contained in the Legislation which restricts a registrant from acting as an underwriter in connection with 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 portion of the distribution at least equal to that portion underwritten by non-independent underwriters is underwritten by independent underwriters shall not apply to the Filers in respect of a secondary offering by Quebecor Inc., or as the case may be, a wholly-owned subsidiary of Quebecor Inc. and 1462594 Ontario Inc. (collectively referred to as the “SellingShareholders”) of 15,000,000 Subordinate Voting Shares of Quebecor World Inc., pursuant to a short form prospectus (the “Prospectus”) filed with all securities commissions or similar regulatory authorities in Canada (the “Secondary Offering”);

AND WHEREAS pursuant to the Mutual Reliance System for Exemptive Relief Applications (the “System”), the Québec Securities Commission is the Principal Regulator for this application;

AND WHEREAS the Filers have represented to the Commissions that:

1. Quebecor World Inc. ("Quebecor World") is a corporation amalgamated under the Canada Business Corporations Act and its head office is located in Montreal, Québec.

2. Quebecor World is a reporting issuer under the Legislation of each Jurisdiction and is not in default of any requirements of the Legislation.

3. Quebecor World is a diversified global commercial printing company and it is the largest commercial printer in the world.

4. Quebecor World's Subordinate Voting Shares are listed on The Toronto Stock Exchange and on the New York Stock Exchange, its Series 2 Cumulative Redeemable First Preferred Shares are listed on The Toronto Stock Exchange and its Multiple Voting Shares are not publicly traded.

5. Quebecor Inc. (“Quebecor”) is the parent company of Quebecor World. As at February 7, 2001, Quebecor held 56,211,277 Multiple Voting Shares of Quebecor World.

6. 1462594 Ontario Inc. (“SPV”) is an Ontario corporation owned by the underwriters of the Secondary Offering and of the Debentures Offering (as such term is defined below).

7. On February 7, 2001, Quebecor and SPV filed a preliminary short form prospectus (the “Preliminary Prospectus”) under the Mutual Reliance Review System for Prospectuses (with Québec as its designated jurisdiction) and a registration statement with the United States Securities and Exchange Commission to qualify a secondary offering of an aggregate of 15 million Subordinate Voting Shares of Quebecor World (the Subordinate Voting Shares of Quebecor World being hereinafter referred to as the “Shares”) for an aggregate amount of $510 million. A final prospectus is expected to be filed on or about February 16, 2001.

8. Concurrently, with the Secondary Offering, the underwriters offered an aggregate principal amount of $408 of Floating Rate Exchangeable Debentures, Series 2001, due February 15, 2026 (the “Debentures”) to be issued by Quebecor by way of a private placement (the “Debentures Offering”). The principal amount of Debentures may be increased to the extent the number of Shares to be sold by Quebecor under the Secondary Offering is less than $3,000,000.

9. The Debentures, which will be exchangeable under certain circumstances into Shares, will be offered to qualified purchasers in Canada on a private placement basis.

10. Each $1,000 principal amount of Debentures is exchangeable for approximately 29.4118 Shares, subject to certain adjustments.

11. In connection with (i) the exercise by a holder of its right to exchange the Debentures for Shares, (ii) any redemption of the Debentures at the option of Quebecor, or (iii) the repayment of the Debentures at maturity or following an event of default, Quebecor may, at its option, satisfy its obligations by payment of a cash amount specified in the Debentures, by delivery of Shares, or by any combination of cash and Shares.

12. SPV is selling Shares in the Secondary Offering to create a hedged position with respect to the Debentures. The Shares to be sold by SPV in the Secondary Offering will be borrowed from existing holders of Shares. In the event an investor that purchases Debentures in the private placement wishes to fully hedge its position with respect to the Debentures, SPV will agree to buy from that investor the number of Shares issuable upon exchange of the Debentures being purchased by such investor. SPV will then use such Shares to cover its borrowing obligation.

13. Immediately prior to and after the Secondary Offering, SPV will not own beneficially any Shares. All of the Shares to be sold by SPV will be borrowed from existing holders of Shares. These borrowed shares represent approximately 13.7% of the outstanding Shares, or 13.2% of the outstanding Shares assuming the conversion by Quebecor of 3,000,000 Multiple Voting Shares into 3,000,000 Shares for the purpose of the Secondary Offering.

14. In the Secondary Offering, Quebecor, or a wholly-owned subsidiary of Quebecor, will sell up to 3,000,000 Shares. The exact number of such shares sold by Quebecor, or a wholly-owned subsidiary of Quebecor, under the Secondary Offering will be determined prior to the closing of the Secondary Offering and will be equal to the difference between the Shares sold by SPV under the Secondary Offering and 15,000,000.

15. The proportionate share of the Offering to be underwritten by each of the underwriters is as follows:

UnderwriterProportionate Share
RBC
      30.81%
Nesbitt20.39%
TD20.39%
CIBC11.78%
Credit Suisse 7.25%
NBF4.17%
Scotia
        4.17%
Desjardins1.04%
      100.00%

16. RBC is an indirect wholly-owned subsidiary of the Royal Bank of Canada, Nesbitt is a wholly-owned subsidiary of BMO Nesbitt Burns Corporation Limited, an indirect majority-owned subsidiary of the Bank of Montreal, TD is a wholly-owned subsidiary of the Toronto-Dominion Bank, CIBC is a wholly-owned subsidiary of the Canadian Imperial Bank of Commerce, Credit Suisse is an indirect subsidiary of the Credit Suisse First Boston Bank , a Swiss bank, NBF is an indirect, wholly-owned subsidiary of the National Bank of Canada, Scotia is a wholly-owned subsidiary of the Bank of Nova Scotia and Desjardins is a wholly-owned subsidiary of Desjardins-Laurentian Financial Corporation, a majority-owned subsidiary of Mouvement Desjardins. The Royal Bank of Canada, the Bank of Montreal, the Toronto-Dominion Bank, the Canadian Imperial Bank of Commerce, Credit Suisse First Boston Bank, the National bank of Canada, the Bank of Nova Scotia and Caisse centrale Desjardins are hereinafter referred to as the “Related Banks”.

17. By virtue of indebtedness to the Related Banks, Quebecor may be considered a “connected issuer” to each of the Filers, as defined in the proposed Multi-Jurisdictional Instrument 33-105 Underwriting Conflicts (the “Proposed Conflicts Instrument”).

18. More specifically, as of December 31, 2000, Quebecor's syndicated credit facilities, which included the credit facilities of Quebecor, Quebecor World, Quebecor Media Inc., Videotron Ltd. and Sun Media Corporation (the “Quebecor Group Facilities”) provided for an aggregate maximum availability of CDN$6.925 billion. As of the same date, the total indebtedness to the Related Banks under the Quebecor Group Facilities stood at approximately CDN$2.537 billion.

19. The Prospectus will contain the information specified in Appendix “C” of the Proposed Instrument.

20. The decision to sell Shares, including the determination of the terms of such distribution has been made through negotiations between Quebecor Inc. and the Flers without the involvement of the Related Banks.

21. Quebecor Inc. is in good financial condition and is not under any immediate financial pressure to complete the Debentures Offering or the Secondary Offering.

22. Quebecor Inc. is not a “related issuer” of the Filers, nor a “specified party”, as such terms are defined in the Legislation and the Proposed Conflicts Instrument.

23. The net proceeds of the Debentures Offering and the Secondary Offering will be used to pay down debt of Quebecor.

24. The Filers will not benefit in any manner from the Debentures Offering or the Secondary Offering other than the payment of their fees in connection therewith.

25. The certificate in each of the Preliminary Prospectus and the Prospectus will be signed by the Filers.

AND WHEREAS pursuant to the System, this MRRS Decision Document evidences the decision of each Decision Maker (the “Decision”);

AND WHEREAS each Decision Maker is satisfied that the test contained in the Legislation that provides the Decision Makers 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 Filers in connection with the

Secondary Offering provided that the Prospectus contains the disclosure stated in paragraph 19 above and provided that Quebecor Inc. is not a “related issuer”, as such term is defined in the Proposed Conflicts Instrument, to the Filers at the time of the Secondary Offering, and is not a “specified party”, as such term is defined in the Proposed Conflicts Instrument, at the time of the Secondary Offering.

DATED at Montreal, this 16 day of February 2001.
Le Directeur de la conformité et de l’application

____________________________
Jean Lorrain
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