Exemption Orders (Discretionary)
THE CIT GROUP, INC.
2001 BCSECCOM 73
Headnote:
Mutual Reliance Review System for Exemptive Relief Applications – An issuer deemed to be a reporting issuer and relief provided from the continuous disclosure requirements, subject to certain conditions, including that the US parent file its continuous disclosure documents.
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c. 418, ss. 1(1), 85, 88, 91(1)(b)
IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, ONTARIO AND NOVA SCOTIA
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF THE CIT GROUP, INC., CIT CREDIT GROUP INC. AND CIT HOLDINGS, LLC
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the “Decision Maker”) in each of British Columbia, Alberta, Saskatchewan, Ontario and Nova Scotia (collectively, the “Jurisdictions”) has received an application from The CIT Group, Inc. ("CIT"), Newcourt Credit Group Inc., now CIT Credit Group Inc. (“Newcourt”) and CIT Holdings, LLC (“Holdings”) (collectively, the “Filer”) for a decision pursuant to the securities legislation of the Jurisdictions (the “Legislation”) that:
a) Holdings be deemed to be a reporting issuer;
b) Holdings be exempt from the requirements of the Legislation to report material changes, to file interim and annual financial statements, to file information circulars and annual information forms (including management’s discussion and analysis of the financial condition and results of operation of Holdings) and each “insider” (as such term is defined in the Legislation) of Holdings be exempt from the insider reporting requirements of the Legislation (the “Continuous Disclosure Requirements”), all subject to certain conditions;
c) Holdings be exempt from the requirements of the legislation to pay any fees relating to documents filed by CIT pursuant to this Decision; and
d) Newcourt be deemed to cease to be a reporting issuer.
AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Ontario Securities Commission (“OSC”) is the principal regulator for this application;
AND WHEREAS the Filer has represented to the Decision Makers that:
1. Newcourt is a corporation incorporated under the laws of the Province of Ontario, is a reporting issuer or the equivalent in each Jurisdiction and is not in default of any requirements of the Legislation. All of Newcourt’s common shares are held by CIT Exchangeco Inc. (“Exchangeco”) which is an indirect subsidiary of CIT.
2. CIT is a corporation incorporated under the laws of the State of Delaware, is subject to the reporting requirements of the United States Securities Exchange Act of 1934 (the “Exchange Act”), is a reporting issuer or the equivalent in each Jurisdiction and is not in default of any requirements of the Legislation.
3. Holdings is a limited liability company formed under the laws of the State of Delaware, all of its membership interests are held by CIT, and it is not a reporting issuer or the equivalent in any Jurisdiction.
4. On November 15, 1999, Newcourt and CIT combined by way of a plan of arrangement (the “Arrangement”) pursuant to section 182 of the Business Corporations Act (Ontario). Pursuant to the Arrangement, common shareholders of Newcourt received either exchangeable shares (“Exchangeable Shares”) of Exchangeco or shares of CIT Common Stock. The Exchangeable Shares and the shares of CIT Common Stock are both listed on The Toronto Stock Exchange. Upon completion of the Arrangement, Exchangeco held all the outstanding shares in the capital of Newcourt and Newcourt became an indirect subsidiary of CIT. Immediately following the completion of the Arrangement, Newcourt’s common shares were delisted from The Toronto Stock Exchange, the Montreal Exchange and the New York Stock Exchange ("NYSE").
5. As part of the Arrangement, pursuant to a mutual reliance review system decision document issued by, among others, the Jurisdictions In the Matter of The CIT Group, Inc., 3026192 Nova Scotia Company and CIT Exchangeco Inc. dated November 1, 1999 (the “November Decision Document”), CIT and Exchangeco were granted, amongst other things, exemptive relief from certain continuous disclosure requirements of the Legislation, subject to certain conditions. Exchangeco’s and CIT’s filing requirements (aside from material change reports and press releases relating to Exchangeco alone) are to be satisfied through CIT’s filing with all Canadian securities regulators copies of all documents required to be filed by CIT with the United States Securities and Exchange Commission (the “SEC”) under the Exchange Act. Furthermore CIT must comply with the requirements of the NYSE with respect to public disclosure of timely information, and all disclosure material furnished to holders of CIT Common Stock must be concurrently sent to holders of Exchangeable Shares.
6. At the time of the completion of the Arrangement, Newcourt had outstanding unlisted public debt securities in Canada (“Canadian Public Debt”) pursuant to a trust indenture dated June 1, 1995 between The R-M Trust Company (now CIBC Mellon Trust Company) (the “Trustee”) and Newcourt and supplemental indentures thereto (collectively, the “Indenture”). The debt securities were issued under the Indenture in five series (pursuant to three shelf prospectuses).
7. On November 15, 1999, CIT provided an unconditional, absolute and irrevocable guaranty of full and prompt payment of all principal and interest on the Canadian Public Debt (the “Guaranty”).
8. On January 1, 2000, CIT reorganized certain of its subsidiaries in order to achieve efficiencies within the CIT group of companies. Two of the principal aspects of the reorganization were (i) the interposition of Holdings in the chain of ownership between CIT and Newcourt such that Newcourt became an indirect subsidiary of Holdings, and (ii) the transfer by Newcourt of all the outstanding shares of its direct subsidiary, Newcourt Credit Group USA Inc. (“NUSA”), to Holdings.
9. As the sale of NUSA may be considered under the terms of the Indenture to be a sale of substantially all of Newcourt’s assets, Holdings and Newcourt entered into a supplemental indenture to the Indenture whereby Holdings expressly assumed all Newcourt’s obligations under the outstanding Canadian Public Debt and Holdings became the primary obligor thereunder. Upon such assumption, Newcourt was expressly relieved of any further obligations under the Indenture and the securities issued thereunder. The Guaranty of CIT continues to operate in favour of Holdings’ obligations under the Canadian Public Debt. The holders of all the Canadian Public Debt were notified in writing as to the assumption by Holdings of all Newcourt’s obligations under the outstanding Canadian Public Debt.
10. The Indenture requires that the successor company (Holdings) provide to the Trustee, on behalf of securityholders, copies of the documents, information and reports that Holdings is required to file with the Ontario Securities Commission. The Indenture does not require that any such documents or information be mailed or delivered to holders of the Canadian Public Debt.
11. It is the intention of CIT, Newcourt and Holdings that once the Canadian Public Debt is no longer outstanding then Holdings will forthwith apply to the Jurisdictions to cease to be a reporting issuer.
12. Newcourt has less than 15 security holders.
AND WHEREAS pursuant to 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:
1. Holdings shall be deemed to be a reporting issuer for the purposes of the Legislation.
2. The Continuous Disclosure Requirements shall not apply to Holdings, provided that, at the time that any such requirement would otherwise apply:
(a) CIT shall be in compliance with the relevant provisions of the November Decision Document such that:
(i) CIT files with the Decision Makers copies of all documents required to be filed by it with the SEC under the Exchange Act including, but not limited to, copies of any Form 10-K, Form 10-Q, Form 8-K and proxy statements prepared in connection with CIT’s annual meetings, which documents will include financial statements prepared solely in accordance with United States generally accepted accounting principles; and
(ii) CIT complies with the requirements of the NYSE in respect of making public disclosure of material information on a timely basis and forthwith issue in the Jurisdictions and file with the Decision Makers any press release that discloses a material change in CIT’s affairs;
(b) Notwithstanding that the Continuous Disclosure Requirements shall not apply to Holdings, Holdings shall comply with the requirements of the Legislation to issue a press release and file a report with the Decision Makers upon the occurrence of a material change in the affairs of Holdings that is not a material change in the affairs of CIT;
(c) CIT remains the direct or indirect beneficial owner of all of the issued and outstanding membership interests of Holdings;
(d) Holdings has not sought or obtained public financing by way of an offering of securities; and
(e) CIT has continued to provide an unconditional, absolute and irrevocable guaranty of full and prompt payment of all principal and interest on the Canadian Public Debt.
3. Holdings shall be exempt from any fee payments under the Legislation, except in British Columbia and Saskatchewan, relating to filings made by CIT pursuant to this Decision.
4. Newcourt shall be deemed to have ceased to be a reporting issuer for the purposes of the Legislation.
DATED at Toronto this 29th day of September, 2000.
J. A. Geller Howard I. Wetston