Exemption Orders (Discretionary)
SCOTIA CAPITAL INC.
2000 BCSECCOM 353
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - Issuer is a connected issuer, but not a related issuer, in respect of registrants that are underwriters in proposed distributions of units by the issuer -Underwriters exempt from the independent underwriter requirement in the legislation provided that issuer complies with certain conditions.
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, QUEBEC AND NEWFOUNDLAND
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF SCOTIA CAPITAL INC., BMO NESBITT BURNS INC. AND
LOOK COMMUNICATIONS 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 Scotia Capital Inc. and BMO Nesbitt Burns Inc. (collectively, the “Filers”) 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 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 an independent underwriter, shall not apply to the Filers in respect of a proposed distribution (the “Offering”) of Units consisting of Limited Voting Shares and Convertible Debentures (the “Offered Securities”) of Look Communications Inc. (the “Issuer”) pursuant to a short form 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 Filers have represented to the Decision Makers that:
1. The Issuer is a corporation governed by the Canada Business Corporations Act (the “CBCA”) and was formed through a court-approved plan of arrangement (the “Arrangement”) under the CBCA which resulted in the amalgamation of Look Communications Inc. and I.D. Internet Direct Ltd. on October 31, 1999.
2. The Issuer’s head office is located in Toronto, Ontario.
3. The Issuer proposes to conduct a public offering (the “Offering”) of Units consisting of Limited Voting Shares and Convertible Debentures by means of the Prospectus.
4. The Issuer has filed an annual information form dated March 10, 2000 with the securities regulatory authorities in each of the Provinces of Canada and is eligible to use the POP System across Canada. The Issuer is currently a reporting issuer under the Legislation in the Provinces of British Columbia, Ontario, Alberta, Quebec and Nova Scotia and is not in default of any requirement under the Legislation of such Jurisdictions. Upon issuance of a receipt for the Prospectus, the Issuer will be a reporting issuer in each Province of Canada.
5. It is intended that the Filers will be appointed co-lead underwriters and will each underwrite 35% of the Offering.
6. The Issuer has established a revolving credit facility (the “Credit Facility”) with The Bank of Nova Scotia and Bank of Montreal (the “Lenders”), which Lenders control Scotia Capital Inc. and BMO Nesbitt Burns Inc., respectively. The Credit Facility contains certain operating and financial covenants including a requirement that the Issuer raise additional equity by specified dates.
7. As at August 31, 2000, an aggregate of $143.3 million was outstanding under the Credit Facility. The Issuer will use the net proceeds of the Offering for financing its capital expenditures and acquisitions and for general working capital purposes. The net proceeds will initially be used to reduce the amount outstanding under the Credit Facility, though such repayment will not reduce the available commitment under such facility.
8. The Issuer may be considered to be a “connected issuer” to the Filers for the purposes of the Legislation and for the purposes of the Proposed Multijurisdictional Instrument 33-105 entitled “Underwriting Conflicts” (the “Proposed Instrument”). Since it is intended that each of the Filers is to be allocated a 35% portion of the Offering, the Filers would not comply with the Independent Underwriter Requirement in connection with the Offering.
9. Of the remaining 30% of the Offering, 20% will be underwritten by TD Securities Inc. (the “Independent Underwriter”) and 10% will be underwritten by National Bank Financial Inc. The Issuer is not a “related issuer” or a “connected issuer” to the Independent Underwriter for the purposes of the Legislation and the Independent Underwriter is an “independent underwriter” for the purposes of the Proposed Instrument.
10. The Independent Underwriter will participate in the determination of the terms of the Offering. The Lenders did not and will not participate in the decision to make the Offering or in the determination of its terms.
11. Neither of the Filers will receive any benefit pursuant to the Offering other than the payment of their fees in connection therewith.
12. The Issuer is not a related issuer (or the equivalent) of the Filers or of any of the other members of the underwriting syndicate.
13. The nature and details of the relationship between the Issuer and the Filers will be described in the Prospectus. The Prospectus will contain the information specified in Appendix “C” of the Proposed Instrument.
14. The Prospectus will contain a certificate signed by each of the underwriters in accordance with the Legislation.
15. The Issuer is not a “specified party” as defined in the Proposed Instrument.
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 Filers in connection with the Offering provided the Issuer is not a related issuer, as defined in the Proposed Instrument, to the Filers at the time of the Offering and is not a specified party, as defined in the Proposed Instrument, at the time of the Offering.
Dated the 22nd day of November, 2000.
Theresa McLeod R. Stephen Paddon