Exemption Orders (Discretionary)
G.T.C. TRANSCONTINENTAL GROUP LTD.
2001 BCSECCOM 328
Headnote
Mutual Reliance Review System for Exemptive Relief Applications – Issuer is a “connected issuer,” but not a “related issuer,” of the registrants that are to act as underwriters in a proposed distribution of senior secured notes of the Issuer – Issuer is not a “specified party” as defined in proposed Multi-Jurisdictional Instrument 33-105 Underwriting Conflicts – Registrant underwriters exempted from independent underwriter requirements provided that, at the time of the distribution, the issuer is not a “specified party” as defined in the proposed Instrument, and, in the case of each registrant, is not a “related issuer.”
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 CANADIAN SECURITIES LEGISLATION OF THE PROVINCES OF ALBERTA, BRITISH COLUMBIA, NEWFOUNDLAND, QUEBEC AND ONTARIO
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF G.T.C. TRANSCONTINENTAL GROUP LTD.
AND
IN THE MATTER OF NATIONAL BANK FINANCIAL INC.
RBC DOMINION SECURITIES INC.
BMO NESBITT BURNS INC.
SCOTIA CAPITAL INC.
MRRS DECISION DOCUMENT
WHEREAS the securities regulatory authority or regulator (the “Decision Maker”) in each of Alberta, British Columbia, Newfoundland, Quebec and Ontario (collectively, the “Jurisdictions”) have received an application from National Bank Financial Inc. (“NBF”), RBC Dominion Securities Inc. (“RBC”), BMO Nesbitt Burns Inc. (“BMO”) and Scotia Capital Inc. (“Scotia”) (collectively, the “Underwriters”) 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 underwriters 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 Underwriters in respect of a proposed distribution (the “Offering”) by G.T.C. Transcontinental Inc. (“GTC”) of Class A subordinate voting shares (the “Shares”) by way of a short form prospectus (the “Prospectus”);
AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Quebec Securities Commission is the Principal Regulator for this application.
AND WHEREAS the Underwriters have represented to the Commissions that:
1. GTC was incorporated under the Canada Business Corporations Act on March 3, 1978 and its head office is located in Montreal, Quebec.
2. GTC is a reporting issuer in all provinces of Canada and its shares are listed for trading on the Toronto Stock Exchange.
3. GTC filed on February 1, 2001 a preliminary short form prospectus (the “Preliminary Prospectus”) under the Mutual Reliance Review System for Prospectuses with Quebec as its designated jurisdiction and will file a final short form prospectus on or about February 12, 2001.
4. The Underwriters involved in the Offering are NBF, RBC, BMO and Scotia. The proportionate share of the Offering underwritten by each of the Underwriters is as follows:
| Underwriter | Proportionate Share |
| NBF | 35% |
| RBC | 35% |
| BMO | 15% |
| Scotia | 15% |
6. GTC currently has credit facilities (the “Credit Facilities”) with a group of banks, which include the Related Banks. The Credit Facilities provide for an aggregate maximum availability of $368 million or US equivalent and US$90 million, of which approximately $228 million is drawn as of the date of the Preliminary Prospectus. GTC is not in default under any of the Credit Facilities.
7. By virtue of the Credit Facilities, GTC may be considered a connected issuer (as that term is defined in the Proposed Multi-Jurisdictional Instrument 33-105 entitled Underwriting Conflicts (1998) 21 OSCB 788) (the “Proposed Conflicts Instrument”) of each of the Underwriters; thus the Underwriters do not comply with the proportionate requirement of the Legislation.
8. GTC is not a “related issuer” of any of the Underwriters as that term is defined in the Proposed Conflicts Instrument nor is GTC a “specified party” as that term is defined in the Proposed Conflicts Instrument.
9. GTC is in good financial condition and is not under any immediate financial pressure to complete the Offering.
10. The net proceeds of the Offering will be used to reduce GTC’s indebtedness to the Related Banks. The Related Banks did not participate in the decision to make the Offering nor in the determination of the terms of the Offering or the use of proceeds thereof.
11. The Underwriters will not benefit in any matter from the Offering other than the payment of their fee in connection with the Offering.
12. The disclosure required by Schedule C to the Proposed Conflicts Instrument is contained in the Preliminary Prospectus and will be contained in the final short form prospectus and the certificate in such prospectus will be signed by each of the Underwriters.
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 in 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 Underwriters in connection with the Offering provided GTC is not a related issuer, as defined in the Proposed Instrument, GTC at time of the Offering and is not a specified party, as defined in the Proposed Instrument, at the time of the Offering.
Dated February 12, 2001
Jean Lorrain
Directeur de la Conformité et de l’application