Exemption Orders (Discretionary)
RBC DOMINION SECURITIES INC.
2001 BCSECCOM 692
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - Issuer is a "connected issuer", but not a "related issuer", of registrants that are to act as underwriters in a proposed distribution of common shares of the Issuer - Issuer not a "specified party" as defined in Draft Multi-Jurisdictional Instrument 33-105 - Underwriting Conflicts - Registrant underwriters exempted from independent underwriter requirements, provided that, at the time of the distribution, issuer is not a "specified party" as defined in the draft 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 SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, ONTARIO, NEWFOUNDLAND AND QUÉBEC
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF RBC DOMINION SECURITIES INC.,
BMO NESBITT BURNS INC. AND TD SECURITIES INC.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of British Columbia, Alberta, Ontario, Newfoundland and Québec (the "Jurisdictions") has received an application from RBC Dominion Securities Inc., BMO Nesbitt Burns Inc. and TD Securities Inc. (collectively, the "Applicants") for a decision under the securities legislation of the Jurisdictions (the "Legislation") that the requirement contained in the Legislation which restricts a registrant from participating in a distribution of securities of a connected issuer (or equivalent) shall not apply to the Applicants in connection with the proposed offering (the "Offering") of preferred shares (the "Preferred Shares") by ATCO Ltd. (the "Issuer") to be made by means of a short form prospectus (the "Prospectus");
AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the "System"), the Ontario Securities Commission is the principal jurisdiction for this application;
AND WHEREAS the Applicants have represented to the Decision Makers that:
1. The Applicants are registrants under the Legislation.
2. The Issuer is a corporation governed by the laws of the Province of Alberta whose activities include power generation, electricity transmission, pipelines and gas distribution and manufacture and sale of modular buildings.
3. The Issuer is a reporting issuer under and is not in default of the securities legislation of each of the provinces of Canada. The Issuer's outstanding Class I Non-Voting Shares and Class II Voting Shares are listed on the Toronto Stock Exchange and the Canadian Venture Exchange. The Issuer has a market capitalization in excess of $1,500,000,000 and has consolidated indebtedness of $2,435,600,000.
4. The Issuer intends to enter into an underwriting agreement with a syndicate of underwriters comprised of the Applicants whereby the Issuer will agree to issue and sell, and the Applicants will agree to purchase, as principals, the Preferred Shares.
5. The Issuer intends to file a preliminary short form prospectus (the "Preliminary Prospectus") and the Prospectus with the securities regulatory authorities in each of the provinces of Canada in order to qualify the Preferred Shares for distribution in those provinces.
6. The Issuer and its subsidiaries currently have credit facilities (collectively, the "Credit Facilities") with Canadian chartered banks (the "Banks") of which the Applicants are subsidiaries. As at the date hereof, the following amounts are outstanding under the Credit Facilities:
| Royal Bank of Canada | $ 66,200,000 |
| Bank of Montreal | $ 95,000,000 |
| Toronto Dominion Bank | $ 2,500,000 |
| Total | $163,700,000 |
The Credit Facilities comprise 6.7% of the consolidated indebtedness of the Issuer.
7. In addition, the Issuer is currently negotiating a credit facility of up to $200,000,000 with the Banks to finance the redemption, on July 3, 2001, of the Cumulative Redeemable Preferred Shares, Series A, B and C of CanUtilities Holdings Ltd., a wholly-owned subsidiary of the Issuer. The proceeds of the Offering, before deducting the Applicants' fees and expenses of the Offering, are currently expected to be approximately Cdn. $150 million and will be used by the Issuer to repay a portion of the $200,000,000 credit facility referred to above.
8. Accordingly, the Issuer may be considered a "connected issuer" (or the equivalent) (within the meaning of proposed Multi-Jurisdictional Instrument 33-105 - Underwriting Conflicts (the “Proposed Instrument”)) of the Applicants. The Issuer is not a "related issuer" (or the equivalent) (within the meaning of the Proposed Instrument) of the Applicants.
9. The proportionate percentage share of the Offering is anticipated to be underwritten by each of the Applicants is as follows:
| RBC Dominion Securities Inc. | 40% |
| BMO Nesbitt Burns Inc. | 40% |
| TD Securities Inc. | 20% |
The final percentage share is subject to negotiation between the Issuer and the Applicants.
10. The Applicants, in connection with the Offering, do not comply with the proportional requirements of the Legislation as there is no independent underwriter.
11. The nature and details of the relationship between the Issuer, the Applicants and the Banks will be described in the Preliminary Prospectus and the Prospectus as prescribed by Appendix C of the Proposed Instrument and the Preliminary Prospectus and the Prospectus will contain a certificate signed by each Applicant in accordance with Item 21.2 of Form 44-101F3 to National Instrument 44-101.
12. The Applicants will receive no benefit relating to the Offering other than the payment of their fees in connection therewith.
13. The decision to issue the Preferred Shares, including the determination of the terms of the distribution, was made through negotiations between the Issuer and the Applicants without involvement of the Banks.
14. The Issuer is not a "specified party" as defined in the Proposed Instrument.
AND WHEREAS under the System, this MRSS 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 under the Legislation is that the requirement contained in the Legislation which restricts a registrant from participating in a distribution of securities of a connected issuer shall not apply to the Applicants in connection with the Offering by the Issuer to be made by means of the Prospectus provided that at the time of the Offering:
(a) the Issuer is not a specified party (as defined in the Proposed Instrument); and
(b) the Issuer is not a related issuer (as defined in the Proposed Instrument) of any of the Applicants.
DATED June 21st, 2001.
Paul M. Moore Stephen N. Adams