Exemption Orders (Discretionary)
LGS GROUP INC.
2000 BCSECCOM 357
Headnote
Mutual Reliance System for Exemptive Relief Applications - Issuer deemed to have ceased to be a reporting issuer following an offer to acquire and subsequent compulsory acquisition leaving only one security holder.
Applicable BC Statutory Provisions
Securities Act, R.S.B.C. 1996, c. 418, ss. 1(1), 88.
IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, ONTARIO, QUÉBEC, NOVA SCOTIA, AND NEWFOUNDLAND
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF LGS GROUP INC.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the “Decision Maker”) in each of British Columbia, Alberta, Saskatchewan, Ontario, Québec, Nova Scotia, and Newfoundland (collectively, the “Jurisdictions”) has received an application from LGS Group Inc. (“LGS”) for a decision pursuant to the securities legislation of the Jurisdictions (the “Legislation”), in connection with the offers by IBM Acquisition Inc. (the “Canadian Offeror”) and IBM Acquisition II L.L.C. (collectively, the “Offeror”) to purchase all of the issued and outstanding class A Subordinate Voting Shares (the “Class A Shares”) and Class B Multiple Voting Shares (the “Class B Shares” and, collectively with the Class A Shares, the “Shares”) of LGS in exchange for consideration of $19.00 per Share or exchangeable shares of the Canadian Offeror, that LGS be deemed to have ceased to be a reporting issuer under the Legislation;
AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Commission des valeurs mobilières du Québec is the principal regulator for this application;
AND WHEREAS LGS has represented to the Decision Makers that:
1. The Canadian Offeror is a corporation incorporated under the laws of Canada and is an indirect wholly-owned subsidiary of International Business Machines Corporation, a corporation incorporated under the laws of the State of New York. The Canadian Offeror was incorporated on March 10, 2000 for the purpose of making the Offers (as defined below). The Canadian Offeror has no material assets or liabilities and no operating history.
2. LGS is a corporation incorporated under the laws of Canada.
3. LGS is a reporting issuer in all Provinces of Canada, other than New Brunswick and Prince Edward Island which provinces do not have reporting issuer provisions in their securities legislation.
4. LGS’s authorized share capital consists of an unlimited number of first preferred shares, issuable in series (“First Preferred Shares”), an unlimited number of second preferred shares, issuable in series (“Second Preferred Shares”), an unlimited number Class A Shares, an unlimited number of Class B Shares, and an unlimited number of Class C Multiple Voting Shares (“Class C Shares”). As of September 25, 2000 there were outstanding 11,853,002 Class A Shares, 2,852,000 Class B Shares, and no First Preferred Shares, Second Preferred Shares or Class C Shares.
5. The Offeror by Offers to Purchase dated March 15, 2000 offered to purchase (i) all of the issued and outstanding Class A Shares (the “Class A Offer”) and (ii) all of the issued and outstanding Class B Shares (the “Class B Offer” and together with the Class A Offer, the “Offers”), including, in the case of the Class A Offer, Class A Shares issuable upon the exercise of existing options, warrants, rights, or other entitlements (collectively, “Rights”) to acquire Class A Shares and in the case of the Class B Offer, Class B Shares issuable upon the exercise of existing Rights, for consideration per Share consisting of C$19.00.
6. The Offers expired on April 5, 2000. At the expiry time the Offers had been accepted by the holders of not less than 90% of the issued and outstanding Class A Shares and by 100% of the holders of the issued and outstanding Class B Shares, other than the Shares held on the date of the Offers by or on behalf of the Offeror and its affiliates and associates (as such terms are defined in the Canada Business Corporations Act (“CBCA”)), and such Shares have been taken up and paid for by the Offeror.
7. On April 20, 2000, the Offeror mailed a compulsory acquisition notice to the persons who had not accepted the Offers (the “Dissenting Offerees”) pursuant to the provisions of the CBCA to acquire any Class A Shares held by the Dissenting Offerees on the same terms as those on which the Offeror acquired the Class A Shares of the shareholders of LGS who had accepted the Offers.
8. The Offeror is the beneficial holder of all Class A Shares and Class B Shares issued and outstanding as of September 25, 2000. Other than the Class A Shares and the Class B Shares, LGS has no other outstanding securities.
9. The Class A Shares were de-listed from the Toronto Stock Exchange at the close of business on May 4, 2000 and were de-listed from the The Nasdaq Stock Market, Inc. on April 11, 2000. As a result of such de-listings, no securities of LGS are listed or posted for trading on any stock exchange.
10. LGS has no intention of seeking public financing by way of an offering of securities.
11. The head office of LGS is currently located in Montreal, Quebec and the Offeror has no plans to effect any relocation of such head office in the immediate future. However, from a functional and operational perspective, the affairs of LGS are now effectively being directed and managed by IBM Canada Inc., through its head office located in Markham, Ontario.
AND WHEREAS pursuant to the System, this 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 that LGS is deemed to have ceased to be a reporting issuer under the Legislation.
Dated at Montréal, Québec this October 19, 2000.
Le chef du service de l'information financière,
Michel Vadnais