Exemption Orders (Discretionary)
BURLINGTON RESOURCES CANADA ENERGY LTD.
2001 BCSECCOM 333
Headnote
Mutual Reliance Review System for Exemptive Relief Applications – Issuer is an indirect wholly-owned subsidiary of a non-reporting issuer that is subject to the reporting requirements of the U.S. Securities and Exchange Commission – Issuer’s parent company has fully and unconditionally guaranteed the outstanding debt securities of the issuer - Relief granted to the issuer from the requirements to file and send to shareholders annual and audited interim financial statements, issue press releases, file material change reports, and comply with the proxy and proxy solicitation requirements, including filing an information circular or report in lieu thereof, subject to certain conditions.
Applicable British Columbia Provisions
Securities Act,R.S.B.C. 1996, c. 418, s. 91(1)(b)
Securities Rules, B.C. Reg. 194/97, ss. 144, 145, and 184
IN THE MATTER OF THE SECURITIES LEGISLATION OF THE PROVINCES OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, ONTARIO, QUÉBEC, NEW BRUNSWICK, NOVA SCOTIA AND NEWFOUNDLAND
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF BURLINGTON RESOURCES CANADA ENERGY LTD.
(FORMERLY POCO PETROLEUMS LTD.)
MRRS DECISION DOCUMENT
1. WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of British Columbia, Alberta, Saskatchewan, Ontario, Quèbec, Nova Scotia, New Brunswick and Newfoundland (collectively, the "Jurisdictions") has received an application from Burlington Resources Canada Energy Ltd. (formerly Poco Petroleums Ltd.) ("BRCEL" or the "Filer") for a decision under the securities legislation of the Jurisdictions (the "Legislation") that the requirements contained in the Legislation that:
1.1. BRCEL file with the Decision Makers and send to its shareholders audited annual financial statements (the "Annual Financial Statement Requirements");
1.2. BRCEL file with the Decision Makers and send to its shareholders unaudited interim financial statements (the "Interim Financial Statement Requirements");
1.3. BRCEL issue a press release and file a report with the Decision Makers upon the occurrence of a material change (the "Material Change Requirements"); and
1.4. BRCEL comply with the proxy and proxy solicitation requirements, including filing with the Decision Makers an information circular or report in lieu thereof (the "Proxy Requirements"),
- shall not apply.
2. AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Alberta Securities Commission is the principal regulator for this application;
3. AND WHEREAS the Filer has represented to the Decision Makers that:
3.1. Burlington Resources Inc. ("Burlington") is a corporation organized and subsisting under the laws of the State of Delaware.
3.2. Burlington is engaged in the exploration, development, production and marketing of oil and gas. Burlington conducts activities in several strategic areas worldwide, and ranks first among independent oil and gas companies in terms of proven North American reserves.
3.3. Burlington's principal executive offices are located in Houston, Texas.
3.4. The authorized capital stock of Burlington consists of 325,000,000 shares of Common Stock and 75,000,000 shares of Preferred Stock of which 3,250,000 shares are designated Series A Junior Participating Preferred Stock. One share of Preferred Stock has been designated as Special Voting Stock and is entitled to a number of votes equal to the number of outstanding Exchangeable Shares of Burlington Resources Canada Inc. (“BR Canada”). The one share of Special Voting Stock is held by a trustee for the benefit of the holder of the Exchangeable Shares of BR Canada. As of March 3, 2000, there were 205,489,807 shares of Common Stock outstanding and a further 9,739,027 shares of Common Stock were reserved for issuance upon the exchange of the Exchangeable Shares of BR Canada. As of June 14, 2000, there were no shares of Preferred Stock issued or outstanding, other than the one share of Special Voting Stock.
3.5. Based solely on the filing of Schedules 13G with the Securities and Exchange Commission, as of June 14, 2000 there are no known beneficial owners of more than 10% of the Common Stock of Burlington, other than Fidelity International Limited which beneficially owns 21,221,298 shares of Common Stock representing 10.327% of the outstanding shares of Common Stock.
3.6. The Common Stock of Burlington is fully participating and voting and is currently traded on the NYSE.
3.7. Burlington is currently subject to the reporting requirements of the Securities Exchange Act of 1934 (the "1934 Act"), and is not a reporting issuer or the equivalent thereof in any provinces or territories in Canada.
3.8. BR Canada was incorporated on June 16, 1999 as 835128 Alberta Ltd. under the laws of the Province of Alberta. On September 14, 1999 the corporation's name was changed to Burlington Resources Canada Inc.
3.9. BR Canada's registered office is located in Calgary, Alberta.
3.10. BR Canada's authorized capital consists of an unlimited number of common shares and an unlimited number of Exchangeable Shares. Each Exchangeable Share has economic and voting rights equivalent to one share of Common Stock of Burlington, but has effectively no economic or voting rights in BR Canada. Holders of Exchangeable Shares are entitled to exchange such shares for Common Stock of Burlington at any time on a one-for-one basis.
3.11. All of the issued and outstanding Common Shares of BR Canada are held by Burlington.
3.12. As at March 3, 2000, there were 9,739,027 Exchangeable Shares issued and outstanding (excluding Exchangeable Shares held by Burlington) all of which were issued pursuant to the Arrangement described in paragraph 3.18 below.
3.13. BRCEL is a corporation organized and subsisting under the Business Corporations Act (Alberta).
3.14. BRCEL's principal executive offices are located in Calgary, Alberta.
3.15. BRCEL is a reporting issuer under the Securities Act (Alberta) and is not in default of any of the requirements under the Act or the regulations thereunder and is a reporting issuer or the equivalent of a reporting issuer under the securities laws of each of the Provinces of Canada.
3.16. BRCEL's authorized capital consists of an unlimited number of common shares, an unlimited number of First Preferred Shares, issued in series, and an unlimited number of Second Preferred Shares, issued in series.
3.17. As at November 18, 1999, 153,572,672 BRCEL Common Shares were issued and outstanding as fully participating voting shares which were listed on The Toronto Stock Exchange.
3.18. Pursuant to an Amended and Restated Combination Agreement by and between Burlington and BRCEL dated as of August 16, 1999, on November 18, 1999, Burlington, BR Canada and BRCEL completed a combination pursuant to a plan of arrangement under section 186 of the Business Corporations Act (Alberta) (the "Arrangement") whereby each of the holders of common shares of BRCEL transferred their common shares to BR Canada in consideration for 0.25 Exchangeable Shares of BR Canada. The Exchangeable Shares are the economic equivalent of Burlington Common Stock, and the holders thereof essentially hold a participatory interest in Burlington rather than in BR Canada.
3.19. As a result of the Arrangement, BRCEL became a wholly-owned subsidiary of BR Canada, and BR Canada holds all 153,572,672 outstanding common shares of BRCEL. BRCEL has no outstanding First Preferred Shares or Second Preferred Shares.
3.20. On November 23, 1999, the Common Shares of BRCEL were delisted by The Toronto Stock Exchange.
3.21. To facilitate the Arrangement, the Alberta Securities Commission, as principal jurisdiction, granted a decision dated November 17, 1999 pursuant to the System which provided that the Registration and Prospectus Requirements (as defined in the decision) would not apply to certain trades in connection with the Arrangement, the Continuous Disclosure Requirements (as defined in the decision) would not apply to BR Canada, and the Insider Reporting Requirements (as defined in the decision) would not apply to any insider of BR Canada.
3.22. In addition to the common shares of BRCEL which are held by BR Canada, BRCEL also has outstanding: Cdn $50,000,000 of 6.20% notes maturing November 2, 2001; Cdn $100,000,000 of 6.40% notes maturing December 3, 2003 and Cdn $150,000,000 of 6.60% notes maturing September 11, 2007 (collectively, the "Notes").
3.23. Effective April 3, 2000, Burlington unconditionally guaranteed all principal, interest and other amounts owing under the Notes. Following the grant of the guarantee by Burlington, the ratings on the Notes were raised to A and A- from CBRS and DBRS, respectively, which are equivalent to the agencies' ratings for Burlington.
3.24. As of October 13, 2000 BRCEL and the trustee appointed by the trust indenture pursuant to which the Notes were issued entered into a supplemental indenture to clarify the financial disclosure BRCEL is required to provide to the trustee. The supplemental indenture requires BRCEL to provide to the trustee the annual and interim financial statements of Burlington, together with the summary annual and interim financial information regarding BRCEL contemplated by this MRRS Decision Document. The financial statements and financial information are required to be provided to the trustee within the respective time limits for the filing by a reporting issuer of annual and interim financial statements with the Alberta Securities Commission pursuant to the Securities Act (Alberta).
4. AND WHEREAS pursuant to the System this MRRS Decision Document evidences the decision of each Decision Maker (collectively, the “Decision”);
5. AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the authority to make the Decision has been met;
6. THE DECISION of the Decision Makers pursuant to the Legislation is that the Annual Financial Statement Requirements, Interim Financial Statement Requirements, Material Change Requirements and Proxy Requirements shall not apply to BRCEL, so long as:
6.1. Burlington shall file with each of the Decision Makers copies of all documents required to be filed by it with the United States Securities and Exchange Commission under the 1934 Act, including, but not limited to, copies of any Form 10-K, Form 10-Q, Form 8-K, quarterly statement and proxy statement prepared in connection with Burlington's annual meetings;
6.2. Burlington shall comply with the requirements of the NYSE in respect of making public disclosure of material information on a timely basis and forthwith issues in the Jurisdictions and files with the Decision Makers any press release that discloses a material change in Burlington's affairs;
6.3. BRCEL 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 respect of material changes in the affairs of BRCEL that are not material changes in the affairs of Burlington;
6.4. Burlington shall remain the direct or indirect beneficial owner of all the issued and outstanding voting securities of BRCEL;
6.5. Burlington maintains a class of securities registered pursuant to the 1934 Act;
6.6. BRCEL does not issue additional securities to those currently issued and outstanding, other than to Burlington or to direct or indirect wholly-owned subsidiaries of Burlington;
6.7. Burlington continues to fully and unconditionally guarantee the Notes as to the payments required to be made by BRCEL to the holders of the Notes;
6.8. BRCEL delivers to the trustee under the trust indenture pursuant to which the Notes were issued the annual and interim financial statements of Burlington, and the summary annual and interim financial information contemplated in paragraphs 6.9 and 6.10 below, within the time requirements imposed by the trust indenture;
6.9. BRCEL files (either separately or as a note to the financial statements of Burlington) a comparative audited summary of BRCEL's financial results for its most recently completed financial year, prepared in accordance with, or reconciled to, generally accepted accounting principles in Canada (“Canadian GAAP”), including the following line items:
(a) oil and gas revenue;
(b) net earnings from continuing operations before extraordinary items;
(c) operating income before other expenses;
(d) net earnings;
(e) current assets;
(f) non-current assets;
(g) current liabilities; and
(h) non-current liabilities;
(a) oil and gas revenue;
(b) operating income before other expenses;
(c) net earnings from continuing operations before extraordinary items; and
(d) net earnings;
6.11 if, in the future, the Decision Makers make rules requiring interim financial statements to include a balance sheet, the disclosure included in paragraph 6.10 above would also be required to include a summary of BRCEL's balance sheet, prepared in accordance with, or reconciled to, Canadian GAAP, including the following line items:
(a) current assets;
(b) non-current assets;
(c) current liabilities; and
(d) non-current liabilities;
6.12 the filings referred to in paragraphs 6.9, 6.10 and 6.11 above are to be made within the time limits, and in accordance with the applicable filing fees required by the Legislation provided that the first filing to be made by BRCEL under paragraph 6.10 shall be in respect of the first quarter ending March 31, 2001 and the first filing to be made by BRCEL under paragraph 6.9 shall be in respect of the financial year ended December 31, 2000.
DATED this 9th day of March, 2001
Agnes Lau, CA
Deputy Director, Capital Markets