Exemption Orders (Discretionary)
ABSOLUT RESOURCES CORP.
2000 BCSECCOM 358
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - relief from the registration and prospectus requirements in connection with the Issuer's spin-off of its wholly owned subsidiary to the Issuer's existing shareholders. The spin-off will consist of the distribution of the outstanding shares of the subsidiary by way of a pro rata dividend in kind to the Issuer's shareholders.
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c. 418, ss. 48 and 76
IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, ONTARIO AND NEWFOUNDLAND
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF ABSOLUT RESOURCES CORP., TANQUERAY RESOURCES LTD. AND STANSBURY HOLDINGS CORPORATION
MRRS DECISION DOCUMENT
1. WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of Alberta, British Columbia, Ontario and Newfoundland (the "Jurisdictions") has received an application from Absolut Resources Corp. ("Absolut") for a decision pursuant to the securities legislation of the Jurisdictions (the “Legislation) that the requirement to be registered to trade in a security and to file and obtain a receipt for a preliminary prospectus and a prospectus (the "Registration and Prospectus Requirements") contained in the Legislation shall not apply to certain trades in securities to be made in connection with a reorganization (the "Reorganization") of Absolut;
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 Absolut has represented to the Decision Makers that:
3.1 Absolut is a corporation organized and subsisting under the Business Corporations Act (Alberta) (the "ABCA");
3.2 Absolut's head office is located in Calgary, Alberta;
3.3 Absolut is authorized to issue an unlimited number of common shares (the "Absolut Common Shares");
3.4 as at June 22, 1999, 30,594,977 Absolut Common Shares were issued and outstanding;
3.5 the Absolut Common Shares are listed on the Canadian Venture Exchange (the "CDNX").
3.6 Absolut is a reporting issuer in Alberta, British Columbia and Ontario and is not in default of any of the requirements under the Legislation;
3.7 Stansbury Holdings Corporation (“Stansbury”) is a corporation organized and subsisting under the laws of the State of Utah;
3.8 Stansbury’s authorized capital consists of 100,000,000 shares of common stock (“Stansbury Shares”);
3.9 as at June 12, 2000, there were 75,052,850 Stansbury Shares issued and outstanding;
3.10 the Stansbury Shares are currently traded on the NASD OTC Bulletin Board;
3.11 Stansbury is currently subject to the reporting requirements of the Securities Exchange Act of 1934 (the "Exchange Act"), and is not a reporting issuer or the equivalent in any province of Canada;
3.12 Tanqueray Resources Ltd. (“Tanqueray”) is a corporation organized and subsisting under the ABCA;
3.13 Tanqueray’s authorized capital consists of an unlimited number of common shares (“Tanqueray Shares”);
3.14 the Tanqueray Shares are currently listed and posted for trading on the CDNX;
3.15 as of June 15, 2000, there were 23,001,111 Tanqueray Shares issued and outstanding;
3.16 Tanqueray is a reporting issuer in Alberta and British Columbia and has been a reporting issuer since 1986 and is not in default of any requirements of the Legislation;
3.17 Absolut intends to effect a reorganization (the "Reorganization") whereby:
3.17.1 Sweetwater Industrial Minerals, Inc. ("Sweetwater"), a wholly owned subsidiary of Absolut, will sell all the issued and outstanding shares of Sweetwater Garnet, Inc. ("Garnet") to Stansbury in exchange for 12,560,000 Stansbury Shares;
3.17.2 Absolut will sell all its significant assets, with the exception of the shares of Garnet held by Sweetwater, (the "Remaining Assets") to Tanqueray in exchange for 9,213,330 Tanqueray Shares;
3.17.3 Absolut will then wind up and dissolve Sweetwater, such that the 12,560,000 Stansbury Shares will be distributed to Absolut;
3.17.4 Absolut will then distribute the 12,560,000 Stansbury Shares and the 9,213,330 Tanqueray Shares to the shareholders of Absolut ("Absolut Shareholders"), on a pro rata basis, by way of a dividend; and
3.17.5 Absolut will consolidate the Absolut Common Shares on a one for ten basis;
3.18 on June 27, 2000, Absolut mailed a management information circular dated June 23, 2000 (the "Circular") in connection with a meeting of the Absolut Shareholders to be held on July 27, 2000 (the “Absolut Meeting”);
3.19 the Circular contains prospectus-level disclosure concerning the respective businesses of Stansbury and Tanqueray and a detailed description of the Reorganization, was mailed to Absolut Shareholders in connection with the Absolut Meeting and was filed with the appropriate securities regulatory authorities. The Circular was prepared in conformity with the provisions of the Securities Act (Alberta), the ABCA, and the applicable policy statements of the Alberta Securities Commission relating to information circulars;
3.20 at the Absolut Meeting, Absolut Shareholders passed special resolutions approving each component of the Reorganization, other than the dissolution and winding-up of Sweetwater (which they were not requested to pass);
3.21 upon completion of the sale of Garnet and the Remaining Assets of Absolut and the dissolution and winding up of Sweetwater, Absolut will distribute to Absolut Shareholders (other than dissenting Absolut Shareholders), on a pro rata basis, 12,560,000 Stansbury Shares and 9,213,330 Tanqueray Shares. Accordingly, Absolut Shareholders (other than dissenting Absolut Shareholders) will receive approximately 0.4 of a Stansbury Share and 0.3 of a Tanqueray Share for each Absolut Common Share held as a consequence of the Reorganization;
3.22 dissenting Absolut Shareholders will not receive any Tanqueray Shares or Stansbury Shares pursuant to the Reorganization. Absolut Common Shares held by dissenting Absolut Shareholders will be dealt with in accordance with the dissent provisions of section 184 of the ABCA;
3.23 after giving effect to the Reorganization, former Absolut Shareholders in each of the Jurisdictions will, in the aggregate, represent less than 10% of all the shareholders of Stansbury Shares (except for the province of Newfoundland where former Absolut Shareholders will represent 10.5% of all shareholders of Stansbury Shares) and hold less than 10% of the then issued and outstanding Stansbury Shares;
3.24 at the time of the acquisition by the Absolut Shareholders of the Tanqueray Shares, Tanqueray will not be a reporting issuer in Ontario and Newfoundland;
3.25 at the time of the acquisition by the Absolut Shareholders of the Tanqueray Shares, after giving effect to the Reorganization, Absolut Shareholders resident in Ontario who have acquired Tanqueray Shares will represent 13% of the shareholders of Tanqueray and will hold approximately 3.7% of the then issued and outstanding Tanqueray Shares;
3.26 at the time of the acquisition by the Absolut Shareholders of the Tanqueray Shares, after giving effect to the Reorganization, Absolut Shareholders resident in Newfoundland who have acquired Tanqueray Shares will represent 15% of the shareholders of Tanqueray and will hold approximately 1% of the then issued and outstanding Tanqueray Shares;
3.27 Stansbury shall concurrently send to all holders of Stansbury Shares resident in the Jurisdictions all disclosure material furnished to holders of Stansbury Shares resident in the United States, including, but not limited to, copies of its annual report and all proxy solicitation materials;
3.28 Stansbury shall file with each Jurisdiction copies of all documents filed by it under the Exchange 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 annual meetings of Stansbury;
3.29 Stansbury shall comply with the requirements of the NASD OTC Bulletin Board (or such other principal stock exchange on which the Stansbury Shares are then listed) in respect of making public disclosure of material information on a timely basis and shall issue in the Jurisdictions and file with the Jurisdictions any press release that discloses a material change in Stansbury's affairs;
3.30 Tanqueray shall concurrently send to all holders of Stansbury Shares resident in Ontario and Newfoundland all disclosure material furnished to holders of Tanqueray Shares;
3.31 Tanqueray shall file in Ontario and Newfoundland all documents filed by it in Jurisdictions in which Tanqueray is a reporting issuer; and
3.32 Tanqueray shall comply with the requirements of the CDNX (or such other principal stock exchange on which the Tanqueray Shares are then listed) in respect of making public disclosure of material information on a timely basis and shall issue in Ontario and Newfoundland and file with those Jurisdictions any press release that discloses a material change in Tanqueray's affairs;
4. AND WHEREAS under 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 jurisdiction to make a Decision has been met;
6. THE DECISION OF the Decision Makers under the Legislation is that the Registration and Prospectus Requirements shall not apply to the distribution by Absolut of 12,560,000 Stansbury Shares and 9,213,330 Tanqueray Shares to Absolut Shareholders pursuant to the Reorganization;
7. THE FURTHER DECISION OF the Decision Makers under the Legislation is that the first trade of Stansbury Shares acquired pursuant to the Reorganization shall be deemed to be a distribution unless such trade is executed through the NASD OTC Bulletin Board or the facilities of an exchange or market outside Canada in accordance with the rules and laws applicable to such exchange or market;
8. THE FURTHER DECISION OF the Decision Makers under the Legislation is that the first trade of Tanqueray Shares acquired pursuant to the Reorganization shall be deemed to be a distribution under the Legislation except that where:
8.1 the seller is in a special relationship with Tanqueray, as defined in the Legislation, and the seller has reasonable grounds to believe that Tanqueray is not in default of any requirements of the Legislation; and
8.2 no unusual effort is made to prepare the market or to create a demand for the securities and no extraordinary commission or consideration is paid in respect of such trade;
then such first trade is a distribution only if it is a trade made from the holdings of any person, company or combination of persons or companies holding sufficient number of Tanqueray Shares to affect materially the control of Tanqueray, but any holding of any person, company or combination of persons or companies holding more than 20% of the outstanding Tanqueray Shares shall, in the absence of evidence to the contrary, be deemed to affect materially the control of Tanqueray.
DATED at Edmonton, Alberta this 22nd day of November, 2000.
Eric T. Spink, Vice-Chair Thomas G. Cooke, Q.C., Member