Exemption Orders (Discretionary)
RIDER RESOURCES INC.
2001 BCSECCOM 1182
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - relief from the requirement to offer identical consideration under a take-over bid to all shareholders - small number of shareholders resident in US to receive the proceeds from the sale of the offeror’s shares by the depositary in lieu of shares of the offeror
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c. 418, ss. 107(1) and 114(2)(c)
IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA,
SASKATCHEWAN, ONTARIO AND QUÉBEC
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF RIDER RESOURCES INC. AND CIRCLE ENERGY INC.
MRRS DECISION DOCUMENT
1. WHEREAS the local securities regulatory authority or regulator (the “Decision Maker”) in each of Alberta, British Columbia, Saskatchewan, Ontario and Québec (the “Jurisdictions”) has received an application from Rider Resources Inc. (“Rider”) for a decision under the securities legislation of the Jurisdictions (the “Legislation”) exempting Rider from the requirement under the Legislation to offer all holders of a class of securities subject to a take-over bid identical consideration (the “Identical Consideration Requirement”) in connection with an offer by Rider to purchase all of the outstanding common shares of Circle Energy Inc. (“Circle”);
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 Rider has represented to the Decision Makers that:
3.1 Rider is a corporation incorporated under the Business Corporations Act (Alberta);
3.2 the head office of Rider is in Calgary, Alberta;
3.3 the authorized capital of Rider consists of an unlimited number of common shares (“Rider Shares”);
3.4 there were 14,741,030 Rider Shares outstanding as at October 4, 2001;
3.5 the Rider Shares are listed and posted for trading on The Toronto Stock Exchange (the “TSE”);
3.6 Rider is a reporting issuer or the equivalent in Alberta, British Columbia, Saskatchewan, Manitoba, Ontario, Québec and Newfoundland;
3.7 Rider is not in default of any requirement of the Legislation;
3.8 Circle is a corporation incorporated under the Business Corporations Act (Alberta);
3.9 the head office of Circle is in Calgary, Alberta;
3.10 the authorized capital of Circle includes an unlimited number of common shares (“Circle Shares”);
3.11 there were 18,059,211 Circle Shares outstanding as at September 26, 2001;
3.12 the Circle Shares are listed and posted for trading on the Canadian Venture Exchange;
3.13 Circle is a reporting issuer in Alberta and British Columbia;
3.14 Rider has made an offer to acquire all of the outstanding Circle Shares (the “Offer”);
3.15 Rider is conducting the Offer by means of a formal take-over bid under the Legislation;
3.16 Rider announced the Offer on September 20, 2001 and mailed the required take-over bid circular on October 16, 2001;
3.17 under the terms of the Offer, the holders of Circle Shares are entitled to receive 0.42 of a Rider Share for each Circle Share, subject to the ability to elect, at their option, to receive cash for 20% of their Circle Shares in the amount of $0.48 per Circle Share;
3.18 as at September 26, 2001, there were six registered holders of Circle Shares resident in the United States of America (the “Registered U.S. Shareholders”), holding 362,000 Circle Shares;
3.19 as at September 27, 2001, there were eleven beneficial holders of Circle Shares resident in the United States of America (the “Beneficial U.S. Shareholders”), holding 176,300 Circle Shares;
3.20 the Registered U.S. Shareholders and the Beneficial U.S. Shareholders (together, the “U.S. Shareholders”) held a combined total of 585,300 Circle Shares at the specified dates, representing approximately 2.9% of the Circle Shares outstanding as at September 26, 2001;
3.21 based on the shareholdings described above, the U.S. Shareholders may be entitled to receive up to 245,826 Rider Shares under the Offer;
3.22 the Rider Shares that may be issuable under the Offer to the U.S. Shareholders have not been, and will not be, registered under the Securities Act of 1933 in the United States of America. Accordingly, the delivery of Rider Shares to the U.S. Shareholders without further action by Rider would constitute a violation of the laws of the United States of America;
3.23 to the extent that the U.S. Shareholders are entitled to receive Rider Shares under the Offer, Rider proposes to deliver them to CIBC Mellon Trust Company (the “Depositary”) instead of to the U.S. Shareholders. The Depositary will, as soon as possible after such delivery, pool and sell the Rider Shares on behalf of the U.S. Shareholders. Such sale will be done through the facilities of the TSE in a manner that is intended to minimize any adverse effect on the market price of Rider Shares. As soon as possible after the completion of such sale, the Depositary will send to each U.S. Shareholder a cheque equal to such U.S. Shareholder’s pro rata share of the proceeds of the sale of all Rider Shares by the Depositary, net of sales commissions and applicable withholding taxes;
3.24 the Offer complies with the Legislation, except to the extent that exemptive relief is granted herein with respect to the application of the Identical Consideration Requirement;
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 the Decision has been met;
6. THE DECISION of the Decision Makers under the Legislation is that, in connection with the Offer, Rider is exempt from the Identical Consideration Requirement insofar as U.S. Shareholders who accept the Offer may receive cash proceeds from the Depositary’s sale of Rider Shares in accordance with the procedure set out in paragraph 3.23 above instead of Rider Shares.
DATED this 20th day of November, 2001.
Glenda A. Campbell, Vice-Chair David W. Betts, Member