Agrium Inc. – s. 104(2)(c)
Headnote
Subsection 104(2)(c) of the Act -- Issuer bid -- relief from issuer bid requirements in sections 94 to 94.8 and 97 to 98.7 of the Act -- Issuer proposes to purchase, at a discounted purchase price, from two of its shareholders an aggregate of up to 1,140,000 of its common shares -- due to the discounted purchase price, proposed purchases cannot be made through the TSX trading system -- but for the fact that the proposed purchases cannot be made through the TSX trading system, the Issuer could otherwise acquire the subject shares in reliance upon the issuer bid exemption available under section 101.2 of the Act and in accordance with the TSX rules governing normal course issuer bid purchases -- the selling shareholders did not purchase the subject shares in anticipation or contemplation of resale to the Issuer and have not, for a minimum of 30 days prior to the date of the application seeking the requested relief, purchased common shares of the Issuer in anticipation or contemplation of a sale of common shares to the Issuer -- no adverse economic impact on, or prejudice to, the Issuer or public shareholders -- proposed purchases exempt from the issuer bid requirements in sections 94 to 94.8 and 97 to 98.7 of the Act, subject to conditions, including that the Issuer not purchase, in the aggregate, more than one-third of the maximum number of shares to be purchased under its normal course issuer bid by way of off-exchange block purchases, and that the Issuer not make any proposed purchase unless it has first obtained written confirmation from each selling shareholder that between the date of the order and the date on which the proposed purchase is completed, neither selling shareholder has purchased, had purchased on its behalf, or otherwise accumulated, any common shares of the Issuer to re-establish its, or the other selling shareholder's, holdings of common shares which will have been reduced as a result of the sale of the subject shares pursuant to the proposed purchases.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 94 to 94.8, 97 to 98.7, 104(2)(c).
IN THE MATTER OF THE SECURITIES ACT, R.S.O. 1990, c. S.5, AS AMENDED AND IN THE MATTER OF AGRIUM INC.
ORDER (CLAUSE 104(2)(c))
UPON the application (the Application) of Agrium Inc. (the Issuer) to the Ontario Securities Commission (the Commission) for an order pursuant to clause 104(2)(c) of the Securities Act (Ontario) (the Act) exempting the Issuer from the requirements of sections 94 to 94.8, inclusive, and sections 97 to 98.7, inclusive, of the Act (the Issuer Bid Requirements) in connection with the proposed purchases by the Issuer of up to 1,140,000 common shares of the Issuer (collectively, the Subject Shares) in one or more trades, from BMO Nesbitt Burns Inc. and/or Bank of Montreal (each, a Selling Shareholder and together, the Selling Shareholders);
AND UPON considering the Application and the recommendation of staff of the Commission;
AND UPON the Issuer (and each Selling Shareholder in respect of paragraphs 5, 6, 7, 8, 9, 10, 14, 25 and 26 as they relate to such Selling Shareholder) having represented to the Commission that:
1. The Issuer is a corporation governed by the Canada Business Corporations Act.
2. The registered and head office of the Issuer is located at 13131 Lake Fraser Drive S.E., Calgary, Alberta, T2J 7E8.
3. The Issuer is a reporting issuer in each of the provinces and territories of Canada and the common shares of the Issuer (the Common Shares) are listed for trading on the Toronto Stock Exchange (the TSX) and the New York Stock Exchange (the NYSE) under the symbol "AGU". The Issuer is not in default of any requirement of the securities legislation in the jurisdictions in which it is a reporting issuer.
4. The authorized share capital of the Issuer consists of an unlimited number of Common Shares, of which 142,791,278 were outstanding as of the close of business on August 10, 2015 and an unlimited number of preferred shares, none of which were outstanding as of the close of business on August 10, 2015.
5. The corporate headquarters of each of the Selling Shareholders are located in the Province of Ontario. The Selling Shareholders are affiliates of each other.
6. Neither of the Selling Shareholders, directly or indirectly, owns more than 5% of the issued and outstanding Common Shares.
7. BMO Nesbitt Burns Inc. is the beneficial owner of at least 900,000 Common Shares and Bank of Montreal is the beneficial owner of at least 240,000 Common Shares. None of the Subject Shares were acquired by, or on behalf of, either of the Selling Shareholders in anticipation or contemplation of resale by either of the Selling Shareholders to the Issuer.
8. The Subject Shares are held by the Selling Shareholders in connection with arrangements to hedge client transactions in respect of the Common Shares. Between the date of this Order and the date on which a Proposed Purchase (as defined below) is to be completed, neither Selling Shareholder will purchase, have purchased on its behalf, or otherwise accumulate, any Common Shares to re-establish its, or the other Selling Shareholder's, holdings of Common Shares which will have been reduced as a result of the sale of the Subject Shares pursuant to the Proposed Purchases.
9. No Common Shares were purchased by, or on behalf of, either of the Selling Shareholders on or after July 12, 2015, being the date that was 30 days prior to the date of the Application, in anticipation or contemplation of a sale of the Common Shares by either of the Selling Shareholders to the Issuer.
10. Each of the Selling Shareholders is at arm's length to the Issuer and is not an "insider" of the Issuer, an "associate" of an "insider" of the Issuer, or an "associate" or "affiliate" of the Issuer, as such terms are defined in the Act. Each of the Selling Shareholders is an "accredited investor" within the meaning of National Instrument 45-106 Prospectus Exemptions.
11. Pursuant to a Notice of Intention to make a Normal Course Issuer Bid dated and filed with the TSX on January 21, 2015 (the Notice), the Issuer is permitted to make normal course issuer bid purchases for the period starting on January 26, 2015 and ending on January 25, 2016 and for a maximum of 7,185,866 Common Shares (the Normal Course Issuer Bid), representing approximately 5% of the Issuer's issued and outstanding Common Shares. In accordance with the Notice, the Normal Course Issuer Bid is conducted through the facilities of the TSX, Canadian alternative trading systems and the NYSE. To date, 2,254,331 Common Shares have been purchased under the Normal Course Issuer Bid.
12. The Issuer implemented an automatic repurchase plan (the ARP) to permit the Issuer to make purchases under its Normal Course Issuer Bid at such times when the Issuer activates the ARP in advance of periods when it would not be permitted to trade in its Common Shares due to the occurrence of a regularly scheduled quarterly blackout. The ARP was approved by the TSX, and complies with the TSX Company Manual, applicable securities laws and this Order. While it is not expected that the Issuer would activate the ARP during the time in which it would complete a Proposed Purchase, in the event that the ARP was active during such a period, the ARP will contain provisions restricting the Issuer from conducting a Block Purchase (as defined below) in accordance with the TSX NCIB Rules (as defined below) during the calendar week in which the Issuer completes a Proposed Purchase and will otherwise comply with this Order. Under the terms of the ARP, at times when the Issuer is not subject to blackout restrictions, the Issuer may, but is not required to, instruct the designated broker to make purchases under the Normal Course Issuer Bid in accordance with the terms of the ARP. Such purchases under the ARP will be determined by the designated broker in its sole discretion based on parameters established by the Issuer prior to any blackout period in accordance with the TSX NCIB Rules (as defined below), applicable securities laws and the terms of the agreement between the designated broker and the Issuer. No Subject Shares will be acquired under the ARP or otherwise during any of the Issuer's blackout periods.
13. The Issuer has notified the TSX of its intention to supplement its Normal Course Issuer Bid to include purchases as may be permitted by the TSX or a securities regulatory authority in accordance with sections 628 to 629.3 of Part VI of the TSX Company Manual (the TSX NCIB Rules), including by private agreements under issuer bid exemption orders issued by a securities regulatory authority (each, an Off-Exchange Block Purchase) and the TSX has indicated that it will not object to such Off-Exchange Block Purchases being completed pursuant to the Normal Course Issuer Bid.
14. The Issuer and each Selling Shareholder intend to enter into one or more agreements of purchase and sale (each, an Agreement), pursuant to which the Issuer will agree to acquire some or all of the Subject Shares from the applicable Selling Shareholder by one or more purchases each occurring before November 30, 2015 (each such purchase, a Proposed Purchase) for a purchase price (each such price, a Purchase Price in respect of such Proposed Purchase) that will be negotiated at arm's length between the Issuer and the applicable Selling Shareholder. The Purchase Price will, in each case, be at a discount to the prevailing market price of the Common Shares on the TSX and below the bid-ask price for the Common Shares on the TSX at the time of the relevant Proposed Purchase.
15. The Subject Shares acquired under each Proposed Purchase will constitute a "block", as that term is defined in section 628 of the TSX NCIB Rules.
16. The purchase of any of the Subject Shares by the Issuer pursuant to an Agreement will constitute an "issuer bid" for purposes of the Act, to which the Issuer Bid Requirements would apply.
17. Because the Purchase Price will, in each case, be at a discount to the prevailing market price and below the bid-ask price for the Common Shares on the TSX at the time of the relevant Proposed Purchase, the Proposed Purchases cannot be made through the TSX trading system and, therefore, will not occur "through the facilities" of the TSX. As a result, the Issuer will be unable to acquire the Subject Shares from the Selling Shareholders in reliance upon the exemption from the Issuer Bid Requirements that is available pursuant to subsection 101.2(1) of the Act.
18. But for the fact that the Purchase Price will be at a discount to the prevailing market price and below the bid-ask price for the Common Shares on the TSX at the time of the relevant Proposed Purchase, the Issuer could otherwise acquire the applicable Subject Shares as a "block purchase" (a Block Purchase) on the TSX in accordance with the block purchase exception in clause 629(l)7 of the TSX NCIB Rules and the exemption from the Issuer Bid Requirements that is available pursuant to subsection 101.2(1) of the Act.
19. The sale of any of the Subject Shares to the Issuer will not be a "distribution" (as defined in the Act).
20. For each Proposed Purchase, the Issuer will be able to acquire the applicable Subject Shares from the applicable Selling Shareholder without the Issuer being subject to the dealer registration requirements of the Act.
21. Management of the Issuer is of the view that: (a) the Issuer will be able to purchase the Subject Shares at a lower price than the price at which it would be able to purchase Common Shares under the Normal Course Issuer Bid through the facilities of the TSX and (b) the Proposed Purchases are an appropriate use of the Issuer's funds.
22. The purchase of the Subject Shares will not adversely affect the Issuer or the rights of any of the Issuer's security holders and it will not materially affect the control of the Issuer. To the knowledge of the Issuer, the Proposed Purchases will not prejudice the ability of other security holders of the Issuer to otherwise sell Common Shares in the open market at the then-prevailing market price. The Proposed Purchases will be carried out at minimal cost to the Issuer.
23. To the best of the Issuer's knowledge, as of the close of business on August 10, 2015, the "public float" of the Issuer's Common Shares represented approximately 99.93% of all issued and outstanding Common Shares for purposes of the TSX NCIB Rules.
24. The Common Shares are "highly liquid securities" within the meaning of section 1.1 of OSC Rule 48-501 Trading during Distributions, Formal Bids and Share Exchange Transactions and section 1.1 of the Universal Market Integrity Rules.
25. Other than the Purchase Price, no fee or other consideration will be paid in connection with the Proposed Purchases.
26. At the time that each Agreement is entered into by the Issuer and the applicable Selling Shareholder and at the time of each Proposed Purchase, neither the Issuer, nor any member of the Trading Products Group of either Selling Shareholder, nor any personnel of the Selling Shareholders that negotiated the Agreement or made, participated in the making of, or provided advice in connection with, the decision to enter into the Agreement and sell the Subject Shares, will be aware of any "material change" or "material fact" (each as defined in the Act) in respect of the Issuer that has not been generally disclosed.
27. The Issuer will not make any Proposed Purchase unless it has first obtained confirmation in writing from each Selling Shareholder that, between the date of this Order and the date on which a Proposed Purchase is to be completed, neither Selling Shareholder has purchased, had purchased on its behalf, or otherwise accumulated, any Common Shares to re-establish its, or the other Selling Shareholder's, holdings of Common Shares which will have been reduced as a result of the sale of the Subject Shares pursuant to the Proposed Purchases.
28. The Issuer will not purchase, pursuant to Off-Exchange Block Purchases, in the aggregate, more than one-third of the maximum number of Common Shares that the Issuer can purchase under the Normal Course Issuer Bid, such one-third being equal to 2,395,288 Common Shares as of the date of this Order.
29. The Commission granted the Issuer an order on June 12, 2015 pursuant to clause 104(2)(c) of the Act exempting the Issuer from the Issuer Bid Requirements in connection with purchases by the Issuer pursuant to private agreements of up to 1,175,000 Common Shares from The Toronto-Dominion Bank (the Existing Order). To date, the Issuer has acquired 1,175,000 Common Shares under the Existing Order.
30. The Issuer will not purchase Common Shares pursuant to the Proposed Purchases during designated blackout periods designated and administered in accordance with the Issuer's corporate policies.
31. Assuming completion of the purchase of the maximum number of Subject Shares, being 1,140,000 Common Shares, and the maximum number of Common Shares pursuant to the Existing Order, being 1,175,000 Common Shares, the Issuer will have purchased under the Normal Course Issuer Bid an aggregate of 2,315,000 Common Shares pursuant to Off-Exchange Block Purchases, representing approximately 32.33% of the maximum of 7,185,866 Common Shares authorized to be purchased under the Normal Course Issuer Bid.
AND UPON the Commission being satisfied to do so would not be prejudicial to the public interest;
IT IS ORDERED pursuant to clause 104(2)(c) of the Act that the Issuer be exempt from the Issuer Bid Requirements in connection with the Proposed Purchases, provided that:
(a) the Proposed Purchases will be taken into account by the Issuer when calculating the maximum annual aggregate limit that is imposed upon the Issuer's Normal Course Issuer Bid in accordance with the TSX NCIB Rules;
(b) the Issuer will refrain from conducting either a Block Purchase in accordance with the TSX NCIB Rules or another Off-Exchange Block Purchase during the calendar week in which it completes any Proposed Purchase and will not make any further purchases under the Normal Course Issuer Bid for the remainder of the calendar day on which it completes each Proposed Purchase;
(c) the Purchase Price in respect of each Proposed Purchase will be at a discount to the last "independent trade" (as that term is used in paragraph 629(l)1 of the TSX NCIB Rules) of a board lot of Common Shares immediately prior to the execution of such Proposed Purchase;
(d) the Issuer will otherwise acquire any additional Common Shares pursuant to the Normal Course Issuer Bid and in accordance with the Notice and the TSX NCIB Rules, as applicable, subject to condition (i) below;
(e) immediately following each Proposed Purchase of Subject Shares from a Selling Shareholder, the Issuer will report the purchase of such Subject Shares to the TSX;
(f) at the time that each Agreement is entered into by the Issuer and the applicable Selling Shareholder and at the time of each Proposed Purchase, neither the Issuer, nor any member of the Trading Products Group of either Selling Shareholder, nor any personnel of the Selling Shareholders that negotiated the Agreement or made, participated in the making of, or provided advice in connection with, the decision to enter into the Agreement and sell the Subject Shares, will be aware of any "material change" or "material fact" (each as defined in the Act) in respect of the Issuer that has not been generally disclosed;
(g) in advance of the first Proposed Purchase, the Issuer will issue a press release disclosing (i) its intention to make the Proposed Purchases, and (ii) that information regarding each Proposed Purchase, including the number of Common Shares purchased and the aggregate Purchase Price, will be available on the System for Electronic Document Analysis and Retrieval (SEDAR) following the completion of each such Proposed Purchase;
(h) the Issuer will report information regarding each Proposed Purchase, including the number of Subject Shares purchased and the aggregate Purchase Price, on SEDAR before 5:00 p.m. (Toronto time) on the business day following such Proposed Purchase;
(i) the Issuer does not purchase, pursuant to Off-Exchange Block Purchases, in the aggregate more than one-third of the maximum number of Common Shares the Issuer can purchase under the Normal Course Issuer Bid, such one-third being equal to, as of the date of this Order, 2,395,288 Common Shares; and
(j) the Issuer will not make any Proposed Purchase unless it has first obtained confirmation in writing from each Selling Shareholder that, between the date of this Order and the date on which a Proposed Purchase is to be completed, neither Selling Shareholder has purchased, had purchased on its behalf, or otherwise accumulated, any Common Shares to re-establish its, or the other Selling Shareholder's, holdings of Common Shares which will have been reduced as a result of the sale of the Subject Shares pursuant to the Proposed Purchases.
DATED at Toronto, Ontario this 21st day of August, 2015.