Alliance Pipeline Limited Partnership - MRRS Decision
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - Issuer is a connected issuer, but not a relatedissuer, in respect of registrants that are underwriters in proposed distributions of common shares by the issuer -Underwriters exempt from the independent underwriter requirement in the legislation provided that issuer not infinancial difficulty.
Applicable Ontario Regulations
Regulation made under the Securities Act, R.S.O. 1990, Reg. 1015, as am., ss. 219(1), 224(1)(b) and 233.
Applicable Ontario Rules
Proposed Multi-Jurisdictional Instrument 33-105 Underwriting Conflicts (published for comment February 6, 1998).
IN THE MATTER OF
THE SECURITIES LEGISLATION
OF ALBERTA, BRITISH COLUMBIA AND ONTARIO
AND
IN THE MATTER OF
THE MUTUAL RELIANCE
REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
ALLIANCE PIPELINE
LIMITED PARTNERSHIP
AND
IN THE MATTER OF
ALLIANCE PIPELINE L.P.
AND
IN THE MATTER OF
SCOTIA CAPITAL INC.,
BMO NESBITT BURNS INC., RBC DOMINION SECURITIES INC.,
TD SECURITIES INC., CIBC WORLD MARKETS INC.
AND NATIONAL BANK FINANCIAL INC.
MRRS DECISION DOCUMENT
WHEREAS the Canadian securities regulatory authority or regulator (the "Decision Maker") in each ofAlberta, British Columbia and Ontario (the "Jurisdictions") has received an application from Alliance Canada LimitedPartnership ("Alliance Canada") on behalf of each of Scotia Capital Inc., BMO Nesbitt Burns Inc., RBC DominionSecurities Inc., TD Securities Inc., CIBC World Markets Inc., National Bank Financial Inc. (collectively, the "Dealers)and Alliance Pipeline L.P. ("Alliance USA") for a decision pursuant to the securities legislation of the Jurisdictions(the "Legislation") that the requirement contained in the Legislation for an independent underwriter where an offeringof securities of an issuer is otherwise being underwritten by underwriters in respect of which the issuer is a"connected issuer", or the equivalent (the "Independent Underwriter Requirement"), shall not apply to a proposedoffering (the "Offering") of senior secured notes (the "Senior Notes") by Alliance Canada to be made by means of ashort form shelf prospectus (the "Prospectus") dated March 1, 2001 and a prospectus supplement expected to befiled with the Decision Maker in each Jurisdiction;
AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the"System"), the Ontario Securities Commission is the principal regulator of this application;
AND WHEREAS the Filer has represented to the Decision Makers that:
1. Alliance Canada is a limited partnership formed in 1996 pursuant to the laws of Alberta.
2. The general partner of Alliance Canada is Alliance Pipeline Ltd., a Canadian corporation.
3. Alliance Canada became a reporting issuer on March 31, 2000 in all of the provinces of Canada exceptManitoba, New Brunswick and Prince Edward Island by filing a non-offering prospectus dated March 28,2000.
4. Alliance Canada owns and operates the Canadian portion of a natural gas transmission system (the"Alliance Pipeline System") consisting of 3,000 kilometers of natural gas mainline pipeline and an additional700 kilometers of lateral pipelines.
5. The shares of Alliance Pipeline Ltd. and the limited partnership units of Alliance Canada are held directly orindirectly by five corporations.
6. Alliance USA is a limited partnership organized under the laws of the State of Delaware. The managingpartner of Alliance USA is Alliance Pipeline Inc.
7. Alliance USA owns and operates the American portion of the Alliance Pipeline System.
8. In 1998, Alliance Canada and Alliance USA (collectively, "Alliance") arranged credit facilities in the amountof approximately $3.765 billion (assuming a US$/Cdn$ exchange rate of 1.50) with a syndicate ofcommercial banks and other financial institutions of which approximately $1.931 billion of the credit facilitieswere for Alliance Canada.
9. On December 21, 2001, the credit facilities were converted to eight year term facilities.
10. Alliance Canada is required to make quarterly principal payments under the credit facilities until December21, 2008 at which time the remaining balance of $1.2 billion, becomes due.
11. At present, the principal amount of Alliance Canada's credit facilities is $1.6 billion.
12. The strategy of Alliance has been to refinance all or a portion of the credit facilities using senior notes in amanner generally consistent with the depreciation of the rate base of the Alliance Pipeline System.
13. Alliance Canada obtained a decision document on March 2, 2001 for the Prospectus, which Prospectusqualifies in all provinces of Canada up to $1.2 billion of Senior Notes to be offered in tranches.
14. Each of the Dealers is, directly or indirectly, a subsidiary of a Canadian chartered bank (a "Bank") to whichAlliance Canada is indebted under the credit facilities. Accordingly, Alliance Canada may be considered tobe a connected issuer to each of the Dealers.
15. None of the Banks were involved in the decision to offer the Notes and none will be involved in thedetermination of the terms of the distribution of the Notes.
16. Neither Alliance Canada nor Alliance USA is a specified party as defined in Draft MultijurisdictionalInstrument 33-105 (the "Proposed Instrument").
17. The Senior Notes are rated BBB (high) from Dominion Bond Rating Services Limited, A3 from Moody'sInvestors Service, Inc. and BBB from Standard & Poor's Rating Service.
18. Each Dealer was chosen by Alliance Canada based on the ability of such Dealer to market the SeniorNotes.
19. Neither Alliance Canada nor Alliance USA is a related issuer (or the equivalent) of the Dealer or of any ofthe other members of the underwriting syndicate.
20. Neither Alliance Canada nor Alliance USA is under immediate pressure to do an offering.
21. The nature and details of the relationship between the Alliance Canada and the Dealers is described in theProspectus. The Prospectus contains the information specified in Appendix "C" of the ProposedInstrument.
AND WHEREAS pursuant to the System this MRRS Decision Document evidences the decision of eachDecision Maker (collectively, the "Decision");
AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation thatprovides 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 the Independent UnderwriterRequirement shall not apply to the Dealers in connection with the Offering, provided that:
(a) neither Alliance Canada nor Alliance USA is a related issuer, as defined in the Proposed Instrument, to theDealers at the time of the Offering, and
(b) neither Alliance Canada nor Alliance USA is a specified party, as defined in the Proposed Instrument, at thetime of the Offering.
March 13, 2001.
"Howard I. Wetson" "R. Stephen Paddon"