Brascan Corporation
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - In connection witha proposed Dutch auction issuer bid, with respect to securities tendered at or below theclearing price, offeror exempt from the requirement to take up and pay for securitiesdeposited proportionately according to the number of securities deposited to the bidand the associated disclosure requirement.
Ontario Statutes Cited
Securities Act, R.S.O. 1990, c. S.5, as am, ss. 95(7) and 104(2)(c)
Ontario Regulations Cited
Regulation made under the Securities Act, R.R.O. 1990, Reg. 1015, as am., s. 189(b)and Item 9 of Form 33
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
BRASCAN CORPORATION
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, NovaScotia, and Newfoundland (collectively, the "Jurisdictions") has received an application(the "Application") from Brascan Corporation ("Brascan") for a decision pursuant to thesecurities legislation of the Jurisdictions (the "Legislation") that, in connection with theproposed purchase by Brascan of a portion of its outstanding Subordinated ConvertibleAuction Notes due 2088 (the "Notes") pursuant to an issuer bid (the "Offer"), Brascan beexempt from the requirements in the Legislation to:
(i) take up and pay for securities proportionately according to the number of securitiesdeposited by each securityholder (the "Proportionate Take-up and PaymentRequirement"); and
(ii) provide disclosure in the issuer bid circular (the "Circular") of such proportionatetake-up and payment (the "Associated Disclosure Requirement");
AND WHEREAS pursuant to the Mutual Reliance Review System for ExemptiveRelief Applications (the "System"), the Ontario Securities Commission is the principalregulator for the Application;
AND WHEREAS Brascan has represented to the Decision Makers as follows:
1. Brascan is a reporting issuer or the equivalent in each of the Jurisdictions and isnot in default of any requirement of the Legislation. The head office of Brascan islocated in Toronto, Ontario.
2. Brascan's authorized capital consists of an unlimited number of Class A PreferenceShares, issuable in series, an unlimited number of Class AA Preference Shares,issuable in series, an unlimited number of Class A Limited Voting Shares and85,120 Class B Limited Voting Shares.
3. The Class A Limited Voting Shares are listed and posted for trading on The TorontoStock Exchange. As of May 19, 2000, the closing price of the Class A LimitedVoting Shares was $17.65.
4. As of May 19, 2000, Notes in the aggregate principal amount of $77,295,000 wereoutstanding. The Notes are convertible into Class A Limited Voting shares at aconversion price which is significantly in excess of the current market price of theClass A Limited Voting Shares.
5. In connection with the Offer, Brascan retained the firm of Koger Valuations Inc. toprepare a formal valuation of the Notes (the "Formal Valuation").
6. Brascan proposes to purchase Notes through the Offer by way of the Circular.Brascan intends to acquire the aggregate principal amount of $50,000,000 ofNotes, representing approximately 64.7% of the outstanding Notes, pursuant to theOffer. Brascan anticipates using cash on hand to acquire the Notes.
7. The Offer will be made pursuant to a Dutch Auction procedure (the "Procedure") asfollows:
(a) the Circular will specify that the maximum aggregate principal amount of theNotes that Brascan intends to purchase under the Offer is $50,000,000 (the"Specified Amount").
(b) The Circular also will specify the range of prices (the "Range") within whichBrascan is prepared to purchase Notes under the Offer.
(c) Holders of the Notes (the "Noteholders") wishing to tender to the Offer willbe able to specify the lowest price within the Range at which they are willingto sell their Notes (an "Auction Tender").
(d) Noteholders wishing to tender to the Offer but who do not wish to make anAuction Tender may elect to be deemed to have tendered at the ClearingPrice determined in accordance with paragraph (e) below (a "Purchase PriceTender").
(e) The purchase price (the "Clearing Price") of the Notes tendered to the Offerwill be the lowest price that will enable Brascan to purchase the SpecifiedAmount of Notes and will be determined based upon the aggregate principalamount of Notes tendered pursuant to an Auction Tender at each pricewithin the Range and tendered pursuant to a Purchase Price Tender, witheach Purchase Price Tender being considered a tender at the lowest pricein the Range for the purpose of calculating the Clearing Price.
(f) All Notes tendered by Noteholders who specify a tender price for suchtendered Notes that falls outside the Range will be considered to have beenimproperly tendered, will be excluded from the determination of the ClearingPrice, will not be purchased by Brascan and will be returned to the tenderingNoteholders.
(g) All Notes tendered by Noteholders who fail to specify any tender price forsuch tendered Notes and fail to indicate that they have tendered their Notespursuant to a Purchase Price Tender will be considered to have beentendered pursuant to a Purchase Price Tender and will be dealt with asdescribed in paragraph (i) below.
(h) The aggregate amount that Brascan will expend pursuant to the Offer will notbe ascertained until the Clearing Price is determined.
(i) All Notes tendered at or below the Clearing Price pursuant to an AuctionTender and all Notes tendered pursuant to a Purchase Price Tender will betaken up and paid for at the Clearing Price, plus accrued and unpaidinterest, subject to proration (calculated to the nearest whole $1,000principal amount of Notes, so as to avoid the creation of fractional Notes) ifthe aggregate principal amount of Notes tendered at or below the ClearingPrice pursuant to Auction Tenders and the aggregate principal amount ofNotes tendered pursuant to Purchase Price Tenders exceeds the SpecifiedAmount.
(j) All Notes tendered at prices above the Clearing Price for the Offer will bereturned to the appropriate Noteholders.
8. Prior to the expiry of the Offer, all information regarding the aggregate principalamount of Notes tendered and the prices at which such Notes are tendered will bekept confidential, and the depository will be directed by Brascan to maintain suchconfidentiality until the Clearing Price is determined.
9. Since the Offer will be for fewer than all of the Notes, if the aggregate principalamount of Notes tendered to the Offer at or below the Clearing Price exceeds theSpecified Amount, the Legislation would require Brascan to take up and pay fordeposited Notes proportionately, according to the principal amount of Notesdeposited by each Noteholder. In addition, the Legislation would require disclosurein each Circular that Brascan would, if Notes tendered to the Offer exceeded theSpecified Amount, take up such Notes proportionately according to the aggregateprincipal amount of Notes tendered by each Noteholder to the Offer.
10. The Circular will:
(a) disclose the mechanics for the take-up of and payment for, or the return of,Notes as described in the Procedure in paragraph 7 above;
(b) explain that, by tendering Notes at the lowest price in the Range, aNoteholder can reasonably expect that the Notes so tendered will bepurchased at the Clearing Price, subject to proration as described inparagraph 7 above; and
(c) include a summary of the Formal Valuation.
AND WHEREAS pursuant to the System this MRRS Decision Document evidencesthe decision of each of the Decision Makers (collectively, the "Decision");
AND WHEREAS each of the Decision Makers is satisfied that the test contained inthe Legislation that provides the Decision Maker with the jurisdiction to make the Decisionhas been met;
THE DECISION of the Decision Makers in the Jurisdictions pursuant to theLegislation is that, in connection with the Offer, Brascan is exempt from the ProportionateTake-up and Payment Requirement and the Associated Disclosure Requirement, providedthat Notes tendered to the Offer are taken up and paid for, or returned to the Noteholders,in accordance with the Procedure.
June 19th, 2000.
"J. A. Geller" "J. F. Howard"