Builders Energy Services Trust - MRRS Decision
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - Relief granted from the requirement for an income trust to include certain financial statements of acquired businesses in a business acquisition report provided that:
(i) the business acquisition report includes the financial statements pertaining to the acquired businesses that were included in the income trust's final prospectus; and
(ii) the financial statements that were not included in the business acquisition report are filed separately by May 15, 2005.
The relief was granted as a short-term accommodation measure - Staff will not be recommending this type of relief going forward and, as a result, this decision should not be viewed as a precedent in Ontario - Issuers should plan to file complete business acquisition reports that include all required financial statement disclosure within the timeline prescribed by Part 8 of National Instrument 51-102.
Instrument Cited
National Instrument 51-102 Continuous Disclosure Obligations, Part 8.
Citation: Builders Energy Services Trust, 2005 ABASC 315
April 11, 2005
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA, SASKATCHEWAN, MANITOBA AND ONTARIO
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
BUILDERS ENERGY SERVICES TRUST
MRRS DECISION DOCUMENT
Background
The local securities regulatory authority or regulator (the "Decision Makers"), in each of Alberta, Saskatchewan, Manitoba and Ontario, (collectively, the "Jurisdictions") has received an application from Builders Energy Services Trust (the "Trust" or the "Applicant") for a decision pursuant to the securities legislation of the Jurisdictions (the "Legislation") that the Applicant is exempt from certain financial statement requirements contained in Part 8 of National Instrument 51-102 Continuous Disclosure Requirements ("NI 51-102").
The Applicant requested that the Decision Makers exercise their discretion under section 13.1 of NI 51-102 to exempt the Applicant from the requirement include certain financial statements required by Part 8 of NI 51-102 in the business acquisition report required to be filed by the Applicant under Part 8 of NI 51-102 in connection with the acquisition by Builders Energy Services Ltd. ("Builders") of Brazeau Well Servicing Ltd., C.D.T. Rentals Inc., Circle D Transport Inc., CTC Coil Tubing Completions Ltd., CTC Nitrogen Services Ltd., CTC Production Testing Ltd., Decarson Rentals (2000) Inc., Ken Polege Enterprises Ltd. and Remote Wireline Services Ltd. (collectively, the "Acquired Companies"), provided that the business acquisition report includes the financial statements contained in the Prospectus.
Under the Mutual Reliance Review System for Exemptive Relief Applications
(a) the Alberta Securities Commission is the principal regulator for this application, and
(b) the MRRS decision document evidences the decision of each Decision Maker.
Interpretation
Defined terms contain in National Instrument 14-101 Definitions have the same meaning in this decision unless they are defined in this decision.
Representations
This decision is based on the following facts represented by the Trust:
1. The Trust is an open-end investment trust governed by the laws of the Province of Alberta and created by the Declaration of Trust dated November 29, 2004, as amended, supplemented or restated from time to time.
2. The Trust's head office is located at 540, 800 - 6th Avenue SW, Calgary, Alberta T2P 3G3.
3. The Trust has been a reporting issuer or equivalent in each of the Jurisdictions and British Columbia since January 17, 2005, being the date the on which a receipt was issued for the prospectus dated January 13, 2005 (the "Prospectus") of the Trust in respect of the initial public offering of 4,600,000 trust units ("Units") of the Trust (the "Offering").
4. To the best of its knowledge, the Trust is not in default of any requirements of the securities legislation of the Jurisdictions (the "Legislation").
5. The Units are listed on the Toronto Stock Exchange. As of April 8, 2005, there are 8,935,226 Units issued and outstanding.
6. Although the Trust is also a reporting issuer in British Columbia, the Requested Relief is not being sought in this jurisdiction on the basis that Part 8 of NI 51-102 does not apply in British Columbia pursuant to BC Implementing Rule 51-801.
7. The Prospectus included disclosure regarding the acquisition of each of the Acquired Companies, including a description of the business, financial statements and management's discussion and analysis for each Acquired Company and pro forma financial statements of the Trust.
8. On January 25, 2005 the Trust closed the Offering and Builders acquired all of the issued and outstanding shares of the Acquired Companies (collectively, the "Transactions").
9. The Prospectus included the following financial statement disclosure:
(a) for Builders Energy Services Trust:
(i) auditors' report of the consolidated balance sheet as at November 29, 2004;
(ii) audited consolidated balance sheet as at November 29, 2004;
(iii) unaudited pro form consolidated balance sheet as at August 31, 2004 and unaudited pro forma consolidated statement of income for the eight-months ended August 31, 2004 and for the year ended December 31, 2004; and
(iv) notes to the pro forma consolidated financial statements eight-months ended August 31, 2004 and year ended December 31, 2003.
(b) Brazeau Well Servicing Ltd.:
(i) auditors' report of the balance sheets as at March 31, 2004 and 2003 and statements of income and retained earnings and cash flows for each of the years in the three-year period ended March 31, 2004;
(ii) audited balance sheets as at March 31, 2004 and 2003;
(iii) unaudited balance sheet as at August 31, 2004;
(iv) audited statements of income and retained earnings and cash flows for each of the years in the three-year period ended March 31, 2004;
(v) unaudited statements of income and retained earnings and cash flows for the five-months ended August 31, 2004 and 2003; and
(vi) notes to the financial statements as at August 31, 2004 (information as at August 31, 2004 and for the five-months ended August 31, 2004 and 2003 is unaudited).
(c) C.D.T. Rentals Inc.:
(i) auditors' report of the balance sheets as at July 31, 2004 and July 31, 2003 and the statements of earnings, retained earnings and cash flows for each of the years in the three-year period ended July 31, 2004;
(ii) audited balance sheets as at July 31, 2004 and July 31, 2003;
(iii) unaudited balance sheet as at August 31, 2004;
(iv) audited statements of earnings, retained earnings and cash flows for each of the years in the three-year period ended July 31, 2004;
(v) unaudited statements of earnings, retained earnings and cash flows for the one-month ended August 31, 2004 and 2003; and
(vi) notes to financial statements (information as at August 31, 2004 and for the month ended August 31, 2004 and 2003 is unaudited).
(d) Circle D Transport Inc.:
(i) audited balance sheets as at December 31, 2003 and 2002;
(ii) unaudited balance sheet as at August 31, 2004;
(iii) audited statements of income, retained earnings and cash flows for each of the years in the three-year period ended December 31, 2003;
(iv) unaudited statements of retained earnings, income and cash flows for the eight-months ended August 31, 2004 and 2003; and
(v) notes to financial statements (information as at August 31, 2004 and for the eight-months ended August 31, 2004 and 2003 is unaudited).
(e) Coil Tubing Completions Ltd.:
(i) auditors' report of the balance sheets as at August 31, 2004, September 30, 2003 and September 30, 2002 and the statements of income and retained earnings and cash flow for the eleven-month period ended August 31, 2004 and the two-year period ended September 30, 2003;
(ii) audited balance sheets as at August 31, 2004, September 30, 2003 and September 30, 2002;
(iii) audited statements of income and retained earnings and cash flow for the eleven-month period ended August 31, 2004 and the two-year period ended September 30, 2003; and
(iv) notes to the financial statements for the eleven-month period ended August 31, 2004.
(f) CTC Nitrogen Services Ltd.:
(i) auditors' report as at August 31, 2004, 2003 and 2002 and statements of income and retained earnings and cash flows for each of the years in the three-year period ended August 31, 2004;
(ii) audited balance sheet as at August 31, 2004, 2003 and 2002;
(iii) audited statements of income and retained earnings and cash flows for each of the years in the three-year period August 31, 2004; and
(iv) notes to the financial statements for the year ended August 31, 2004.
(g) CTC Production Testing Ltd.:
(i) auditors' report of the balance sheets as at August 31, 2004, 2003 and 2002 and the statements of income and retained earnings and cash flows for each of the years in the three-year period ended August 31, 2004;
(ii) audited balance sheets as at August 31, 2004, 2003 and 2002;
(iii) audited statements of income and retained earnings and cash flows for each of the years in the three-year period ended August 31, 2004; and
(iv) notes to the financial statements for the year ended August 31, 2004.
(h) Decarson Rentals (2000) Inc.
(i) auditors' report of balance sheets as at June 30, 2004 and 2003 and the statements of income (loss) and retained earnings (deficit) and cash flows for each of the years in the three-year period ended June 30, 2004;
(ii) audited balance sheet as at June 30, 2004 and 2003;
(iii) unaudited balance sheet as at August 31, 2004;
(iv) audited statements of income (loss) and retained earnings (deficit) and cash flows for each of the years in the three-year period ended June 30, 2004;
(v) unaudited statements of income (loss), retained earnings (deficit) and cash flows for two-months ended August 31, 2004 and 2003; and
(vi) notes to the financial statements (information as at August 31, 2004 and for the two-months ended August 31, 2004 and August 31, 2003 is unaudited).
(i) Ken Polege Enterprised Ltd.:
(i) auditors' report of the balance sheet as at January 31, 2004 and 2003 and the statements of income, retained earnings and cash flows for each of the years in the three-year period ended January 31, 2004;
(ii) audited balance sheet as at January 31, 2004 and 2003;
(iii) unaudited balance sheet as at August 31, 2004;
(iv) audited statements of income, retained earnings and cash flows for each of the years in the three-year period ended January 31, 2004;
(v) unaudited statements of income, retained earnings and cash flows for the seven-months ended August 31, 2004 and 2003; and
(vi) notes to financial statements for the year ended January 31, 2004 (information as at and for the seven-months ended August 31, 2004 and 2003 is unaudited).
(j) Remote Wireline Services Ltd.:
(i) auditors' report of the balance sheet as at August 31, 2004, 2003 and 2002 and the statements of income and retained earnings and cash flows for each of the years in the three-year period ended August 31, 2004;
(ii) audited balance sheet as at August 31, 2004, 2003 and 2002;
(iii) audited statements of income and retained earnings and cash flows for each of the years in the three-year period ended August 31, 2004; and
(iv) notes to the financial statements for the year ended August 31, 2004.
(collectively, the "Prospectus Financial Statements").
11. Except for the closing of the Offering on January 25, 2005, and as otherwise disclosed in the Prospectus, there were no material facts or material events relating to the Acquired Companies that arose from August 31, 2004 (the date of the most recent Acquired Company-related financial statements included in the Prospectus), to January 25, 2005 (the closing date of the Transactions).
Decision
Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Makers with the jurisdiction to make the decision has been met.
The Decision of the Decision Makers pursuant to the Legislation is that the Requested Relief is granted provided that:
(a) the Trust's business acquisition report includes the Prospectus Financial Statements; and
(b) the Trust files the following financial statements by May 15, 2005: for each of Brazeau Well Servicing Ltd., C.D.T. Rentals Inc., CTC Coil Tubing Completions Ltd., CTC Nitrogen Services Ltd., CTC Production Testing Ltd., Decarson Rentals (2000) Inc., Ken Polege Enterprises Ltd. and Remote Wireline Services Ltd. unaudited comparative financial statements for the period ended January 25, 2005 and commencing from the respective company's most recently completed fiscal year end; and for Circle D Transport Inc. annual financial statements for the year ended December 31, 2004.