Canbras Communications Corp.- MRRS Decision

MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- issuer has filed a statement of intent to dissolve under the Canada Business Corporations Act and has ceased to carry on business except to the extent necessary to complete, in an orderly manner, the liquidation and dissolution of the issuer -- issuer granted an exemption from the requirement to prepare and file an annual information form (the "AIF") in respect of its financial year ended December 31, 2003.

Ontario Statutes

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 80(b)(iii).

Ontario Rules

OSC Rule 51-501 AIF and MD&A.

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

SASKATCHEWAN, ONTARIO AND QUÉBEC

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

CANBRAS COMMUNICATIONS CORP.

 

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of Saskatchewan, Ontario and Québec (the "Jurisdictions") has received an application from Canbras Communications Corp. ("Canbras") for a decision under the securities legislation (the "Legislation") of the Jurisdictions that Canbras be exempted from the requirement to prepare and file an annual information form (the "AIF") in respect of its financial year ended December 31, 2003;

AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the "System"), the Agence nationale d'encadrement du secteur financier (also known as "Autorité des marchés financiers") is the principal regulator for this application;

AND WHERAS, unless otherwise defined, the terms herein have the meaning set out in National Instrument 14-101 Definitions;

AND WHEREAS Canbras has represented to the Decision Makers that:

    1. Canbras is a corporation continued under the laws of Canada and is a reporting issuer in each of the provinces of Canada in which such concept exists. To the best of its knowledge, Canbras is not in default of any requirement under the legislation.

    2. The authorized capital of Canbras consists of an unlimited number of Common Shares. As of December 31, 2003, there were 55,098,071 Common Shares issued and outstanding.

    3. As of December 31, 2003, the Common Shares of Canbras were listed on the Toronto Stock Exchange. As of the close of business on January 23, 2004, Canbras delisted its Common Shares from the Toronto Stock Exchange. Since January 24, 2004, its Common Shares were listed and posted for trading on NEX, a new and separate board of the TSX Venture Exchange which provides a trading forum for companies that have ceased to carry on an active business.

    4. In October 2003, Canbras entered into a definitive agreement with Horizon Cablevision do Brasil S.A., a Brazilian company ("Horizon"), for the sale of all of Canbras' interests in its Brazilian holding company subsidiary ("Canbras-Participacoes") in consideration for cash and a promissory note. Through Canbras-Participacoes, Canbras held all of its interests in its several broadband communications subsidiaries (all Brazilian companies) operating in the greater metropolitan area of Sao Paolo, in Sao Paolo State, Brazil (the "Horizon Sale").

    5. In a related transaction entered into concurrently with the Horizon Sale transaction, Canbras-Participacoes entered into definitive agreements with Cia. Tecnica de Engenharia Elétrica, a Brazilian company ("Alusa"), for the sale of all of Canbras' interests in its cable television subsidiaries (all Brazilian companies) operating in Parana State, Brazil (including certain related, non-operating predecessor companies) in consideration for the assumption by Alusa of all obligations of such companies (the "Alusa Sale").

    6. Canbras held a special shareholders' meeting on December 17, 2003 at which the following special resolutions were passed:

      (a) a special resolution approving the sale of substantially all of the assets of Canbras pursuant to the Horizon Sale and the Alusa Sale (collectively, the "Disposition"); and

      (b) a special resolution approving the voluntary liquidation and dissolution of Canbras pursuant to the Canada Business Corporations Act (the "CBCA") following the final distribution of the net proceeds of the Disposition transactions to Canbras' shareholders (the "Dissolution").

    7. On December 24, 2003, Canbras completed the Horizon Sale and, pursuant to the terms thereof, received gross proceeds of $32.6 million, comprised of $22.168 million in cash and a one-year promissory note in the original principal amount of $10.432 million, bearing interest at 10% (the "Note").

    8. As a result of the acquisition of Canbras-Participacoes by Horizon upon the completion of the Horizon Sale, Horizon has assumed the obligation to cause Canbras-Participacoes to complete the Alusa Sale.

    9. As of December 24, 2003, the closing date of the Horizon Sale, Canbras no longer has any ongoing active business operations, and has no intent to explore other investment opportunities. Canbras' only assets consist of its equity interests in its non-Brazilian holding company subsidiaries, which subsidiaries are in process to be liquidated and dissolved, and the gross proceeds received by it in the Horizon Sale (comprising cash and the Note).

    10. On January 14, 2004, following the filing by Canbras of a statement of intent to dissolve, the Director under the CBCA issued a Certificate of Intent to Dissolve. As a result and as required pursuant to section 211 of the CBCA, Canbras has ceased to carry on business except to the extent necessary to complete, in an orderly manner, the liquidation and dissolution of Canbras.

    11. Canbras anticipates that the distribution to shareholders of the net proceeds of the Disposition transactions will be made in two or more instalments as part of the liquidation and dissolution process of Canbras to be completed by or before the end of 2005. The initial distribution is currently expected to be made during the first half of 2004. A final distribution of the remaining net proceeds will be made to Canbras' shareholders in one or more instalments following Canbras' receipt of the balance of the purchase price payable by Horizon under the Note and the satisfaction of all remaining liabilities and obligations of Canbras, including winding up costs.

    12. As a result of the completion of the Horizon Sale on December 24, 2003, Canbras no longer conducts active business operations. Canbras will maintain its corporate existence and remain a reporting issuer during the liquidation and dissolution process pending the collection of the amount due under the Note on December 24, 2004, the satisfaction of all of its remaining liabilities and obligations, the payment of all of its expenses and the distribution of the net proceeds of the Disposition transactions to its shareholders.

    13. Given that Canbras has ceased to carry on business, the requirement for Canbras to prepare and file an AIF as set forth in the Legislation will result in unnecessary and burdensome costs to Canbras, will not be of any meaningful benefit to its shareholders and will result in an actual decrease in the net cash available for distribution to its shareholders.

    14. Despite its limited range of activities during the process of liquidation and dissolution, Canbras will continue to file and send to its shareholders its interim unaudited financial statements as well as its audited annual financial statements accompanied with the respective MD&A. Upon the occurrence of a material change, Canbras will comply with the obligation to issue a press release and file a material change report. Moreover, in order to keep informed its shareholders and the capital market, these documents will be available on Canbras' Website.

AND WHEREAS under the System, this MRRS Decision Document evidences the decision of each Decision Maker (collectively, the "Decision");

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;

THE DECISION of the Decision Maker pursuant to the Legislation is that Canbras be exempted to prepare and file an AIF in respect of its financial year ended December 31, 2003.

April 19, 2004.

"Josée Deslauriers"