Enersource Corporation - ss. 83.1(1)
Headnote
Subsection83.1(1) - special purpose trust established to invest in and facilitatefinancing of infrastructure projects and related programs - trustmade a prospectus offering of bonds secured by and with recourselimited to rights of trust under a credit facility with issuer- financial and other disclosure in prospectus and ultimate investmentdecision relate to issuer and not trust - issuer had contractuallyagreed to comply with continuous disclosure requirements of Canadiansecurities laws as if it were a "reporting issuer" or the equivalentin each province of Canada - prospectus collectively containedsubstantially the disclosure about issuer that would have beenincluded in a prospectus for an initial public offering by issuer- issuer deemed to be a reporting issuer in Ontario.StatutesCited
SecuritiesAct, R.S.O. 1990, c.S.5, as am., ss.83.1(1).INTHE MATTER OF
THESECURITIES ACT
R.S.O.1990, CHAPTER S.5, AS AMENDED (the "Act")
AND
INTHE MATTER OF
ENERSOURCECORPORATION
ORDER
(Subsection83.1(1))
UPONthe application of Enersource Corporation ("Enersource")for an order, pursuant to subsection 83.1(1) of the Act, deemingEnersource to be a reporting issuer for the purposes of Ontariosecurities law; ANDUPON considering the application and the recommendationof the staff of the Ontario Securities Commission (the "Commission"); ANDUPON Enersource representing to the Commission as follows: 1.Enersource is a corporation governed by the Business CorporationsAct (Ontario) (the "Corporations Act"); 2.The registered and principal executive office of Enersource islocated in Mississauga, Ontario. 3.The authorized capital of Enersource consists of an unlimitednumber of Class A shares ("Enersource A Shares"),1,000 Class B shares ("Enersource B Shares")and 100 Class C shares ("Enersource C Shares"),of which there were issued and outstanding at June 30, 2001, 180,555,562Enersource A Shares, 1,000 Enersource B Shares and 100 EnersourceC Shares. The Corporation of the City of Mississauga ("Mississauga")holds all of the issued Enersource A Shares and 900 EnersourceB Shares. Borealis Energy Corporation ("Borealis Energy")holds 100 Enersource B Shares and all of the issued EnersourceC Shares. 4.Enersource is not a "reporting issuer" or the equivalent in anyjurisdiction. 5.Enersource is a holding company for Enersource Hydro MississaugaInc. ("Enersource Hydro Mississauga") and EnersourceServices Inc. ("Enersource Services"). 6.Enersource Hydro Mississauga is a corporation governed by theCorporations Act carrying on business as an electricitydistribution company regulated under the Energy CompetitionAct, 1998 ("Energy Act"). Its businessconsists primarily of the distribution of electricity to businessesand residences in the Mississauga area. 7.Enersource Services is a corporation governed by the CorporationsAct carrying on all of the businesses of Enersource thatare not subject to regulation under the Energy Act, directlyor through Enersource Services' subsidiaries. 8.Pursuant to a prospectus filed by Borealis Infrastructure Trust("Borealis") in all provinces of Canada and datedApril 25, 2001 (the "Prospectus") and a prospectussupplement dated April 26, 2001 (the "Prospectus Supplement"),Borealis has distributed to the public Borealis-Enersource SeriesBonds in the principal amount of $290,000,000 and has the abilityto sell up to an aggregate of $500,000,000 of such bonds (the"Enersource Bonds"). 9.Borealis is a special purpose trust that has been establishedby Borealis Infrastructure Management Inc., which is governedby the laws of the Province of Ontario. The purpose of Borealisis to invest in and facilitate the financing of infrastructureprojects and related programs initiated by Borealis Funds ManagementLtd. or its affiliates. Borealis has entered into a trust indenture(the "Trust Indenture") with The Trust Companyof the Bank of Montreal, as trustee for the bondholders, to permitthe issuance of separately secured bonds, in series, to financesuch investments by Borealis. 10.The Enersource Bonds are issued under an Enersource Series SupplementalTrust Indenture to the Trust Indenture which provides that theEnersource Bonds are issuable at the discretion of Borealis inone or more tranches. The Enersource Bonds are direct obligationsof Borealis, secured by (with recourse limited to) (i) the loansadvanced by Borealis to Enersource under a credit agreement, (ii)the benefit of such credit agreement and (iii) a securities pledgeagreement creating a first ranking security interest on all presentand future equity or other ownership interests held by Enersourcein the capital of municipal electric utilities, and share certificatesrepresenting such interests granted by Enersource to Borealiswhile any bridge loans are outstanding to secure Enersource'sobligations to repay term loans and bridge loans. The collateralfor the Enersource Bonds is segregated and identified as beingapplicable only to such Enersource Bonds. 11.The funds received by Borealis from Enersource Bond distributionsare advanced to Enersource. 12.Enersource has contractually agreed with Borealis to: (i) provideto Borealis; (ii) file directly on SEDAR; and (iii) deliver toholders of the Enersource Bonds, on Borealis' behalf, the unauditedconsolidated interim financial statements and unaudited consolidatedannual financial statements of Enersource, each prepared in accordancewith Canadian GAAP and applicable securities laws. Enersourcehas contractually agreed to file material change reports on SEDAR.Enersource has agreed to in all respects comply with the continuousand episodic disclosure requirements of the Canadian securitieslaws as if it were a "reporting issuer" or the equivalent in eachprovince of Canada. In addition, Enersource is contractually obligatedto co-operate with Borealis in the preparation of all disclosuredocuments prepared by Borealis, with respect to information relatingto Enersource and its subsidiaries, and assist in the preparationof investor relations materials and attend at, as reasonably requested,meetings with investors, rating agencies and analysts. The aboveare collectively referred to as the "Disclosure Obligations". 13.The Prospectus and Prospectus Supplement collectively containedsubstantially the disclosure about Enersource that would havebeen included in a prospectus for an initial public offering ofEnersource securities, and such disclosure was sufficient to enablean investor in the Enersource Bonds to evaluate the investment. 14.As part of the Prospectus filing, Enersource undertook to theCommission to make an application to be deemed to be a "reportingissuer", for the purposes of paragraph (f) of the definition of"reporting issuer" in section 1(1) of the Act, following the issuanceof a receipt for the final Prospectus and Prospectus Supplement; 15.The Disclosure Obligations are substantially the same as the requirementsof the Act. 16.Since the filing of the Prospectus, Enersource has complied withthe Disclosure Obligations. 17.Enersource does not have any securities listed on a stock exchangeand there is no trading or quotation system through which Enersource'ssecurities are traded or quoted. 18.Neither Enersource nor any of its officers, directors or its controllingshareholder has (i) been the subject of any penalties or sanctionsimposed by a court relating to Canadian securities legislationor by a Canadian securities regulatory authority, (ii) enteredinto a settlement agreement with a Canadian securities regulatoryauthority or (iii) been subject to any other penalties or sanctionsimposed by a court or regulatory body that would be likely tobe considered important to a reasonable investor making an investmentdecision. ANDUPON the Commission being satisfied that to do so wouldnot be prejudicial to the public interest; ITIS HEREBY ORDERED pursuant to subsection 83.1(1) of theAct that Enersource is deemed to be a reporting issuer for thepurposes of Ontario securities law. March19, 2002. "PaulM. Moore" "H. Lorne Morphy"