Helin Industries Inc. cl. 104(2)(c)

Order

IN THE MATTER OF

THE SECURITIES ACT
R.S.O. 1990, c. S.5, AS AMENDED (the "Act")

AND

IN THE MATTER OF

HELIN INDUSTRIES INC.

ORDER

(clause 104(2)(c) of the Act)

UPON the application of Helin Industries Inc. ("Helin") and certain shareholders of Helin (the "Minority Shareholders") to the Ontario Securities Commission (the "Commission") for an order of the Commission pursuant to clause 104(2)(c) of the Act exempting Helin from the issuer bid requirements set forth in sections 95, 96, 97, 98 and 100 of the Act (the "Issuer Bid Requirements") in connection with a proposed transaction (the "Transaction") involving the disposition by Helin of all of the outstanding common shares of Helin Industries Ltd. ("Helin Subco"), a wholly-owned subsidiary of Helin, to certain shareholders of Helin (the "Significant Shareholders") in exchange for the common shares of Helin held by the Significant Shareholders;

AND UPON considering the application and the recommendation of staff of the Commission;

AND UPON Helin and the Minority Shareholders having represented to the Commission and the Director as follows:

1. Helin is a corporation existing under the laws of the Province of Ontario and is a reporting issuer under the Act. Helin is not in default under the Act.


2. Helin is a holding company, the only significant business of which is conducted through a wholly-owned subsidiary of Helin Subco.

3. The authorized capital of Helin consists of an unlimited number of common shares ("Helin Shares") and an unlimited number of preferred shares, issuable in series, of which there are currently 15,978,501 Helin Shares and no preferred shares outstanding. The Helin Shares are listed on the Canadian Venture Exchange ("CDNX").

4. Helin Subco is a corporation existing under the laws of the Province of Ontario. Helin Subco is not a reporting issuer under the Act.

5. Helin Subco owns all of the outstanding shares of Empire Foods Limited, a distributor of dry foods, edible oils, paper products and frozen foods to restaurants, institutions and cafeterias, as well as several other holding companies which do not currently carry on any active business.

6. The authorized capital of Helin Subco consists of an unlimited number of common shares ("Helin Subco Shares") and an unlimited number of preferred shares, issuable in series, of which there are currently 15,578,502 Helin Subco Shares and no preferred shares outstanding. All of the outstanding Helin Subco Shares are owned by Helin. There are no outstanding options, warrants or other securities exchangeable for or convertible into Helin Subco Shares.


7. The Significant Shareholders beneficially own an aggregate of 10,299,997 Helin Shares, representing approximately 64.5 per cent of the outstanding Helin Shares. The Helin Shares beneficially owned by the Significant Shareholders were originally acquired by the Significant Shareholders in connection with the Acquisition, as described in paragraph 10 below. Each of the Significant Shareholders is resident in the Province of Ontario.

8. The Minority Shareholders are a number of holders of Helin Shares, other than the Significant Shareholders, who beneficially own an aggregate of approximately 1,700,000 Helin Shares, representing approximately 10.6 per cent of the outstanding Helin Shares.

9. Prior to the fall of 1997, Helin was a "junior capital pool company" within the meaning of Policy 4.11 of the Alberta Securities Commission and Circular No. 7 of The Alberta Stock Exchange (collectively the "Former Alberta Policies") existing under the name "Harvest Acquisition Corp." and, as such, did not conduct any business other than the evaluation of potential business opportunities.

10. In the fall of 1997, Helin completed a "major transaction" within the meaning of the Former Alberta Policies (the "Acquisition") and thereby ceased to be a junior capital pool company under the Former Alberta Policies. Pursuant to the Acquisition, which was structured as a share exchange take-over bid, Helin acquired all of the outstanding Helin Subco Shares from the holders thereof on the basis of one Helin Share for each Helin Subco Share and changed its name from Harvest Acquisition Corp. to Helin Industries Inc.

11. As part of the Acquisition, 10,553,141 Helin Subco Shares were acquired from the Significant Shareholders and two other holders of Helin Subco Shares (collectively the "Principal Vendors") in exchange for an aggregate of 10,553,141 Helin Shares. The Helin Shares issued to the Principal Vendors who are not Significant Shareholders were subsequently transferred by such Principal Vendors to the Significant Shareholders.

12. Prior to the completion of the Acquisition, Helin and the Principal Vendors were at arm's length. The Acquisition was approved by the holders of Helin Shares at a meeting held on October 16, 1997 and was completed in accordance with the requirements of the Former Alberta Policies.

13. Of the aggregate of 10,553,141 Helin Shares acquired by the Principal Vendors on the completion of the Acquisition, 10,299,997 Helin Shares continue to be beneficially owned by the Significant Shareholders.


14. Helin, the Significant Shareholders and the Minority Shareholders have entered into an agreement dated December 20, 2000 (the "Transaction Agreement") providing for the Transaction. The Transaction Agreement provides that Helin will sell all of the outstanding Helin Subco Shares to the Significant Shareholders in consideration for the 10,299,997 Helin Shares beneficially owned by the Significant Shareholders. The Helin Shares received by Helin as consideration under Transaction will be cancelled.


15. The terms of the Transaction have been reviewed by an independent committee of Helin's board of directors (the "Independent Committee"). The Independent Committee has concluded that the Transaction is fair and reasonable to, and in the best interests of, the Corporation and the shareholders of Helin (the "Helin Shareholders").


16. The completion of the Transaction is subject to a number of conditions including, without limitation, the approval of the Transaction by CDNX and approval by the Helin Shareholders at a special meeting of Helin Shareholders to be held on or about April 19, 2001 for the purpose of considering the Transaction (the "Special Meeting").


17. To the knowledge of Helin and the Minority Shareholders, after reasonable enquiry, the Significant Shareholders did not, at the time the Transaction Agreement was entered into, know of any material non-public information in respect of Helin or the Helin Shares that was not generally disclosed.

18. The purpose of the Transaction is to effectively reverse the Acquisition in order that Helin may pursue new business opportunities. The Transaction was initiated by the Minority Shareholders because of their dissatisfaction with the business being conducted by Helin through Helin Subco. While Helin is a holding company without substantial assets or operations, Helin Subco and its subsidiaries have on a consolidated basis incurred losses since the completion of the Acquisition and are in serious financial difficulty.

19. The tendering of the Helin Shares for cancellation constitutes an "issuer bid" as defined in subsection 89(1) of the Act.

20. The Transaction constitutes a "related party transaction" within the meaning of Commission Rule 61-501 ("Rule 61-501").

21. CDNX has granted conditional approval of the Transaction, subject to its receipt of certain documents.

22. In order for the Transaction to be effective, it must be approved at the Special Meeting by:

(i) Helin Shareholders holding not less than two-thirds of the Helin Shares represented at the Special Meeting; and

(ii) Helin Shareholders holding a majority of the Helin Shares represented at the Special Meeting other than the Helin Shares held by the Significant Shareholders.


23. An information circular and accompanying notice of the Special Meeting was sent on March 23, 2001 to all Helin Shareholders and includes all material non-public information concerning Helin and the Helin Shares that is known to Helin, the Substantial Shareholders and the Minority Shareholders after reasonable enquiry but has not been generally disclosed. To the knowledge of Helin, the Substantial Shareholders and the Minority Shareholders, after reasonable enquiry, there is no material non-public information concerning Helin or the Helin Shares other than information which has been disclosed in such management information circular or which has otherwise been generally disclosed.

24. The board of directors of Helin and the Independent Committee have each determined that Helin is entitled to rely upon the valuation exemption in subsection 5.6(8) of Rule 61-501 as Helin is in serious financial difficulty, the Transaction is designed to improve the financial position of Helin and the terms of the Transaction are reasonable in the circumstances of Helin.

AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;

IT IS ORDERED by the Commission pursuant to clause 104(2)(c) of the Act that Helin is exempt from the Issuer Bid Requirements in connection with the Transaction.

April 19, 2001.

Paul M. Moore, R. Stephen Paddon