Norbord Inc.
Headnote
National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- Application for an order that an issuer is not a reporting issuer under applicable securities laws -- Following an arrangement, all of the issuer's common shares were acquired by another company that is a reporting issuer and in compliance with its continuous disclosure obligations -- Issuer has outstanding non-convertible debt securities and convertible securities that are beneficially owned by more than 15 securityholders in certain jurisdictions in Canada and 51 securityholders worldwide -- Convertible securities are exercisable for securities of the acquiror or redeemable based on the value of the shares of the acquiror -- Issuer is not required under the terms of the outstanding securities to remain a reporting issuer -- Debt securities of the issuer are traded on broker-dealer networks in the U.S. -- Order granted.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10)(a)(ii).
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR CEASE TO BE A REPORTING ISSUER APPLICATIONS AND IN THE MATTER OF NORBORD INC. (the Filer)
ORDER
Background
The principal regulator in the Jurisdiction has received an application from the Filer for an order under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that the Filer has ceased to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer (the Order Sought).
Under the Process for Cease to be a Reporting Issuer Applications (for a passport application):
a) the Ontario Securities Commission is the principal regulator for this application, and
b) the Filer has provided notice that subsection 4C.5(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, the territories of Yukon, the Northwest Territories and Nunavut.
Interpretation
Terms defined in National Instrument 14-101 -- Definitions and MI 11-102 have the same meaning if used in this order, unless otherwise defined.
Representations
This order is based on the following facts represented by the Filer:
1. The Filer was formed under the Canada Business Corporations Act on December 31, 1998 by the amalgamation of Noranda Forest Inc. and NFI Forest Holdings Ltd. The Filer filed Articles of Arrangement and Restated Articles of Incorporation on June 30, 2004 to facilitate the transfer of its paper and timber business to a new public company, Fraser Papers Inc., and changed its name from Nexfor Inc. to Norbord Inc. The Filer filed Articles of Amendment on October 16, 2009 in connection with its one for ten share consolidation effective the same date. On July 15, 2015, the Filer filed Articles amalgamating the Filer and Ainsworth Lumber Co. Ltd.
2. The Filer Shares (as defined below) were listed on the TSX and the NYSE under the symbol "OSB". No other securities of the Filer were listed on any exchange.
3. The Filer's head office is at Suite 600, 1 Toronto Street, Toronto, Ontario, M5C 2W4.
4. West Fraser Timber Co. (West Fraser) is a corporation existing under the Business Corporations Act (British Columbia). West Fraser's authorized share capital consists of 400,000,000 common shares (the West Fraser Shares), 20,000,000 Class B common shares and 10,000,000 preferred shares issuable in series. The West Fraser Shares are listed on the Toronto Stock Exchange (the TSX) under the symbol "WFG". On February 1, 2021, the West Fraser Shares were listed on the New York Stock Exchange (the NYSE) under the symbol "WFG". West Fraser is a reporting issuer in each province and territory of Canada and is not in default of securities legislation in any jurisdiction.
5. The Filer entered into an arrangement agreement dated November 18, 2020 (the Arrangement Agreement) with West Fraser, whereby West Fraser acquired all of the issued and outstanding common shares of the Filer pursuant to a plan of arrangement under the Business Corporations Act (Ontario).
6. Immediately prior to the Effective Time (as defined below), the Filer had the following issued and outstanding securities: (i) 80,719,543 common shares (the Filer Shares); (ii) 1,315,504 options to purchase Filer Shares under the option plan of the Filer (the Standard Filer Options); (iii) 3,032 options to purchase Filer Shares under the option plan of the Filer for employees of the Filer's United Kingdom subsidiary (the UK Filer Options and, together with the Standard Filer Options, the Filer Options) (iv) 216,642 restricted share units (the Filer RSUs) (rounded to the nearest whole number); (v) 92,149 deferred share units (the Filer DSUs) (rounded to the nearest whole number); (vi) CDN$350,000,000 million principal amount of 5.75% Senior Secured Notes due July 2027 (the 5.75% Notes); and (vii) CDN$315,000,000 million principal amount of 6.25% Senior Secured Notes due April 2023 (the 6.25% Notes and, together with the 5.75% Notes, theFiler Notes).
7. The Filer distributed the meeting materials (which included, among other things, the information circular (the Filer Circular), notice of meeting and letter of transmittal) on December 24, 2020 to the holders of the Filer Shares in connection with the special meeting of holders of Filer Shares that took place on January 19, 2021 to consider the Arrangement in accordance with the order of the Ontario Superior Court. Holders of Filer Options, Filer RSUs and Filer DSUs were distributed the notice of meeting and Filer Circular.
8. The Filer disclosed in the Filer Circular that it intended to apply to cease to be a reporting issuer under the securities legislation of each of the provinces and territories of Canada under which it is currently a reporting issuer (or equivalent) or take or cause to be taken such other measures as may be appropriate to ensure that the Filer is not required to prepare and file continuous disclosure documents.
9. On January 19, 2021, the shareholders of each of West Fraser and the Filer approved a statutory plan of arrangement under the Business Corporations Act (Ontario) pursuant to the Arrangement Agreement (the Arrangement).
10. On February 1, 2021 (the Effective Date), West Fraser acquired all of the issued and outstanding common shares of the Filer, pursuant to the Arrangement, which became effective at 8:22 AM (Toronto time) (the Effective Time) on the Effective Date.
11. Immediately prior to the Effective Time:
(a) each outstanding Filer Share was automatically exchanged for 0.6750 common shares (the Exchange Ratio) of West Fraser Shares;
(b) each outstanding Standard Filer Option was automatically exchanged for a replacement option of West Fraser (the West Fraser Options) that entitles the holder to receive the number of West Fraser Shares based on the Exchange Ratio at an exercise price adjusted in accordance with the Exchange Ratio (therefore there are no Standard Filer Options outstanding);
(c) each outstanding UK Filer Option remained outstanding on their existing terms, except the Filer Shares subject to the UK Filer Options were substituted for West Fraser Shares based on the Exchange Ratio at an exercise price adjusted in accordance with the Exchange Ratio; and
(d) each outstanding Filer RSU and Filer DSU remained outstanding on their existing terms, except the Filer Shares subject to the Filer RSUs and Filer DSUs were substituted for West Fraser Shares and adjusted to reflect the Exchange Ratio; all Filer RSUs and Filer DSUs are cash-settled with reference to the value of West Fraser Shares and are not exercisable into West Fraser Shares.
12. Following the Effective Date, the Filer became a wholly-owned subsidiary of West Fraser.
13. The Filer Shares were delisted from the TSX on February 2, 2021 and from the NYSE on February 1, 2021
14. As of the date hereof, the Filer has the following outstanding securities: (i) 106,773 Filer RSUs (rounded to the nearest whole number); (ii) 11,379 Filer DSUs (rounded to the nearest whole number); (iii) 3,032 UK Filer Options (iv) CDN$350,000,000 million in aggregate principal amount of 5.75% Notes; and (v) CDN$315,000,000 million in aggregate principal amount of 6.25% Notes.
Filer RSUs and Filer DSUs
15. The Filer RSUs and Filer DSUs are notional, cash-settled incentive securities granted to directors, officers and other employees of the Filer under the Filer's long-term incentive plan (the LTIP). They are, by their nature and pursuant to the terms of the LTIP, non-transferable and not convertible into any other security, or otherwise available to the public.
16. The holders of Filer RSUs and Filer DSUs are not entitled to receive any ongoing disclosure about the Filer; instead holders of Filer RSUs and Filer DSUs, have access to West Fraser's continuous disclosure record, which is the disclosure relevant to such holders since the Filer RSUs and Filer DSUs are cash-settled with reference to the value of West Fraser Shares. The Filer RSUs and Filer DSUs are not exercisable for West Fraser Shares, and no Filer Shares or West Fraser Shares will be issued upon exercise of the Filer RSUs or Filer DSUs.
17. Based on the registers of holders of the Filer RSUs maintained by the Filer, as of March 5, 2020, there were 71 holders of Filer RSUs residing in the following jurisdictions:
(a) 41 in Canada (representing 82.06% of the total aggregate Filer RSUs) of which,
i. three (3) reside in Alberta (representing 1.65% of the total aggregate Filer RSUs);
ii. one (1) resides in British Columbia (representing 0.60% of the total aggregate Filer RSUs);
iii. 33 reside in Ontario (representing 78.05% of the total aggregate Filer RSUs); and
iv. four (4) reside in Québec (representing 1.76% of the total aggregate Filer RSUs);
(b) 16 in the United States (representing 10.04% of the total aggregate Filer RSUs) and;
(c) 14 in other foreign jurisdictions (representing 7.90% of the total aggregate Filer RSUs).
18. Based on the registers of Filer DSUs maintained by the Filer, as of March 5, 2020, there were eight (8) holders of Filer DSUs residing in the following jurisdictions:
(a) five (5) in Canada (representing 53.87% of the total aggregate Filer DSUs) all of which reside in Ontario; and
(b) three (3) of which were in the United States (representing 46.13% of the total aggregate Filer DSUs).
The UK Filer Options
19. The UK Filer Options are incentive securities granted under the option plan of the Filer for employees of the Filer's United Kingdom subsidiary, which forms part of the LTIP. They are, by their nature, non-transferable. The holders of UK Filer Options are not entitled to receive any ongoing disclosure about the Filer. Further, holders of UK Filer Options have access to West Fraser's continuous disclosure record, which is the disclosure relevant to such holders since the UK Filer Options are now exercisable for West Fraser Shares.
20. Based on the registers of the holders of the UK Filer Options maintained by the Filer, as of March 5, 2020, there were two (2) holders in the United Kingdom holding all issued and outstanding UK Filer Options.
21. In connection with the Arrangement, additional West Fraser Shares are authorized for issuance upon exercise of the UK Filer Options.
The Filer Notes
22. The 5.75% Notes were issued pursuant to the indenture (the 5.75% Indenture) dated as of June 24, 2019 between the Filer, as issuer, and Computershare Trust Company, N.A., as trustee (the Trustee). The 6.25% Notes were issued pursuant to the indenture (the 6.25% Indenture and, together with the 5.75% Indenture, the Indentures) dated as of April 16, 2015 between the Filer, as issuer, and the Trustee. The Filer Notes are not voting nor are they convertible or exchangeable into Filer Shares (or any other equity securities).
23. The Filer Notes were issued on a private placement basis pursuant to Rule 144A under the U.S. Securities Act of 1933, as amended, to "qualified institutional buyers" (QIBs) in the United States and pursuant to National Instrument 45-106 Prospectus Exemptions (NI 45-106), section 2.3 -- Accredited Investors to Canadian purchasers, and not pursuant to a prospectus, registration statement or similar instrument that would allow sale of the Filer Notes to the general public. To the Filer's knowledge based on the Ipreo Report (as defined below), the Filer Notes are currently owned by QIBs and Accredited Investors, as defined by NI 45-106.
24. The disclosure to Canadian purchasers in the offering of Filer Notes stated that any resale of the Filer Notes would need to be in compliance with Canadian securities laws. The disclosure to U.S. purchasers in the offering of Filer Notes stated that any resale of the Filer Notes would need to be in compliance with U.S. securities laws and that the Notes could be resold to other QIBs. There are restrictions on transfer to give effect to U.S. securities laws and securities transfer legends addressing both Canadian and U.S. transfer restrictions.
25. The Filer Notes are issued in book-entry form and are represented by global certificates registered in a nominee name of The Depository Trust Company (DTC), with beneficial interests therein recorded in records maintained by DTC and its participants as intermediaries or financial institutions that hold securities on behalf of their clients.
26. In accordance with industry practice and custom, the Filer obtained a geographic survey of beneficial holders of the Filer Notes from Broadridge Financial Solutions Inc. (Broadridge) on February 26, 2021 (and on March 4, 2021 for certain United States data), which provides information as to the number of noteholders and Filer Notes in each jurisdiction of Canada, the United States and other foreign jurisdictions (the Geographic Report). Broadridge advises that its reported information is based on securityholder addresses of record identified in the files provided to it by the intermediaries or financial institutions holding Filer Notes. Further, the Geographic Report does not provide consolidated information for the Filer Notes.
27. The Geographic Report covers approximately 88.8% of the outstanding principal amount of 5.75% Notes for a total of CDN $310,953,000 and reports a total of 313 beneficial holders residing in the following jurisdictions:
(a) 17 in Canada holding 8.30% of the principal amount of the 5.75% Notes of which,
i. one (1) resides in British Columbia (representing 0.29% of the principal amount of 5.75% Notes);
ii. 16 reside in Ontario (representing 8.01% of the principal amount of 5.75% Notes);
(b) 294 in the United States holding 73.41% of the principal amount of 5.75% Notes (including 83 foreign accounts reported by U.S. brokers reporting to Broadridge for an aggregate of CDN$53,045,000); and
(c) two (2) in another foreign jurisdiction holding 7.13% of the principal amount of 5.75% Notes.
28. The Geographic Report covers approximately 72.3% of the outstanding principal amount of the 6.25% Notes for a total of CDN$227,787,000 and reports a total of 162 beneficial holders residing in the following jurisdictions:
(a) ten (10) in Canada, holding 1.73% of the principal amount of 6.25% Notes of which,
i. five (5) reside in Alberta (representing 0.016% of the principal amount of 6.25% Notes);
ii. one (1) resides in British Columbia (representing 0.006% of the principal amount of 6.25% Notes); and
iii. four (4) reside in Ontario (representing 1.706% of the principal amount of 6.25% Notes);
(b) 151 in the United States holding 70.27% of the principal amount of 6.25% Notes (including 29 foreign accounts reported by U.S. brokers reporting to Broadridge for an aggregate of CDN$49,380,000); and
(c) one (1) in another foreign jurisdiction holding 0.32% of the principal amount of 6.25% Notes.
29. As the Geographic Report does not provide data on a consolidated basis, there may be duplicated Filer Note holders in the above distribution of Filer securityholders as each holder of the 5.75% Notes and 6.25% Notes was counted as unique.
30. Broadridge has confirmed that its searches are unable to report on 100% of the geographic ownership of the Filer Notes.
31. In addition to obtaining the Geographic Report, the Filer obtained a report from Ipreo (the Ipreo Report), a financial services technology, data and analytics services provider, which provided certain proprietary information on the ownership levels of various constituencies holding the Filer Notes as of February 2021. Ipreo searches are unable to report on 100% of the ownership of the Filer Notes. Further, the information in the Ipreo Report is based on securityholders of record identified in the files provided to it by the financial institutions holding Filer Notes.
32. The Ipreo Report covers approximately 66.5% of the outstanding principal amount of the Filer Notes and reports nine (9) holders in Canada holding CDN$69,134,352, 72 holders in the United States holding CDN$329,964,919 and 12 holders in other foreign jurisdictions holding CDN$43,016,242 (holders of both 5.75% Notes and 6.25% Notes were counted once).
33. The Filer also obtained from DTC security position reports indicating the position of each financial intermediary holding Filer Notes through DTC as of February 22, 2021 (the DTC Position Reports). DTC reported on 100% of the ownership of the Filer Notes. The DTC Position Reports provide all the names of the financial intermediaries that are reported by DTC as holding the Filer Notes and cover the entire CDN $350,000,000 principal amount of the 5.75% Notes and CDN $315,000,000 principal amount of the 6.25% Notes.
34. The Filer retained Georgeson, a proxy solicitation and strategic shareholder communications service provider, to analyze the DTC Position Reports and conduct such further inquiries to confirm the number of noteholders and Filer Notes in each jurisdiction of Canada, the United States and other foreign jurisdictions.
35. To the knowledge of the Filer after diligent enquiry and based on the information contained in the DTC Position Reports, the Filer Notes are held by financial intermediaries in the following jurisdictions:
(a) 11 financial intermediaries in Canada for a total CDN$45,288,000 principal amount of Filer Notes (representing approximately 6.81% of the aggregate outstanding principal amount of Filer Notes); and
(b) 41 financial intermediaries in the United States and other foreign jurisdictions for a total CDN$619,712,000 principal amount of Filer Notes (representing approximately 93.19% of the aggregate principal amount of Filer Notes).
36. The DTC Position Reports do not provide information regarding beneficial ownership of the Filer Notes and the Filer cannot access such information or make further inquiries of DTC in this regard. As such, the Filer cannot, despite diligent enquiry, identify beneficial holders that are not covered by the Geographic Report or the Ipreo Report (or obtain information regarding the number or jurisdiction of residence of such beneficial Filer Note holders). However, even if one were to assume that all Filer Notes held by financial intermediaries in Canada were beneficially owned by holders resident in Canada, such holders would only hold approximately 4.98% of the outstanding principal amount of 5.75% Notes, 8.84% of the outstanding principal amount of 6.25% Notes and 6.81% of the aggregate principal amount of all outstanding Filer Notes.
37. Pursuant to the terms of the Indentures, upon completion of the Arrangement, the Filer made a change of control offer on March 2, 2021 to acquire all outstanding Filer Notes at 101% of the principal amount plus accrued and unpaid interest (the Tender Offer). Any Filer Notes that are not tendered to the Tender Offer will continue to remain outstanding obligations of the Filer, subject to the terms and conditions of the Indentures. If holders of not less than 90% of the aggregate principal amount of the outstanding 5.75% Notes or the outstanding 6.25% Notes validly tender to the Tender Offer, the Filer will have the right to redeem all of the 5.75% Notes or the 6.25% Notes that remain outstanding, respectively, at a purchase price equal to 101% of the principal amount plus accrued and unpaid interest. According to DTC position reports, it is the Filer's understanding that two holders deposited an aggregate of $575,000 of the 5.75% Notes (representing 0.16% of the principal amount of 5.75% Notes) and two holders deposited an aggregate of $1,117,000 of the 6.25% Notes (representing 0.35% of the principal amount of 6.25% Notes) under the Tender Offer.
38. Under the Indentures the Filer is deemed to have satisfied its financial reporting obligations if it furnishes the financial information (including MD&A) of the Filer's parent company (West Fraser). In addition, the Filer is required to provide unaudited consolidating information that explains in reasonable detail the differences between the financial statements of West Fraser and the financial statements relating to the Filer, on a standalone basis. No standalone MD&A of the Filer is required.
Total Outstanding Securityholders
39. Based on the Filer's records and the Geographic Report, it is the Filer's understanding that the Filer's securities are beneficially owned, directly or indirectly held by 556 securityholders, including:
(a) 73 in Canada, representing 13.13% of aggregate securityholders; and
(b) 483 worldwide, representing 86.87% of aggregate securityholders. Of this number, 464 are in the United States (inclusive of accounts outside of the United States reported by U.S. brokers) representing 83.45% of aggregate securityholders and 19 in other foreign jurisdictions representing 3.42% of aggregate securityholders.
40. On April 6, 2021, West Fraser announced that the Filer will redeem on May 6, 2021 all of the outstanding 5.75% Notes. The redemption will be completed under the optional redemption provisions of the 5.75% Indenture at a redemption price equal to 100% of the principal amount of the 5.75% Notes plus a make-whole premium based on the July 15, 2022 early call date together with accrued and unpaid interest to, but excluding, the redemption date. On and after the date of redemption, the 5.75% Notes will no longer be outstanding, interest thereon will cease to accrue and all rights of the holders of the 5.75% Notes will cease to exist, except for the right to receive the redemption price on the date of redemption.
41. The Filer is not required to remain a reporting issuer pursuant to the terms of the Filer RSUs, the Filer DSUs, the UK Filer Options, or the Indentures.
42. The Filer is not a reporting issuer in any jurisdiction of Canada other than the jurisdictions identified in this order. The Filer is applying for exemptive relief to cease to be a reporting issuer in all of the jurisdictions of Canada in which it is currently a reporting issuer.
43. The Filer is not in default of securities legislation in any jurisdiction.
44. The Filer has no intention to seek public financing by way of an offering of securities.
45. The Filer is not an OTC reporting issuer under Multilateral Instrument 51-105 -- Issuers Quoted in the U.S. Over-the-Counter Markets.
46. The Filer Notes are not listed on any stock exchange. The Filer Notes trade through broker-dealer networks as over-the-counter secondary market transactions; all broker-dealers who are Financial Industry Regulatory Authority (FINRA) member firms have an obligation to report over-the-counter secondary market transactions in eligible fixed income securities to FINRA's Trade Reporting and Compliance Engine (TRACE) under a set of rules approved by the SEC; after trades of the Notes are reported to TRACE, they also appear on FINRA's BondFacts and Market Data platforms, which are both accessible to the public.
47. Other than as represented in this order, no securities of the Filer, including debt securities, are traded in Canada or another country on a marketplace as defined in National Instrument 21-101 -- Marketplace Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported.
48. The Filer is not eligible to surrender its status as a reporting issuer pursuant to the simplified procedure in National Policy 11-206 -- Process for Cease to be a Reporting Issuer Applications because its outstanding securities, including debt securities, are not beneficially owned, directly or indirectly, by fewer than 15 securityholders in each of the jurisdictions of Canada and fewer than 51 securityholders in total worldwide.
49. The Filer issued a news release on March 29, 2021 specifying that the Filer had applied for the Order Sought.
50. Upon the granting of the requested exemptive relief, the Filer will not be a reporting issuer or the equivalent in any jurisdiction of Canada.
Order
The principal regulator is satisfied that the order meets the test set out in the Legislation for the principal regulator to make the order.
The decision of the principal regulator under the Legislation is that the Order Sought is granted.
DATED at Toronto on this 16th day of April, 2021.