Premier Tech Ltd. - MRRS Decision
Headnote
Mutual Reliance Review System for Exemptive Relief Applications -- exemption from valuation requirement in connection with business combination -- transaction involves subordinate voting shares and multiple voting shares -- subordinate voting shares listed on Toronto Stock Exchange -- multiple voting shares not listed for trading but convertible into subordinate voting shares on a one-for-one basis -- transaction to be approved by minority holders of subordinate voting shares -- independent board committee mandated to make recommendation on the privatization of issuer -- subordinate voting shares fair appraisal for multiple voting shares -- transaction involves arm's length negotiations with a majority shareholder resulting in a minimum purchase price of $2.75 per share -- holders of multiple voting shares will benefit from the same conditions as the holders of subordinate voting shares -- no valuation required in connection with multiple voting shares
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c. S.5, as am.,
OSC Rule 61-501 Insider Bids, Issuer Bids, Business Combinations and Related Party Transactions, s. 9.1
September 19, 2006
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
QUEBEC AND ONTARIO
(THE "JURISDICTIONS")
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR
EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
PREMIER TECH LTD.
(THE "FILER")
MRRS DECISION DOCUMENT
Background
The local securities regulatory authority or regulator (the "Decision Maker") in each of the Jurisdictions has received an application from the Filer(s) for a decision under the securities legislation of the Jurisdictions (the "Legislation") for a discretionary exemption from the valuation requirement of the Legislation (the "Requested Relief") with respect to the Transaction (as hereinafter defined).
Under the Mutual Reliance Review System for Exemptive Relief Applications
(a) the Autorité des marchés financiers is the principal regulator for this application, and
(b) this MRRS decision document evidences the decision of each Decision Maker.
Interpretation
Defined terms contained 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 Filer(s):
1. The Filer is a corporation existing under the laws of Canada and is a reporting issuer in each Jurisdiction.
2. The authorized share capital of the Filer consists of an unlimited number of Class A subordinated voting shares ("SVS"), Class B multiple voting shares ("MVS"), Class A preferred shares and Class B preferred shares. Each SVS entitles its holder to one vote and each MVS entitles its holder to ten votes. The Class A and B preferred shares carry no voting rights.
3. The MVS are convertible into SVS on a one-for-one basis.
4. The MVS and SVS carry identical rights except with respect to voting rights and convertibility. The MVS are convertible into SVS at any time at the shareholder's option. The SVS carry a limited right to be converted to MVS only in the context of a take-over bid made for the MVS (except where a bid is also made for the SVS on identical terms as to price, percentage of shares for which the bid is made and all other material aspects).
5. Only the SVS are listed on the Toronto Stock Exchange (the "TSX").
6. As of July 27, 2006, there were 15,492,695 SVS and 849,500 MVS issued and outstanding. As at the date hereof, there are no Class A or B preferred shares issued and outstanding.
7. Of the MVS outstanding, 6,500 are held by shareholders other than Gestion Bernard Bélanger Ltd. ("GBB"). Those 6,500 MVS represent less than 0.0004% of the overall equity interest in the Filer and have a total market value of approximately $16,250 (as of August 11, 2006 and based on the closing price of the SVS on the TSX) and a total value under the Transaction of approximately $18,000. Measured as of May 9, 2006, the date immediately preceding the announcement of the Transaction, the total market value of the MVS was approximately $12,220.
8. GBB is a corporation existing under the laws of Canada. It is not a reporting issuer in any jurisdiction.
9. As at July 27, 2006 GBB held 7,915,373 SVS representing approximately 51.09% of the SVS issued and outstanding (or 48.38% on a fully diluted basis) and 843,000 MVS representing approximately 99.23% of the MVS issued and outstanding.
10. Altogether, GBB holds shares in the Filer carrying 16,345,373 votes representing approximately 68.14% of the total voting rights attached to all shares of the Filer (or 65.76% on a fully diluted basis).
11. The Fonds de solidarité des travailleurs du Québec (F.T.Q.) (the "Fonds") is a joint-stock company established by special act of the Quebec National Assembly and existing under the laws of Quebec.
12. As of July 27, 2006, the Fonds held 5,205,565 SVS representing approximately 33.60% of the SVS issued and outstanding (or 31.81% on a fully diluted basis).
13. The Fonds deals at arm's length with GBB.
14. On May 11, 2006, the Filer announced that it had been advised by GBB that GBB was taking steps to obtain the financing necessary to privatize the Filer. The Filer simultaneously announced that it had been advised that GBB had entered into an agreement (the "Agreement") with the Fonds pursuant to which the Fonds agreed to sign a lock-up agreement under certain conditions (the "Lock-Up") providing an undertaking of the Fonds to deposit (or to vote in favour, as the case may be) all of its SVS as part of a possible privatization (the "Transaction") by way of take-over bid or by way of a merger proposal by GBB.
15. At a meeting held on April 27, 2006, the board of directors of the Filer established a committee of independent directors (the "Committee") made up of Messrs. Marc-Yvan Côté (Committee Chairman), Gilles Laurin, Jean-Yves Leblanc and Roger Samson. The Committee was mandated to make a recommendation with respect to any proposed privatization transaction.
16. To that end, the Committee has retained KPMG LLP to render an opinion on the fairness, from a financial perspective, of the Transaction (the "Fairness Opinion"). The Fairness Opinion will cover both the SVS and the MVS in identical fashion.
17. The costs of preparing a formal valuation of the MVS are not justified by the benefit to be gained by its preparation.
18. The approval of the minority holders of the SVS will be obtained prior to completing the Transaction.
19. Minority holders of MVS will have the right to dissent pursuant to s. 190 of the Canada Business Corporations Act should the Transaction be completed.
Decision
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 Makers under the Legislation is that the Requested Relief is granted.