Saskatchewan Wheat Pool - MRRS Decision

MRRS Decision

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications - Issuer exempt from the requirement toprepare and file comparative financial statements in connectionwith a reorganization accounted for on a "fresh start"basis, provided that the Issuer prepare and file comparativefinancial statements that are segregated to disclose financialstatements on a pre and post reorganization basis.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am.s. 83. ss. 77, 80(b)(iii).

Applicable Ontario Rules Cited

OSC Rule 52-501 - Financial Statements - Parts2.1, 2.2(1)(a),2.2(2), 4.1.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN, MANITOBA,

ONTARIO, QUEBEC, NOVA SCOTIA,AND

NEWFOUNDLAND AND LABRADOR

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

SASKATCHEWAN WHEAT POOL

 

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,Quebec, Nova Scotia and Newfoundland and Labrador (the "Jurisdictions")has received an application from Saskatchewan Wheat Pool (the"Filer") for a decision pursuant to the securitieslegislation of the Jurisdictions (the "Legislation")that certain requirements contained in the Legislation requiringthe Filer to file its comparative interim financial statementsfor the fiscal periods ending (or ended, as the case may be)April 30, 2003, October 31, 2003, January 31, 2004 and April30, 2004, respectively, and to file its comparative annual statementsfor the years ending July 31, 2003 and July 31, 2004, respectively,shall not apply to the Filer;

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Saskatchewan Financial Services Commission, Securities Division,is the principal regulator for this application;

AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 Definitions or in Quebec Commission Notice 14-101;

AND WHEREAS the Filer has representedto each Decision Maker that:

1. The Filer is organized under the laws ofthe Province of Saskatchewan, and is a reporting issuer ineach of the Jurisdictions that provides for a reporting issuerregime and is not on the list of defaulting reporting issuersmaintained by the Jurisdictions;

2. The Filer completed a consensual capitalrestructuring that resulted in $105 million of bank debt and$300 million principal amount of publicly held Medium TermNotes (as defined below) being exchanged for $150 millionof a new series of senior subordinated notes, $255 millionof a new series of convertible subordinated notes and 22,938,037class "B" non-voting shares ("Class B Shares")in the capital of the Filer (the "Reorganization").As part of the Reorganization, the Filer arranged new bankoperating and term loan facilities, which replaced the existingbank facilities and which will be used to finance operationsand the Filer's securitization requirements. In connectionwith the Reorganization the Filer implemented certain corporategovernance changes, including the appointment of four independentdirectors and establishment of a lead director position. TheReorganization was approved by the holders of the Medium TermNotes (as defined below) at a meeting on February 3, 2003and subsequently closed on March 14, 2003;

3. Under the Reorganization, the Filer exchangedand cancelled its outstanding 7.25% notes due February 24,2004 and 6.60% notes due July 18, 2007 (collectively, the"Medium Term Notes") for the issuance of (i) twonewly created series of notes designated as the 8% seniorsubordinated notes due November 29, 2008 (the "SeniorSubordinated Notes") and the convertible subordinatednotes due November 30, 2008 (the "Convertible SubordinatedNotes") issued under a trust indenture and supplementdated March 14, 2003; and (ii) Class B Shares;

4. Under the Reorganization, for each $1,000principal amount of Medium Term Notes and each $1,000 of theexchanged bank debt (an aggregate of $405 million of MediumTerm Notes and bank debt), holders received $370.37 of SeniorSubordinated Notes, $629.63 of Convertible Subordinated Notes,and 56.637128 Class B Shares (rounded down to the nearestwhole share). In total, the banks and the holders of the MediumTerm Notes received 38 per cent of the outstanding Class BShares or 22,938,037 Class B Shares;

5. The Class B Shares were listed and postedfor trading on the Toronto Stock Exchange on March 14, 2003;

6. The total Class B Shares issued and outstandingafter the issuance was 60,363,256 shares;

7. The holders of the Convertible SubordinatedNotes can convert such notes into Class B Shares at any timeprior to the maturity date. Each $1,000 of principal amountof Convertible Subordinated Notes is convertible at the holder'soption into approximately 2,227 Class B Shares. At maturity,the Filer has the right to convert, subject to certain conditionsand certain adjustments, the Convertible Subordinated Notesinto a single class of voting, common shares of the Filerthat represents 90% of such class of shares, provided thatany conversions by holders of such Notes into Class B Sharesprior to maturity shall proportionally reduce this 90% conversionratio;

8. The Filer accounted for the implementationof the Reorganization as at January 31, 2003 on a "freshstart" basis in accordance with the guidelines set forthby the Canadian Institute of Chartered Accountants (the "CICA"),which contemplates that figures for a prior period may beexcluded from a company's financial statements where thatcompany has undergone a financial reorganization resultingin a substantial realignment of its non-equity and equityinterests;

9. The balance sheet required to be includedin the interim financial statements for the periods ending(or ended, as the case may be) April 30, 2003 and October31, 2003 and the balance sheet required to be included inthe annual financial statements for the year ending July 31,2003 of the Filer will not be comparable to the balance sheetsas at April 30, 2002, July 31, 2002 and October 31, 2002 dueto the Reorganization;

10. The statements of earnings and retainedearnings and statements of cash flows required to be includedin the interim statements for April 30, 2003, October 31,2003, January 31, 2004 and April 30, 2004 and the statementsof earnings and retained earnings and statements of cash flowsrequired to be included in the annual financial statementsfor the years ending July 31, 2003 and July 31, 2004 of theFiler will not be comparable to such statements for the equivalentperiod of the prior year due to the Reorganization;

11. The Filer will prepare and file with theJurisdictions interim financial statements for the periodended April 30, 2003, which will be comprised of (a) a balancesheet as at April 30, 2003 presented on a comparative basiswith a "fresh start" opening balance sheet as atJanuary 31, 2003 with note disclosure for the disclosure itemsspecified by CICA Handbook Section 1625, and (b) comparativestatements of earnings and retained earning and statementsof cash flows presented on a columnar basis to reflect pre-and post-Reorganization results as follows: (x) under thepost-Reorganization column, the three month period ended April30, 2003, and (y) under the pre-Reorganization columns, thesix month period ended January 31, 2003, the three month periodended April 30, 2002 and the nine month period ended April30, 2002;

12. The Filer will prepare and file with theJurisdictions annual financial statements for the year endingJuly 31, 2003, which will be comprised of (a) a balance sheetas at July 31, 2003, presented on a comparative basis witha "fresh start" opening balance sheet as at January31, 2003 with note disclosure for the disclosure items specifiedby CICA Handbook Section 1625, and (b) comparative statementsof earnings and retained earnings and statements of cash flowspresented on a columnar basis to reflect pre- and post-Reorganizationresults as follows: (x) under the post-Reorganization column,the six month period ended July 31, 2003, and (y) under thepre-Reorganization columns, the six month period ended January31, 2003 and the twelve month period ended July 31, 2002;

13. The Filer will prepare and file with theJurisdictions interim financial statements for the three monthperiod ended October 31, 2003 which will be comprised of (a)a balance sheet as at October 31, 2003 presented on a comparativebasis with a balance sheet as at the Filer's July 31, 2003year end, with note disclosure for the disclosure items specifiedby CICA Handbook Section 1625, and (b) comparative statementsof earnings and retained earnings and statements of cash flowspresented on a columnar basis to reflect pre- and post-Reorganizationresults as follows: (x) under the post-Reorganization column,the three month period ended October 31, 2003, and (y) underthe pre-Reorganization column, the three month period endedOctober 31, 2002;

14. The Filer will prepare and file with theJurisdictions interim financial statements for the six monthperiod ended January 31, 2004 which will be comprised of (a)a balance sheet as at January 31, 2004 presented on a comparativebasis with a "fresh start" opening balance sheetas at January 31, 2003 and a balance sheet as at the Filer'sJuly 31, 2003 year end, with note disclosure for the disclosureitems specified by CICA Handbook Section 1625, and (b) comparativestatements of earnings and retained earnings and statementsof cash flows presented on a columnar basis to reflect pre-and post-Reorganization results as follows: (x) under thepost-Reorganization columns, the three month and six monthperiods ended January 31, 2004, and (y) under the pre-Reorganizationcolumns, the three and six month periods ended January 31,2003;

15. The Filer will prepare and file with theJurisdictions interim financial statements for the nine monthperiod ended April 30, 2004 which will be comprised of (a)a balance sheet as at April 30, 2004 presented on a comparativebasis with a balance sheet as of April 30, 2003 and a balancesheet as at the Filer's July 31, 2003 year end, with notedisclosure for the disclosure items specified by CICA HandbookSection 1625, and (b) comparative statements of earnings andretained earnings and statements of cash flows presented ona columnar basis to reflect pre- and post-Reorganization resultsas follows: (x) under the post-Reorganization columns, thethree month period ended April 30, 2004, the three month periodended April 30, 2003 and the nine month period ended April30, 2004, and (y) under the pre-Reorganization columns, thesix month period ended January 31, 2003;

16. The Filer will prepare and file with theJurisdictions annual financial statements for the year endedJuly 31, 2004 which will be comprised of (a) a balance sheetas at July 31, 2004 presented on a comparative basis withthe Filer's balance sheet as at July 31, 2003 with note disclosurefor the disclosure items specified by CICA Handbook Section1625, and (b) comparative statements of earnings and retainedearnings and statements of cash flows presented on a columnarbasis to reflect pre- and post-Reorganization results as follows:(x) under the post-Reorganization columns, the year endedJuly 31, 2004 and the six month period ended July 31, 2003,and (y) under the pre-Reorganization column, the six monthperiod ended January 31, 2003;

17. The Filer will provide information relatingto the Filer's Reorganization both in its interim financialstatements for the periods ended April 30, 2003 and October31, 2003 and January 31, 2004 and April 30, 2004 and its annualfinancial statements for the years ended July 31, 2003 andJuly 31, 2004, as well as in its management discussion andanalysis of financial condition for the corresponding periods;and

18. Failure to present the financial informationof the Filer for the periods before and after the Reorganizationon a segregated columnar basis as described in the precedingparagraphs could subject the financial statements of the Filerto misinterpretation by investors;

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

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers underthe Legislation is that the Filer is exempt from the applicablerequirements of the Legislation requiring the Filer (i) to prepareand file comparative interim financial statements for the periodsending (or ended, as the case may be) April 30, 2003 and October31, 2003 and January 31, 2004 and April 30, 2004, respectively;and (ii) prepare and file comparative annual financial statementsfor the years ending July 31, 2003 and July 31, 2004, respectively,provided that:

1. The Filer prepares and files with the Jurisdictionsinterim financial statements with the Jurisdictions for theperiod ended April 30, 2003, which will be comprised of (a)a balance sheet as at April 30, 2003 presented on a comparativebasis with a "fresh start" opening balance sheetas at January 31, 2003 with note disclosure for the disclosureitems specified by CICA Handbook Section 1625, and (b) comparativestatements of earnings and retained earning and statementsof cash flows presented on a columnar basis to reflect pre-and post-Reorganization results as follows: (x) under thepost-Reorganization column, the three month period ended April30, 2003, and (y) under the pre-Reorganization columns, thesix month period ended January 31, 2003, the three month periodended April 30, 2002 and the nine month period ended April30, 2002;

2. The Filer prepares and files with the Jurisdictionsannual financial statements for the year ended July 31, 2003,which will be comprised of (a) a balance sheet as at July31, 2003, presented on a comparative basis with a "freshstart" opening balance sheet as at January 31, 2003 withnote disclosure for the disclosure items specified by CICAHandbook Section 1625, and (b) comparative statements of earningsand retained earnings and statements of cash flows presentedon a columnar basis to reflect pre- and post-Reorganizationresults as follows: (x) under the post-Reorganization column,the six month period ended July 31, 2003, and (y) under thepre-Reorganization columns, the six month period ended January31, 2003 and the twelve month period ended July 31, 2002;

3. The Filer prepares and files with the Jurisdictionsinterim financial statements for the three month period endedOctober 31, 2003 which will be comprised of (a) a balancesheet as at October 31, 2003 presented on a comparative basiswith a balance sheet as at the Filer's July 31, 2003 yearend, with note disclosure for the disclosure items specifiedby CICA Handbook Section 1625, and (b) comparative statementsof earnings and retained earnings and statements of cash flowspresented on a columnar basis to reflect pre- and post-Reorganizationresults as follows: (x) under the post-Reorganization column,the three month period ended October 31, 2003, and (y) underthe pre-Reorganization column, the three month period endedOctober 31, 2002;

4. The Filer prepares and files with the Jurisdictionsinterim financial statements for the six month period endedJanuary 31, 2004 which will be comprised of (a) a balancesheet as at January 31, 2004 presented on a comparative basiswith a "fresh start" opening balance sheet as aJanuary 31, 2003 and a balance sheet as at the Filer's July31, 2003 year end, with note disclosure for the disclosureitems specified by CICA Handbook Section 1625, and (b) comparativestatements of earnings and retained earnings and statementsof cash flows presented on a columnar basis to reflect pre-and post-Reorganization results as follows: (x) under thepost-Reorganization columns, the three month and six monthperiods ended January 31, 2004, and (y) under the pre-Reorganizationcolumns, the three and six month periods ended January 31,2003;

5. The Filer prepares and files with the Jurisdictionsinterim financial statements for the nine month period endedApril 30, 2004 which will be comprised of (a) a balance sheetas at April 30, 2004 presented on a comparative basis witha balance sheet as at April 30, 2003 and a balance sheet asat the Filer's July 31, 2003 year end, with note disclosurefor the disclosure items specified by CICA Handbook Section1625, and (b) comparative statements of earnings and retainedearnings and statements of cash flows presented on a columnarbasis to reflect pre- and post-Reorganization results as follows:(x) under the post-Reorganization columns, the three monthperiod ended April 30, 2004, the three month period endedApril 30, 2003 and the nine month period ended April 30, 2004,and (y) under the pre-Reorganization columns, the six monthperiod ended January 31, 2003;

6. The Filer prepares and files with the Jurisdictionsannual financial statements for the year ended July 31, 2004which will be comprised of (a) a balance sheet as at July31, 2004 presented on a comparative basis with the Filer'sbalance sheet as at July 31, 2003 with note disclosure forthe disclosure items specified by CICA Handbook Section 1625,and (b) comparative statements of earnings and retained earningsand statements of cash flows presented on a columnar basisto reflect pre- and post-Reorganization results as follows:(x) under the post-Reorganization columns, the year endedJuly 31, 2004 and the six month period ended July 31, 2003,and (y) under the pre-Reorganization column, the six monthperiod ended January 31, 2003; and

7. The Filer provides information relatingto the Filer's Reorganization both in its interim financialstatement for the periods ended April 30, 2003 and October31, 2003, January 31, 2004 and April 30, 2004, and its annualfinancial statements for the years ended July 31, 2003 andJuly 31, 2004, as well as in its management discussion andanalysis of financial condition for the corresponding periods.

June 25, 2003.

"David Wild"