Shiningbank Energy Income Fund - MRRS Decision
IN THE MATTER OF
THE SECURITIES LEGISLATION
OF ALBERTA, BRITISH COLUMBIA AND ONTARIO
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
SHININGBANK ENERGY INCOME FUND,
923720 ALBERTA INC. AND IONIC ENERGY INC.
MRRS DECISION DOCUMENT
1. WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of BritishColumbia, Alberta, and Ontario (the "Jurisdictions") has received an application from Shiningbank EnergyIncome Fund ("Shiningbank") and 923720 Alberta Inc. ("Acquireco") for a decision under the securitieslegislation of the Jurisdictions (the "Legislation") exempting Shiningbank and Acquireco from the requirementcontained in the Legislation to offer holders of a class of securities subject to a take-over bid identicalconsideration (the "Identical Consideration Requirement") in connection with an offer to purchase the commonshares of Ionic Energy Inc. ("Ionic");
2. AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the"System"), the Alberta Securities Commission is the principal regulator for this application;
3. AND WHEREAS Shiningbank and Acquireco have represented to the Decision Makers that:
3.1 Shiningbank is a trust organized under the laws of the Province of Alberta;
3.2 the head office of Shiningbank is in Calgary, Alberta;
3.3 Shiningbank is a reporting issuer in each of the Jurisdictions;
3.4 Shiningbank is authorized to issue up to 300,000,000 units ("Shiningbank Units");
3.5 as of March 12, 2001, there were 19,703,712 Shiningbank Units outstanding;
3.6 the Shiningbank Units are listed and posted for trading on The Toronto Stock Exchange (the "TSE");
3.7 Shiningbank is not in default of any requirement under the Legislation;
3.8 Acquireco is a corporation incorporated under the Business Corporations Act (Alberta);
3.9 Acquireco is a wholly-owned subsidiary of Shiningbank;
3.10 Ionic is a corporation incorporated under the Business Corporations Act (Alberta);
3.11 the head office of Ionic is in Calgary, Alberta;
3.12 Ionic is a reporting issuer in each of the Jurisdictions;
3.13 the authorized capital of Ionic includes an unlimited number of common shares ("Ionic Shares");
3.14 as of March 8, 2001, there were 24,803,843 Ionic Shares outstanding;
3.15 the Ionic Shares are listed and posted for trading on the TSE;
3.16 to the knowledge of Shiningbank, Ionic is not in default of any requirement under the Legislation;
3.17 Shiningbank and Acquireco have made a take-over bid for all of the Ionic Shares currently outstandingor issuable upon the exercise of outstanding options (the "Bid");
3.18 under the Bid, the holders of Ionic Shares may elect to receive 0.306 of a Shiningbank Unit or $5.10in cash for each Ionic Share;
3.19 a maximum of $45,000,000 is payable as consideration under the Bid;
3.20 to the best information of Shiningbank, there are three registered holders of Ionic Shares (the "U.S.Shareholders") resident in the United States of America (the "United States");
3.21 to the best information of Shiningbank, the U.S. Shareholders currently hold a total of 2,134,800 IonicShares, representing approximately 8.6% of the total number of outstanding Ionic Shares;
3.22 Shiningbank has reason to believe that certain of the U.S. Shareholders or persons holding IonicShares beneficially through the U.S. Shareholders may sell some or all of the Ionic Shares held bythem prior to the expiry of the Bid;
3.23 any Shiningbank Units which might be issued under the Bid to the U.S. Shareholders will not beregistered under the Securities Act of 1933 in the United States. Accordingly, the delivery ofShiningbank Units to the U.S. Shareholders without further action by Shiningbank may constitute aviolation of the laws of the United States;
3.24 Shiningbank is eligible to use the multi-jurisdictional disclosure system adopted by the United States.However, if Shiningbank delivered Shiningbank Units to the U.S. Shareholders under the Bid it wouldbecome subject to the Investment Company Act in the United States;
3.25 compliance with the Investment Company Act would require changes to Shiningbank's trust indentureand business operations and would result in significant ongoing obligations;
3.26 Shiningbank proposes to deal with any Shiningbank Units issuable to the U.S. Shareholders underthe Bid in the following manner:
3.26.1 if the total number of Shiningbank Units does not exceed 2% of the currently outstandingnumber of Shiningbank Units, Shiningbank will deliver them to the depository for the Bid (the"Depository"). The Depository will then pool and sell the Shiningbank Units on the TSE onbehalf of the U.S. Shareholders. Immediately following such sale, the Depository will providethe applicable U.S. Shareholders with their respective share of the proceeds of the sale, lessany commissions and withholding taxes; or
3.26.2 if the total number of Shiningbank Units exceeds 2% of the currently outstanding number ofShiningbank Units, Shiningbank will deliver them to the Depository. The Depository will thenpool and sell the Shiningbank Units through one or more investment dealers, arranged forby Shiningbank, to available purchasers on a best efforts basis. Immediately following suchsale, the Depository will provide the applicable U.S. Shareholders with their respective shareof the proceeds of the sale, less any commissions and withholding taxes;
3.27 any sale of Shiningbank Units described in paragraph 3.26 will be completed within five trading daysof the date that Shiningbank takes up the Ionic Shares tendered by the applicable U.S. Shareholdersunder the Bid;
3.28 any sale of Shiningbank Units described in paragraph 3.26 will be done in a manner intended tomaximize the consideration to be received from the sale by the applicable U.S. Shareholders andminimize any adverse impact of the sale on the market for the Shiningbank Units;
3.29 except to the extent that relief from the Identical Consideration Requirement is granted herein, the Bidis being made in compliance with the requirements under the Legislation concerning take-over bids;
4. AND WHEREAS under the System, this MRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");
5. AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that providesthe Decision Maker with the jurisdiction to make the Decision has been met;
6. THE DECISION of the Decision Makers under the Legislation is that, in connection with the Bid, Shiningbankand Acquireco are exempt from the Identical Consideration Requirement insofar as U.S. Shareholders whowould otherwise receive Shiningbank Units under the Bid receive instead cash proceeds from the sale of thoseShiningbank Units in accordance with the procedures set out in paragraph 3.26.
April 4, 2001.
"Eric T. Spink" "Thomas G. Cooke"