Superior Plus Income Fund and Superior Plus Inc. - MRRS Decision
Headnote
Mutual Reliance Review System for Exemptive Relief Applications -- Filers exempt from from the requirement to include certain financial statements in the Business Acquisition Report to be filed by the Filers in connection with an acquisition which was completed on October 19, 2005 on the condition that the Filers incorporate by reference the Prospectus Financial Statements in the BAR
Rules cited
National Instrument 51-102 Continuous Disclosure Obligations
National Instrument 44-101 Short Form Prospectus Distributions
Multilateral Instrument 11-101 Principal Regulator System
Citation: Superior Plus Income Fund and Superior Plus Inc., 2005 ABASC 991
December 16, 2005
IN THE MATTER OF
THE SECURITIES LEGISLATION
OF ALBERTA AND ONTARIO (THE "JURISDICTIONS")
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
SUPERIOR PLUS INCOME FUND AND
SUPERIOR PLUS INC. (THE "FILERS")
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 Filers for a decision under the securities legislation of the Jurisdictions (the "Legislation") exempting the Filers from the requirement to include certain financial statements in the Business Acquisition Report (the "BAR") to be filed by the Filers in connection with an acquisition which was completed on October 19, 2005 on the condition that the Filers incorporate by reference the Prospectus Financial Statements (as hereinafter defined) in the BAR (the "Requested Relief").
Principal Regulator System
Under Multilateral Instrument 11-101 Principal Regulator System ("MI 11-101") and the Mutual Reliance Review System for Exemptive Relief Applications
(a) the Alberta Securities Commission is the principal regulator for the Filers,
(b) the Filers are relying on the exemption in Part 3 of MI 11-101 in all of the Provinces in Canada except Ontario, and
(c) 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 Filers:
The Applicants
The Fund
1. Superior Plus Income Fund (the "Fund") is a limited purpose, unincorporated trust established under the laws of the Province of Alberta by a Declaration of Trust made as of August 2, 1996, as amended and restated on October 7, 2003 with its head and registered office located in Calgary, Alberta.
2. The Fund does not conduct active business operations, but rather, it distributes to its unitholders the income it receives from Superior Plus Inc. ("Superior").
3. The Fund holds all of the outstanding equity securities of Superior.
4. The trust units of the Fund trade on the Toronto Stock Exchange (the "TSX") under the trading symbol "SPF.UN". The Fund also has Series 1 and Series 2, 8% Convertible Unsecured Subordinated Debentures outstanding, that trade on the TSX under the trading symbols "SPF.DB" and "SPF.DB.A", respectively, Series 1, 5.75% Convertible Unsecured Subordinated Debentures outstanding that trade on the TSX under the trading symbol "SPF.DB.B" and Series 1, 5.85% Convertible Unsecured Subordinated Debentures outstanding that trade on the TSX under the trading symbol "SPF.DB.C ".
5. The Fund is a reporting issuer, where such status exists, in all of the provinces and territories of Canada.
6. To its knowledge, the Fund is not in default of any of the requirements of the applicable securities legislation in any of the provinces or territories in which it is a reporting issuer.
Superior
7. Superior was incorporated under the provisions of Part 1 of the Companies Act, 1934 by letter patent dated July 24, 1951 as Superior Propane Limited and was continued under the Canada Business Corporations Act on June 30, 1978.
8. Superior carries on business through five operating divisions: Superior Propane, a distributor of propane, related products and services; ERCO Worldwide, a supplier of chemicals and technology to the pulp and paper and water treatment industries; Winroc, a distributor of walls and ceilings construction products in North America; Superior Energy Management which provides natural gas supply services, predominantly to commercial and industrial markets in Ontario and Quebec, and JW Aluminum Company, a manufacturer of specialty, flat-rolled aluminum products, primarily serving the heating, ventilation and air-conditioning, building and construction and flexible packaging end-use markets.
9. Superior is authorized to issue an unlimited number of Class A common shares, Class B common shares and preferred shares. Currently there are 22.9 million Class A Common Shares, 22.9 million Class B Common Shares and no preferred shares issued and outstanding. All of the outstanding Common Shares of Superior are owned by the Fund.
10. Superior is also authorized to issue an unlimited amount of Shareholder Notes pursuant to an amended and restated note indenture between Superior and CIBC Mellon Trust Company of Canada dated October 7, 2003. Currently there is approximately $1.469 billion aggregate principal amount of Shareholder Notes issued and outstanding, all registered in the name of the Fund.
11. Superior has undertaken to file all continuous disclosure documents as though it were a reporting issuer in all of the provinces of Canada that have such a concept, subject to certain exceptions, as part of an application under the Mutual Reliance Review System ("MRRS") for which an MRRS decision document was received on February 23, 2001. The decision document relieves Superior from the 12 month reporting issuer requirement under National Instrument 44-101 - Short Form Prospectus Distributions ("NI 44-101") and National Instrument 44-102 - Shelf Distributions.
12. To its knowledge, Superior is not in default of any of the requirements of the applicable securities legislation in any of the provinces in which it files such continuous disclosure documents.
13. As a consequence of Superior's undertaking, it is also required to file a BAR in connection with the Acquisition (as hereinafter defined).
The Acquisition
14. On October 19, 2005 the Fund completed the indirect acquisition of all of the issued and outstanding shares of JW Aluminum Holding Company ("JWA") through the Fund's indirect wholly-owned subsidiary Superior Plus US Holdings Inc. (the "Acquisition").
15. The Acquisition was partially financed by the Fund's public offering of 6,215,000 Subscription Receipts and $75 million of 5.85% Extendible Convertible Unsecured Subordinated Debentures (the "Offering") made pursuant to a (final) short form prospectus dated October 7, 2005 (the "Prospectus").
16. After the Acquisition, JWA became one of the five operating divisions of Superior's business, operating under the division name JW Aluminum Company. The JW Aluminum Company division is not Superior's primary business.
The Prospectus Financial Statement Requirements
17. NI 44-101 sets forth the financial statements that are required to be included in a short form prospectus if an issuer is proposing to make a significant probable acquisition (the "Prospectus Financial Statement Requirements").
18. Using the significance tests set forth in Section 1.2 of NI 44-101, the Acquisition was determined to be significant at the 20-40% level.
19. In compliance with the requirements of Section 4.4 of NI 44-101, the Prospectus contained the following financial statements relating to the Acquisition:
(a) the audited consolidated financial statements of JWA for the year ended December 31, 2004 and the periods from December 5, 2003 through to December 31, 2003 and January 1, 2003 through to December 4, 2003 (the "Prospectus Annual Financial Statements");
(b) the unaudited consolidated financial statements of JWA as of June 30, 2005 and December 31, 2004 and the six months ended June 30, 2005 and 2004 (the "Prospectus Interim Financial Statements"); and
(c) the unaudited pro forma consolidated balance sheet of the Fund as at June 30, 2005 and the pro forma unaudited consolidated statements of net earnings for the six months ended June 30, 2005 and for the year ended December 31, 2004 (the "Prospectus Pro Forma Financial Statements", the Prospectus Pro Forma Financial Statements, Prospectus Interim Financial Statements and the Prospectus Annual Financial Statements being collectively referred to herein as the "Prospectus Financial Statements").
20. All material facts in respect of JWA and the Acquisition at the time the Prospectus was filed, including the Prospectus Financial Statements, were provided in the Prospectus. To the knowledge of the Fund and Superior since the time the Prospectus was filed on October 7, 2005, there has not been any change in the business or affairs of JWA that is material and adverse to the Fund or Superior.
The Business Acquisition Report Financial Statement Requirements
21. Pursuant to the requirements of Part 8 of NI 51-102 the Fund and Superior are required to file a BAR relating to the Acquisition within 75 days after the date of the Acquisition.
22. Using the significance tests set forth in Section 8.3 of NI 51-102, the Acquisition was determined to be significant at the 20-40% level.
23. To comply with the requirements of Section 8.4 of NI 51-102, the Fund and Superior are required to include the following financial statements in the BAR:
(a) audited annual financial statements for the year ended December 31, 2004 prepared in compliance with Section 8.4(1) of NI 51-102 (the "BAR Annual Financial Statements");
(b) unaudited financial statements of JWA for the nine months ended September 30, 2005 and 2004 prepared in compliance with Section 8.4(2) of NI 51-102 (the "BAR Interim Financial Statements"); and
(c) an unaudited pro forma consolidated balance sheet of the Fund or Superior, as the case may be, as at September 30, 2005 and the pro forma unaudited consolidated statements of net earnings for the nine months ended September 30, 2005 and for the year ended December 31, 2004 prepared in compliance with Section 8.4(3) of NI 51-102 (the "BAR Pro Forma Financial Statements", the BAR Pro Forma Financial Statements, BAR Interim Financial Statements and the BAR Annual Financial Statements being collectively referred to herein as the "BAR Financial Statements").
Decision
The Decision Makers being satisfied that they have the jurisdiction to make this decision and that the relevant test under the Legislation has been met.
The decision of the Decision Makers under the Legislation is that the Requested Relief is granted, provided that the Filers incorporate by reference the Prospectus Financial Statements in the BAR and provided that Superior will not account for the Acquisition as continuity of interests.