Vicwest Income Fund - MRRS Decision
Headnote
MI 11-102 and NP 11-203 -- Application for exemption from issuer bid requirements -- issuer proposing to acquire securities of its own issue as part of a negotiated settlement with former securityholder -- securities currently held in escrow -- securities to be released to former securityholder and then returned to issuer for cancellation -- consideration paid to former securityholder would represent, on a per escrowed security basis, a substantial discount to the market price of the securities on the TSX -- ownership dispute and terms of escrow publicly disclosed in issuer's public disclosures -- issuer and former securityholder not "related parties" -- relief from issuer bid requirements granted.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 93 to 99.1, 104(2)(c).
Multilateral Instrument 11-102 Passport System.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions.
June 17, 2008
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ONTARIO
(the "Jurisdiction")
AND
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF
VICWEST INCOME FUND
(the "Filer")
MRRS DECISION DOCUMENT
Background
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the "Legislation") exempting the acquisition of units ("Units") of the Filer from Escrow (as described below) from the issuer bid requirements under the Legislation (the "Exemption Sought").
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission (the "OSC") is the principal regulator for this application, and
(b) the Filer has provided notice that Section 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon Territory, Northwest Territories and Nunavut (collectively with the Jurisdiction, the "Jurisdictions").
Interpretation
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning in this decision unless they are otherwise defined in this decision.
Representations
This decision is based on the following facts represented by the Filer:
1. The Filer is an unincorporated, open-ended limited purpose investment trust established under the laws of the Province of Ontario pursuant to an amended and restated declaration of trust dated June 30, 2005.
2. The registered and principal office of the Filer is 1296 South Service Road West, Oakville, Ontario, L6L 5T7.
3. The Filer is a reporting issuer in each of the Jurisdictions.
4. The Filer is not in default of the securities legislation in any Jurisdiction.
5. The Units are listed and posted for trading through the facilities of the Toronto Stock Exchange (the "TSX") under the symbol "VIC.UN." The Filer currently has outstanding 18,675,564 Units.
6. The Filer was established pursuant to a statutory arrangement (the "Arrangement") of Vicwest Corporation completed on July 1, 2005, pursuant to which the Filer acquired all of the common shares in the capital of Vicwest Corporation then issued and outstanding in exchange for Units.
7. Vicwest Corporation had earlier undergone a financial restructuring, under the terms of which 5% of the total common shares issued under the restructuring plan were to be made available to the former holder of Vicwest Corporation preferred shares (the "Former Preferred Shareholder"). Vicwest Corporation contested the Former Preferred Shareholder's right to such an ownership interest, and accordingly 956,096 common shares in the capital of Vicwest Corporation were placed into escrow (the "Escrow"). Under the Arrangement these common shares were exchanged for Units (the "Escrowed Units"). The Escrowed Units, and the distributions related to same (and interest earned thereon), are being held in escrow pending resolution of the ownership dispute.
8. The fact of this ownership dispute, and the terms of the Escrow, have been publicly disclosed in the Filer's public disclosures (and were similarly disclosed by Vicwest Corporation in its disclosures prior to the completion of the Arrangement). The Filer's public filings have consistently disclosed that in the event and to the extent that the ownership dispute is resolved in the Filer's favour, the Escrowed Units would be returned to the Filer for cancellation.
9. The Filer and the Former Preferred Shareholder have agreed, subject to the receipt of necessary regulatory approval, to resolve the ownership dispute, pursuant to which resolution the Escrowed Units would be released to the Former Preferred Shareholder and then returned to the Filer for cancellation. The consideration paid to the Former Preferred Shareholder under such resolution would be comprised of cash and would represent, on a per Escrowed Unit basis, a very substantial discount to the market price of the Units on the TSX.
10. The Filer and the Former Preferred Shareholder are not and have not been "related parties" as such term is defined in Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions.
11. The acquisition of the Units from Escrow is an issuer bid as defined in the Legislation and is not an exempt issuer bid under any of the exemptions contained in the Legislation.
Decision
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted.