Atlantic Power Corporation
Headnote
Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief from the formal issuer bid requirements in connection with purchases by a cross-listed issuer of its shares on published markets in the U.S. as part of normal course issuer bids implemented from time to time and conducted through the facilities of the TSX in reliance on the designated exchange exemption -- the trading volume of the cross-listed issuer on U.S. markets is significant and greater than the trading volume of such issuer on the TSX -- requested relief granted, subject to conditions, including that the bid is made in compliance with applicable U.S. securities laws and any applicable by-laws, rules, regulations or policies of the published market through which the purchases are carried out, the purchases form part of an issuer bid made in the normal course through the facilities of the TSX, purchases only occur in compliance with Part 6 (Order Protection) of National Instrument 23-101 Trading Rules, purchases under a bid do not, when aggregated with the total of all other purchases in the preceding 12-month period, exceed 10% of the public float at the time the purchases are made, and the requested relief apply only to the acquisition of shares pursuant to a bid commenced within 36 months of the date of the decision.
Applicable Legislative Provisions
National Instrument 62-104 Take-Over Bids and Issuer Bids, Part 2 and s. 6.1.
September 27, 2018
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 ATLANTIC POWER CORPORATION (the Filer)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that the requirements contained in the Legislation relating to issuer bids (the Issuer Bid Requirements) shall not apply to purchases of the Filer's common shares (the Shares) made by the Filer through the facilities of the New York Stock Exchange (the NYSE) and other trading systems (collectively with the NYSE, the U.S. Markets) based in the United States of America (the U.S.) as part of an issuer bid made in the normal course through the facilities of the Toronto Stock Exchange (the TSX) that the Filer may implement from time to time (such bids, the Normal Course Issuer Bids, and such exemption, the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission 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 is intended to be relied upon in Alberta, British Columbia, Saskatchewan, Manitoba, Quebec, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, the Yukon, the Northwest Territories, and Nunavut.
Interpretation
Terms defined in National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined.
Representations
This decision is based on the following facts represented by the Filer:
1. The Filer validly exists under the Business Corporations Act (British Columbia) and has its registered office in Vancouver, British Columbia and its principal executive office in Dedham, Massachusetts, U.S.
2. The Filer is a reporting issuer in all of the provinces and territories of Canada, and is not in default of any requirements of the securities legislation of any of the provinces and territories of Canada.
3. The Filer is also a registrant with the U.S. Securities and Exchange Commission (the SEC) and is subject to the requirements of the United States Securities Exchange Act of 1934 (the Exchange Act).
4. The authorized capital of the Filer consists of an unlimited number of Shares. As at September 26, 2018, the Filer had 111,666,941 Shares issued and outstanding.
5. The Shares are listed and posted for trading on the TSX under the trading symbol "ATP", and on the NYSE under the trading symbol "AT".
6. On December 20, 2017, the Filer announced that the TSX had authorized it to make a normal course issuer bid (the Current NCIB), for the 12-month period ending December 28, 2018, to purchase up to 11,308,946 Shares, representing approximately 10% of the Filer's public float of Shares as of the date specified in the Notice of Intention to Make a Normal Course Issuer Bid (the Current Notice) filed with the TSX. The Current Notice specifies that purchases under the Current NCIB will be made through the facilities of the TSX or other Canadian designated exchanges and published marketplaces, and the NYSE or other designated U.S. exchanges and published marketplaces, in accordance with, and as permitted by, the TSX and Applicable U.S. Rules (as defined below), as applicable.
7. Purchases under issuer bids made in the normal course through the facilities of the TSX are, and will be, conducted in reliance upon the exemption from the Issuer Bid Requirements set out in subsection 4.8(2) of National Instrument 62-104 Take-Over Bids and Issuer Bids (NI 62-104, and such exemption, the Designated Exchange Exemption). The Designated Exchange Exemption provides that an issuer bid made in the normal course through the facilities of a designated exchange is exempt from the Issuer Bid Requirements if the bid is made in accordance with the bylaws, rules, regulations and policies of that exchange. The TSX is a designated exchange for the purposes of the Designated Exchange Exemption. The TSX's rules governing the conduct of normal course issuer bids are set out in sections 628 to 629.3 of Part VI of the TSX Company Manual (the TSX NCIB Rules). The TSX NCIB Rules permit a listed issuer to acquire, over a 12-month period commencing on the date specified in the Notice of Intention to Make a Normal Course Issuer Bid, up to the greater of (a) 10% of the public float on the date of acceptance of the Notice of Intention to Make a Normal Course Issuer Bid by the TSX, or (b) 5% of such class of securities issued and outstanding on the date of acceptance of the Notice of Intention to Make a Normal Course Issuer Bid by the TSX.
8. Purchases under issuer bids made in the normal course through the U.S. Markets and alternative trading systems in Canada are, and will be, conducted in reliance upon the exemption from the Issuer Bid Requirements set out in subsection 4.8(3) of NI 62-104 (the Other Published Markets Exemption). The Other Published Markets Exemption provides that an issuer bid made in the normal course on a published market, other than a designated exchange, is exempt from the Issuer Bid Requirements if, among other things, the bid is for not more than 5% of the outstanding securities of a class of securities of the issuer, and the aggregate number of securities acquired in reliance on the Other Published Markets Exemption by the issuer and any person acting jointly or in concert with the issuer within any 12-month period does not exceed 5% of the securities of that class outstanding at the beginning of the 12-month period.
9. For the 12-month period ended July 31, 2018, an aggregate of 106,676,593 Shares were traded over published markets in Canada, the U.S. and Europe, with trading volumes having occurred as follows:
(a) 13,275,693 Shares (or approximately 11.44% of aggregate trading volume in North America) over the facilities of the TSX;
(b) 16,288,998 Shares (or approximately 15.27% of aggregate trading volume in North America) over the facilities of the NYSE;
(c) 77,088,514 Shares (or approximately 72.28% of aggregate trading volume in North America) on U.S. Markets other than the NYSE; and
(d) 23,388 Shares on markets in the European Union.
10. The Filer's trading volume on the TSX for the 12-month periods ended July 31, 2018, July 31, 2017 and July 31, 2016, represented approximately 11.44%, 12.64% and 12.92%, respectively, of the aggregate trading volume of the Shares in North America.
11. As of September 26, 2018, the Filer has purchased 5,780,598 Shares pursuant to the Current NCIB. Of those 5,780,598 Shares, 5,760,498 Shares were purchased over the U.S. Markets, 20,000 Shares were purchased on the TSX, and 100 Shares were purchased on other published markets in Canada other than the TSX.
12. As a substantial number of Shares have historically traded through the U.S. Markets (approximately 87.55% of the aggregate trading volume for the 12-month period ended July 31, 2018), the Filer wishes to have the ability to continue to make repurchases under the Current NCIB and any Normal Course Issuer Bids that may be implemented by the Filer on the NYSE (such repurchases, the Proposed Bids) in excess of the maximum allowable in reliance on the Other Published Markets Exemption, if the market price thereon (having regard to applicable foreign exchange rates) would result in the Filer being able to acquire the Shares at a favourable cost relative to the market price of the Shares on the TSX at the relevant time.
13. The Proposed Bids will be effected in accordance with the Exchange Act, the U.S. Securities Act of 1933, and the rules of the SEC made pursuant thereto, including the safe harbour provided by Rule 10b-18 under the Exchange Act and any applicable by-laws, rules, regulations or policies of the U.S. published market through which the purchases are carried out (collectively, the Applicable U.S. Rules).
14. Applicable U.S. Rules require that, in respect of purchases by an issuer of its own securities over U.S. Markets: (a) all purchases made during a single trading day must be conducted through a single broker or dealer; (b) purchases cannot be effected during the last 30 minutes before the close of the primary trading session in the principal market for the Shares, being the NYSE; (c) purchases must be made at a price that does not exceed the higher of the highest published independent bid and the last transaction price reported on the consolidated system for securities listed on the NYSE; and (d) in any given day, the issuer cannot purchase more than 25% of its average daily trading volume across all U.S. Markets over the four calendar weeks preceding the week in which an issuer repurchase is effected.
15. Purchases of Shares by the Filer of up to 10% of the public float through the facilities of U.S. Markets are permitted under the Applicable U.S. Rules.
16. The Filer believes that the Proposed Bids are in the best interests of the Filer.
17. The purchase of Shares under the Proposed Bids will not adversely affect the Filer or the rights of any of the Filer's security holders and they will not materially affect control of the Filer.
18. No other exemptions exist under the Legislation that would permit the Filer to continue to make purchases pursuant to the Proposed Bids through the U.S. Markets on an exempt basis once the Filer has purchased, within a 12-month period, 5% of the outstanding Shares in reliance on the Other Published Markets Exemption.
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 provided that:
(a) the Proposed Bids are permitted under the Applicable U.S. Rules, and are established and conducted in accordance and compliance with the Applicable U.S. Rules;
(b) the Notice of Intention to Make a Normal Course Issuer Bid accepted by the TSX in respect of any Normal Course Issuer Bid that may be implemented by the Filer will specifically contemplate that purchases under such bid will also be effected through the U.S. Markets;
(c) purchases of Shares under a Proposed Bid in reliance on this decision shall only be made:
(i) in compliance with Part 6 (Order Protection) of National Instrument 23-101 Trading Rules; and
(ii) at a price which is not higher than the price of the last standard trading unit of Shares purchased;
(d) the Exemption Sought apply only to the acquisition of Shares by the Filer pursuant to a Proposed Bid commenced within 36 months of the date of this decision;
(e) prior to purchasing Shares under a Proposed Bid in reliance on this decision, the Filer issues and files a press release setting out the terms of the Exemption Sought and the conditions applicable thereto; and
(f) purchases under a Proposed Bid do not, when aggregated with the total of all other purchases in the preceding 12-month period, whether in reliance on the Other Published Markets Exemption, the Designated Exchange Exemption and/or this decision, exceed 10% of the public float of the Shares at the time the purchases are made.