Biomarin Pharmaceutical Inc. et al - MRRS Decision
Headnote
Rule 54-501 - Relief granted from the requirementto reconcile to Canadian GAAP certain financial statements includedin an information circular that were prepared in accordancewith U.S. GAAP
Ontario Rule Cited
Rule 54-501 Prospectus Disclosure in CertainInformation Circulars (2000), 23 OSCB 8519, section 3.1
Rule 41-501 General Prospectus Requirements (2000), 23 OSCB761, sections 9.1, 9.4; Form 41-501F1 section 8.4 and subsection8.5(2)
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ONTARIO AND ALBERTA
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
BIOMARIN PHARMACEUTICAL INC.,
AND
IN THE MATTER OF
BIOMARIN ACQUISITION (NOVA SCOTIA) COMPANY
AND IN THE MATTER OF GLYKO BIOMEDICAL LTD.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof Ontario and Alberta (the "Jurisdictions"), hasreceived an application from BioMarin Pharmaceutical Inc. ("BioMarin"),BioMarin Acquisition (Nova Scotia) Company ("BioMarin NovaScotia") and Glyko Biomedical Ltd. ("Glyko")(collectively, the "Applicant"), for a decision underthe securities legislation of the Jurisdictions (the "Legislation")that Glyko be exempted from the requirement to provide the followingdisclosure with respect to BioMarin in the Circular (as definedbelow) to be sent to Glyko Shareholders (as defined below):
(a) the requirement that historical and proforma financial statements of BioMarin prepared in accordancewith generally accepted accounting principles ("GAAP")in the United States ("U.S.") be accompanied by anote to explain and quantify the effect of material differencesbetween Canadian GAAP and U.S. GAAP that relate to measurementsand provide a reconciliation of such financial statements toCanadian GAAP;
(b) the requirement that the BioMarin auditor's report discloseany material differences in the form and content of its auditor'sreport as compared to a Canadian auditor's report and confirmingthat the auditing standards applied are substantially equivalentto Canadian generally accepted auditing standards; and
(c) the requirement that the BioMarin management'sdiscussion and analysis ("MD&A") provide a restatementof those parts of the BioMarin MD&A that would read differentlyif the BioMarin MD&A were based on statements prepared inaccordance with Canadian GAAP and the requirement that the BioMarinMD&A provide a cross-reference to the notes in the financialstatements that reconcile the differences between U.S. GAAPand Canadian GAAP.
AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this application;
AND WHEREAS the Applicant having representedto the Decision Makers that:
1. The effect of the Arrangement will be toprovide holders of common shares of Glyko ("Glyko CommonShares") other than held by dissenting shareholders (the"Dissenting Shareholders") who ultimately receivefair value for their Shares with shares of common stock of BioMarin(the "BioMarin Common Shares") in exchange for theirGlyko Common Shares. Each Glyko Shareholder will receive 0.3309BioMarin Common Shares for each Glyko Common Share held (the"Exchange Ratio"). In no event will the aggregatenumber of BioMarin Common Shares issued to Glyko Shareholdersexceed 11,367,617 BioMarin Common Shares. The Glyko Common Shareswill be transferred to and acquired by BioMarin Nova Scotia,an indirect wholly-owned subsidiary of BioMarin, such that uponcompletion of the transaction, BioMarin will own indirectlyall of the Glyko Common Shares.
2. BioMarin is a developer of enzyme therapiesto treat serious, life threatening, chronic genetic diseasesand other diseases and conditions.
3. As at December 31, 2001, BioMarin's totalassets were approximately U.S.$171.8 million and for the yearended December 31, 2001, BioMarin's revenues and net loss wereapproximately U.S.$11.7 million and U.S.$67.6 million, respectively.
4. BioMarin's principal executive office islocated at 371 Bel Marin Keys Boulevard, Suite 210, Novato,California 94949.
5. BioMarin's authorized capital consists of(i) 1,000,000 shares of preferred stock, par value US$0.001per share; and (ii) 75,000,000 shares of common stock, par valueUS$0.001 per share. As of February 15, 2002, there were no sharesof preferred stock and 52,442,902 BioMarin Common Shares issuedand outstanding.
6. The BioMarin Common Shares trade on the NasdaqNational Market and the SWX Swiss Exchange. BioMarin is currentlysubject to the reporting requirements of the United States SecuritiesExchange Act of 1934, as amended. BioMarin is not currentlya "reporting issuer" in any province or territoryof Canada, will not become a "reporting issuer" byvirtue of the Transaction and does not intend to become a "reportingissuer" in any province or territory of Canada after thecompletion of the Transaction.
7. BioMarin Nova Scotia, an indirect whollyowned subsidiary of BioMarin, was incorporated under the lawsof the Province of Nova Scotia on February 6, 2002. BioMarinNova Scotia was incorporated solely for the purpose of engagingin the Transaction.
8. BioMarin Nova Scotia's only material assetupon completion of the Transaction will be all of the issuedand outstanding Glyko Common Shares.
9. Glyko was incorporated pursuant to the CanadaBusiness Corporations Act ("CBCA") on June 26, 1992.The registered office of Glyko is 199 Bay Street, Toronto, Ontario,M5L 1A9.
10. Glyko does not have any operating activitiesor operational employees. The principal asset of Glyko is anequity position in BioMarin. As of the date hereof, Glyko holds11,367,617 BioMarin Common Shares, representing 21.68% of theoutstanding BioMarin Common Shares.
11. The BioMarin Common Shares held by Glykowere issued by BioMarin to Glyko upon the inception and initialfunding of BioMarin and upon subsequent funding and a subsequenttechnology license transfer from Glyko to BioMarin.
12. As at January 21, 2002, based upon informationprovided by the Canadian Depository for Securities Limited ("CDS")and ADP Independent Investor Communications Corporation ("IICC"),34,352,823 Glyko Common Shares were issued and outstanding toapproximately 346 share holders. Based upon information providedby CDS and IICC, the Applicant believes that 722,639 or 2.1%of the outstanding Glyko Common Shares are held beneficiallyby 168 (48.5%) shareholders of Glyko resident in Canada.
13. Glyko's authorized capital consists of anunlimited number of Glyko Common Shares. As of March 12, 2002,34,352,823 Glyko Common Shares were issued and outstanding.
14. As of March 12, 2002, 81,397 Glyko CommonShares were reserved for issuance upon the exercise of outstandingoptions ("Glyko Options") to purchase Glyko CommonShares under the 1994 Glyko stock option plan.
15. The Glyko Common Shares are listed on theToronto Stock Exchange (the "TSE") under the symbol"GBL".
16. Glyko is a "reporting issuer"or the equivalent in British Columbia, Alberta, Saskatchewan,Manitoba, Ontario, New Brunswick and Nova Scotia. To the bestof the knowledge of Glyko, Glyko is not in default of any ofthe requirements of the securities legislation of such jurisdictions.
17. Prior to the Special Meeting (as definedbelow), Glyko will apply under Section 192 of the CBCA for aninterim order (the "Interim Order") of the OntarioSuperior Court of Justice (the "Court") which orderwill specify, among other things, certain procedures and requirementsto be followed in connection with the calling and holding ofthe Special Meeting (as defined below) and the completion ofthe Arrangement.
18. A special meeting (the "Special Meeting")of the Glyko Shareholders is anticipated to be held at the endof May 2002 at which Glyko will seek the requisite Glyko Shareholderapproval (which, pursuant to the Interim Order, is expectedto be 66 2/3% of the votes attached to the Glyko Common Sharesrepresented at the Special Meeting) for a special resolutionapproving the Arrangement.
19. In connection with the Special Meeting andpursuant to the Interim Order, Glyko will mail in April 2002to each Glyko Shareholder (i) a notice of special meeting, (ii)a form of proxy, and (iii) the Circular. The Circular will beprepared in accordance with the Legislation, except with respectto any relief granted therefrom, and will contain disclosureof the Transaction and the business and affairs of each of BioMarinand Glyko. The Circular will also be prepared in accordancewith the proxy rules of the United States Securities ExchangeAct of 1934, as amended.
20. The Circular will contain the followingfinancial statements:
(a) unaudited pro forma consolidated balancesheet of BioMarin as of December 31, 2001 and unaudited proforma consolidated statements of income for the year ended December31, 2001 as if the Arrangement had occurred on January 1, 2001and a compilation report thereon, prepared in accordance withU.S. GAAP;
(b) audited annual consolidated financial statementsof BioMarin for each of the fiscal years ended December 31,2001, December 31, 2000 and December 31, 1999, together withbalance sheets as at December 31, 2001 and December 31, 2000and the auditor's report thereon, prepared in accordance withU.S. GAAP; and
(c) audited financial statements of Glyko foreach of the fiscal years ended December 31, 2001, December 31,2000 and December 31, 1999, together with balance sheets asat December 31, 2001 and December 31, 2000 and the auditor'sreport thereon, prepared in accordance with Canadian GAAP.
21. It is expected that upon consummation ofthe Arrangement or shortly thereafter the Glyko Common Shareswill be delisted from the TSE.
22. Applications will be made as required byBioMarin to the Nasdaq National Market and the SWX Swiss Exchangeto list the additional BioMarin Common Shares issuable in connectionwith the transaction.
23. Upon completion of the Arrangement, assumingthe issuance of the maximum number of BioMarin Common Sharesissuable pursuant to the Arrangement, it is expected that thebeneficial holders of BioMarin Common Shares resident in Canadawill hold approximately 1.18% of the issued and outstandingBioMarin Common Shares. BioMarin recently announced the acquisitionof Synapse Technologies Inc. ("Synapse"), a corporationexisting under the Canada Business Corporations Act. The acquisitionof Synapse closed on March 21, 2002. Upon completion of theArrangement and the acquisition of Synapse, beneficial holdersof BioMarin Common Shares will hold approximately 2.8% of theissued and outstanding BioMarin Common Shares.
24. Although BioMarin does not intend to become a reportingissuer on completion of the Transaction, if BioMarin were tobecome a reporting issuer, it would be able to satisfy its continuousdisclosure obligations using U.S. GAAP financial statementspursuant to the Legislation.
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 Makersunder the Legislation is that, Glyko be exempted from the requirementto provide the following disclosure in the Circular with respectto BioMarin:
(a) the requirement that historical and proforma financial statements of BioMarin prepared in accordancewith U.S. GAAP be accompanied by a note to explain and quantifythe effect of material differences between Canadian GAAP andU.S. GAAP that relate to measurements and provide a reconciliationof such financial statements to Canadian GAAP;
(b) the requirement that the BioMarin auditor'sreport disclose any material differences in the form and contentof its auditor's report as compared to a Canadian auditor'sreport and confirming that the auditing standards applied aresubstantially equivalent to Canadian generally accepted auditingstandards; and
(c) the requirement that the BioMarin MD&Aprovide a restatement of those parts of the BioMarin MD&Athat would read differently if the BioMarin MD&A were basedon statements prepared in accordance with Canadian GAAP andthe requirement that the BioMarin MD&A provide a cross-referenceto the notes in the financial statements that reconcile thedifferences between U.S. GAAP and Canadian GAAP.
April 25, 2002.
"Iva Vranic"