Goldie Enterprises Inc. & MagiCorp. Inc. - s. 147

WHEREAS Goldie Enterprises Inc. ("Goldie") and MagiCorp Inc. ("MagiCorp") have applied to the Ontario Securities Commission (the "Commission") for an order pursuant to Section 147 of the Act exempting Goldie from certain requirements of Item 15 of Form 32 of Ontario Regulation 1015 - General Regulation, R.R.O. 1990, as amended (the "Regulation") insofar as such requirements prescribe the inclusion of certain financial statements in the take-over bid circular prepared by Goldie in connection with its acquisition of all of the shares of MagiCorp; AND UPON considering the application and the recommendation of staff of the Commission; AND UPON Goldie and MagiCorp having represented to the Commission as follows: 1. Goldie is a company incorporated under the laws of British Columbia and its principal and registered offices are located in Vancouver. 2. Goldie has been a reporting issuer under the Securities Act (British Columbia) for more than twelve months. 3. Goldie became a reporting issuer under the Securities Act (Alberta) in November 1999 as a result of the merger of the Vancouver Stock Exchange and the Alberta Stock Exchange to form the Canadian Venture Exchange Inc. ("CDNX"). 4. Goldie was deemed to be a reporting issuer under the Act pursuant to an order of the Commission dated February 13, 2001 under subsection 83.1(1) of the Act. 5. MagiCorp is a corporation incorporated under the laws of Ontario and its principal and registered offices are located in Toronto. 6. MagiCorp is not a reporting issuer under the securities laws of any jurisdiction in Canada. MagiCorp has 29 registered common shareholders (of whom 10 are current or former employees) and 16 special warrant holders. Out of the 45 MagiCorp shareholders (including the special warrant holders), 15 reside outside Ontario. 7. Goldie and MagiCorp have entered into a letter agreement dated June 30, 2000 (as amended) pursuant to which Goldie has agreed to acquire (the "Acquisition") all of the issued and outstanding shares of MagiCorp in consideration for 39,331,678 common shares of Goldie. After giving effect to the Acquisition, the shareholders of MagiCorp will hold approximately 93% of the shares of Goldie. 8. Goldie obtained shareholder approval for the Acquisition and a number of related matters at its shareholders' meeting held in Vancouver on March 5, 2001. 9. Goldie's common shares are listed for trading on CDNX. Goldie has made application to list the common shares to be issued to shareholders of MagiCorp on CDNX. 10. As Goldie has only become a reporting issuer in Ontario on February 13, 2001, the shares of Goldie issued to the shareholders of MagiCorp will be subject to resale restrictions until February 14, 2002 in accordance with the requirements of subsection 72(5) of the Act. Accordingly, Goldie proposes to file with the Ontario Securities Commission a securities exchange take-over bid circular in connection with the Acquisition (the "Take-over Bid Circular") with the result that the first trade of the shares of Goldie issued to Ontario shareholders of MagiCorp in respect of the Acquisition will be subject to section 2.14 of Ontario Securities Commission Rule 45-501 - Prospectus Exempt Distributions. 11. The Acquisition will be a take-over bid which is exempt from the requirements of Part XX of the Securities Act pursuant to clause 93(1)(d). 12. Goldie proposes to include the following financial statements in the Take-over Bid Circular: (i) for MagiCorp: a) Balance sheets as at September 30, 2000 (unaudited), December 31, 1999 (audited), and December 31, 1998 (audited). b) Consolidated statements of income and consolidated statements of retained earnings and consolidated statements of cash flows for the nine months ended September 30, 2000 and 1999 (unaudited) and the years ended December 31, 1999 (audited), December 31, 1998 (audited), December 31, 1997 (unaudited) and December 31, 1996 (unaudited). (ii) for Goldie: a) Balance sheets as at November 30, 2000 (audited), February 29, 2000 (audited) and February 28, 1999 (audited). b) Statements of loss and deficit and statements of cash flows for the nine months ended November 30, 2000 (unaudited) and November 30, 1999 (unaudited) and the years ended February 29, 2000 (audited) and February 28, 1999 (audited). (iii) Pro forma: a) Consolidated balance sheet as at November 30, 2000 (unaudited). b) Consolidated statements of income and retained earnings for nine months ended November 30, 2000 (which combine the results of operations of MagiCorp for the nine-month period ended September 30, 2000) and for the year ended February 29, 2000 (which combine the result of operations of MagiCorp for the year ended December 31, 1999). 13. The audit report dated August 20, 1999 with respect to the 1998 financial statements of MagiCorp includes two reservations as to scope. 14. Item 15 of Form 32 of the Regulation provides that, in respect of a securities exchange take-over bid, the "information prescribed by the form of prospectus" must be included in the Take-Over Bid Circular. Moreover, Item 15 of Form 32 provides that "where the form of prospectus so requires, include the financial statements of the offeror or other issuer required to be included in the such prospectus". 15. The Acquisition is a significant probable acquisition within the meaning of Rule 41-501 of the Ontario Securities Commission (the "Rule") which meets the three tests referred to in clause 6.6(3) of the Rule. Accordingly, in addition to financial statements referred to in paragraph 12 above, the Rule requires the inclusion in the Take-Over Bid Circular of an audited income statement and statement of retained earnings and cash flows of MagiCorp for the year ended 1997 (the "Excluded Statements"). Moreover, the Rule does not permit the inclusion of reservations in an audit report in respect of financial statements which must be audited. AND UPON the Commission being satisfied that to grant this Order would not be prejudicial to the public interest; IT IS ORDERED pursuant to Section 147 of the Act that Goldie is exempt from the requirements of Item 15 of Form 32 of the Regulation in respect of the Take-Over Bid Circular insofar as such requirements require the inclusion of (i) the Excluded Statements, and (ii) an audit report without reservations in respect of the 1998 financial statements of MagiCorp. March 28, 2001. Paul Moore, Howard I. Wetston