International Forest Products Limited - MRRS Decision
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - Relief from the requirement to provide identicalconsideration to all offeree shareholders - shareholders of offeree resident in the United States of America and holdinga small number of shares to receive cash instead of shares.
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., subsections 97(1) and 104(2)(c).
IN THE MATTER OF
THE SECURITIES LEGISLATION OF BRITISH COLUMBIA,
ALBERTA, SASKATCHEWAN, MANITOBA, ONTARIO,
QUÉBEC, NOVA SCOTIA AND NEWFOUNDLAND
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
INTERNATIONAL FOREST PRODUCTS LIMITED
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of BritishColumbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, Nova Scotia and Newfoundland (the "Jurisdictions")has received an application from International Forest Products Limited ("Interfor") for a decision under the securitieslegislation of the Jurisdictions (the "Legislation") that the requirement contained in the Legislation to offer holders of thesame class of securities identical consideration (the "Identical Consideration Requirement"), shall not apply inconnection with Interfor's offer (the "Offer") to purchase all of the issued and outstanding common shares (the "PrimexShares") of Primex Forest Products Ltd. ("Primex"), not owned by Interfor or its affiliates, insofar as it relates to the U.S.Holders (as defined below);
AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the "System"),the British Columbia Securities Commission is the principal regulator for this application;
AND WHEREAS Interfor has represented to the Decision Makers that:
1. Interfor is a company continued by amalgamation under the laws of British Columbia with its head office inVancouver, British Columbia; Interfor is engaged in the business of logging and sawmilling and is a producerof wood products;
2. Interfor is a reporting issuer or the equivalent under the securities legislation in each province of Canada andis not in default of any requirement of such legislation;
3. the authorized capital of Interfor consists of 100,000,000 Class "A" subordinate voting shares (the "Interfor AShares"), 1,700,000 Class "B" common shares (the "Interfor Common Shares") and 5,000,000 preferenceshares of which there were 31,066,262 Interfor A Shares, 1,015,779 Interfor Common Shares and nopreference shares issued and outstanding as at December 31, 2000;
4. the Interfor A Shares are listed and posted for trading on The Toronto Stock Exchange (the "TSE");
5. Primex is a company incorporated under the laws of British Columbia with its head office in Delta, BritishColumbia; Primex is engaged in the business of sawmilling and is a producer of wood products;
6. Primex is a reporting issuer in each of British Columbia and Ontario and is not in default of any requirementof the Legislation of British Columbia or Ontario;
7. based on publicly available information, there were 16,439,028 Primex Shares issued and outstanding as atMarch 12, 2001;
8. the Primex Shares are listed and posted for trading on the TSE;
9. on March 30, 2001, Interfor made the Offer; under the Offer, any holder of Primex Shares (a "PrimexShareholder") who accepts the Offer will receive, at the Primex Shareholder's election, for each Primex Sharevalidly tendered under the Offer, either $6.65 in cash (the "Cash Alternative"), 1.5647 Interfor A Shares (the"Share Alternative") or any combination of cash and Interfor A Shares such that the total consideration to bereceived for each Primex Share is $6.65, valuing each Interfor A Share at $4.25 (the "Split Alternative"), exceptthat the maximum number of Interfor A Shares to be issued under the Offer is limited to 15% of the totalconsideration to be paid by Interfor under the Offer;
10. based on the Primex Shareholder list, there are four Primex Shareholders who are resident in the United States(the "U.S. Holders") holding 139,800 Primex Shares, which constitutes 0.85% of the total issued andoutstanding Primex Shares;
11. the Interfor A Shares issuable under the Offer have not been and will not be registered or otherwise qualifiedfor distribution under the applicable securities legislation in the United States (the "U.S. Law"); accordingly,the delivery of Interfor A Shares to U.S. Holders under the Share Alternative or Split Alternative may constitutea violation of U.S. Law;
12. although Interfor is eligible to make use of the multijurisdictional disclosure system for Canadian issuersadopted by the United States Securities and Exchange Commission, it is of the view that the time and expenserequired to obtain registration under the U.S. Law and to obtain "blue sky" clearance from applicable statesecurities regulators regarding the Interfor A Shares issuable under the Share Alternative or Split Alternativeto U.S. Holders would be unduly onerous; the maximum number of Interfor A Shares that could be issued toU.S. Holders is approximately 32,000 Interfor A Shares which, as of the date of the Offer, would have a marketvalue of approximately $136,000;
13. the U.S. Holders who elect the Split Alternative or Share Alternative under the Offer will be deemed to haveelected the Cash Alternative; and
14. the Offer will be made in compliance with the Legislation, except to the extent that exemptive relief is granted;
AND WHEREAS under the System, this MRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");
AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that providesthe Decision Maker with the jurisdiction to make the Decision has been met;
THE DECISION of the Decision Makers under the Legislation is that Interfor is exempt from the IdenticalConsideration Requirement insofar as the U.S. Holders who accept the Offer will be deemed to have accepted the CashAlternative.
April 30, 2001.
"Derek E. Patterson"