Lone Pine Resources Inc.
Headnote
National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions -- Relief from prospectus requirement in connection with the use of electronic roadshow materials -- cross-border offering of securities -- Compliance with US offering rules leads to non-compliance with Canadian regime -- Relief required as use of electronic roadshow materials constitutes a distribution requiring compliance with prospectus requirement -- Relief subject to conditions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 53, 74.
Citation: Lone Pine Resources Inc., Re, 2011 ABASC 233
April 15, 2011
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA AND ONTARIO
(THE JURISDICTIONS)
AND
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF
LONE PINE RESOURCES INC.
(THE FILER)
DECISION
Background
The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting from the prospectus requirement the unrestricted posting of "electronic roadshow" materials on the internet websites of one or more commercial services, such as www.retailroadshow.com or www.netroadshow.com, during the period (the Waiting Period) between the issuance of a receipt for a preliminary prospectus and the issuance of a receipt for a (final) prospectus (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Alberta Securities Commission is the principal regulator for this application;
(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 each of British Columbia, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador (the Passport Jurisdictions); and
(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Interpretation
Terms defined in National Instrument 14-101 Definitions or in MI 11-102 have the same meaning in this decision, unless otherwise defined herein.
Representations
This decision is based on the following facts and representations made by the Filer:
1. The Filer was incorporated under the laws of the state of Delaware on September 30, 2010.
2. The Filer's principal office is located in Calgary, Alberta.
3. The Filer intends to conduct an initial public offering (the IPO) of shares of its common stock (Common Stock) on a "cross-border" basis both in Canada and in the United States.
4. The Filer has to date filed, in respect of the IPO, in order to:
(a) register the Common Stock under the United States Securities Act of 1933, as amended, a registration statement with the United States Securities and Exchange Commission (the SEC) on December 13, 2010, and amendments thereto on each of January 31, 2011, March 8, 2011 and April 8, 2011; and
(b) qualify the distribution of the shares of Common Stock offered in the IPO (the Offered Shares) under:
(i) the Legislation, a preliminary base PREP prospectus dated February 22, 2011, an amended and restated preliminary base PREP prospectus dated March 14, 2011 and a further amended and restated preliminary base PREP prospectus dated April 14, 2011; and
(ii) the securities legislation of the Passport Jurisdictions, a preliminary base PREP prospectus dated April 14, 2011.
5. The Filer and the underwriters of the IPO wish to use electronic roadshow materials (Website Materials) in the marketing of the IPO in Canada, as has become typical for initial public offerings in the United States.
6. Compliance with U.S. federal securities law respecting initial public offerings requires that the Filer either make any such materials used in connection with the IPO in the United States available without restriction, or file them with the SEC on its Electronic Data Gathering, Analysis and Retrieval System (EDGAR), which has the same effect of affording unrestricted access.
7. The Filer understands that the SEC is of the view that making documents "available without restriction" means that no restrictions on access or viewing, such as password requirements, may be imposed, including with respect to persons outside the United States.
8. Affording unrestricted access to Website Materials during the Waiting Period is, however, contrary to the prospectus requirement and the restrictions on permissible marketing activities during the Waiting Period, such that the Legislation would require that access to Website Materials be controlled by the Filer or the underwriters by such means as password protection and other measures, as suggested by National Policy 47-201 Trading Securities Using the Internet and Other Electronic Means.
9. The Filer and the underwriters of the IPO wish to carry out the IPO in a manner that is typical for initial public offerings in the United States (and consistent with U.S. federal securities law) by posting Website Materials on the internet websites of one or more commercial services, such as www.retailroadshow.com or www.netroadshow.com, without password or other access restrictions.
10. As the Legislation does not permit Website Materials to be made generally available to prospective purchasers in Canada without restriction during the Waiting Period, the Filer and the underwriters of the IPO cannot carry out the IPO in Canada in a manner that is typical for initial public offerings in the United States unless the Exemption Sought is granted.
11. Website Materials will contain a statement that they do not contain all of the information in the preliminary prospectus for the IPO, including any amendments, or the final prospectus for the IPO, as supplemented and including any amendments (the Final Prospectus), and that prospective purchasers of Offered Shares should review all such documents, in addition to Website Materials, for complete information regarding the Offered Shares.
12. Website Materials will be fair and balanced.
13. Website Materials will contain a hyperlink to the documents referred to in paragraph 11 when such documents are filed.
14. Any amendment to the preliminary prospectus for the IPO that is filed after the date of the decision granting the Exemption Sought, and the Final Prospectus, will state that purchasers of Offered Shares in each Canadian jurisdiction in which the Final Prospectus is filed and a receipt therefor is issued (or is deemed to have been issued) will have a contractual right of action for any misrepresentation in Website Materials against the Filer and the Canadian underwriters who sign the Final Prospectus.
15. At least one underwriter that signs any further amendment to the preliminary prospectus for the IPO and the Final Prospectus will be registered in each Canadian jurisdiction in which such document is filed.
16. A Canadian purchaser of Offered Shares will only be able to purchase Offered Shares through an underwriter that is registered in the purchaser's Canadian jurisdiction of residence, unless an exemption from the dealer registration requirement is available.
17. The Filer acknowledges that the Exemption Sought relates only to the unrestricted posting of Website Materials on the internet websites of one or more commercial services such as www.retailroadshow.com or www.netroadshow.com, and not in respect of the preliminary base PREP prospectus for the IPO, including any amendments, or the Final Prospectus.
18. The Filer is not in default of the Legislation or the securities legislation of any of the Passport Jurisdictions.
Decision
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that:
(a) any amendment to the preliminary prospectus for the IPO that is filed after the date of this decision, and the Final Prospectus, will state that purchasers of Offered Shares in each Canadian jurisdiction in which the Final Prospectus is filed and a receipt therefor is issued (or is deemed to have been issued) will have a contractual right of action for any misrepresentation in Website Materials against the Filer and the Canadian underwriters who sign the Final Prospectus, in substantially the following form:
We may make available certain materials describing the offering (Website Materials) on the websites of one or more commercial services, such as www.retailroadshow.com or www.netroadshow.com under the heading "Lone Pine Resources Inc.", during the period prior to obtaining a receipt for the final base PREP prospectus relating to this offering (the Final Prospectus) from the securities regulatory authorities in the Canadian offering jurisdictions. In order to give purchasers in the Canadian offering jurisdictions the same unrestricted access to Website Materials as is provided to United States purchasers in respect of "electronic roadshow" materials used in the marketing of the offering in the United States, we have applied for and obtained, in a decision dated April •, 2011, exemptive relief from or on behalf the securities regulatory authorities in each of the Canadian offering jurisdictions. Pursuant to the terms of that exemptive relief, we and each of the Canadian underwriters signing the certificate contained in the Final Prospectus have agreed that, in the event that Website Materials contained any untrue statement of a material fact or omitted to state a material fact required to be stated or necessary to make any statement therein not misleading in the light of the circumstances in which it was made (a misrepresentation), a purchaser resident in a Canadian offering jurisdiction who purchases our common stock under the Final Prospectus during the period of distribution shall have, without regard to whether the purchaser relied on the misrepresentation, rights against us and each Canadian underwriter with respect to such misrepresentation equivalent to the rights under section 203 of the Securities Act (Alberta) or the comparable provision of the securities legislation of the Canadian offering jurisdiction where the purchaser is resident, as the case may be, as if the misrepresentation were contained in the Final Prospectus.
(b) Website Materials will not include information that compares the Filer to one or more other issuers (Comparables) unless the Comparables are also included in the preliminary prospectus for the IPO, including any amendments, and the Final Prospectus.
For the Commission: