MEC Holdings (Canada) Inc. - MRRS Decision
Headnote
Mutual Reliance Review System for ExemptiveRelief Applications - Issuer has only one security holder -issuer deemed to have ceased being a reporting issuer.
Subsection 1(6) of the OBCA - Issuer deemedto have ceased to be offering its securities to the public underthe Business Corporations Act (Ontario).
Ontario Statutes
Securities Act, R.S.O. 1990, c. S.5, as am.,s. 83.
Business Corporations Act, R.S.O. 1990, c. B.16,as am., s. 1(6).
IN THE MATTER OF
THE SECURITIES LEGISLATIONOF
ALBERTA, SASKATCHEWAN, ONTARIO,QUEBEC,
NOVA SCOTIA AND NEWFOUNDLAND& LABRADOR
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEWSYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
MEC HOLDINGS (CANADA) INC.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof Alberta, Saskatchewan, Ontario, Québec, Nova Scotiaand Newfoundland and Labrador (collectively, the "Jurisdictions")has received an application from MEC Holdings (Canada) Inc.("Exchangeco") for:
(i) a decision pursuant to the securitieslegislation of the Jurisdictions (the "Legislation")that Exchangeco be deemed to have ceased to be a reportingissuer under the Legislation; and
(ii) in Ontario only, an order pursuantto the Business Corporations Act (Ontario) (the "OBCA")that Exchangeco be deemed to have ceased to be offeringits securities to the public;
AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this application;
AND WHEREAS Exchangeco has representedto the Decision Makers as follows:
1. Magna Entertainment Corp. ("MEC")is a Delaware corporation and is a reporting issuer or theequivalent in every province in Canada which recognizes theconcept of reporting issuer status. The head office of MECis located in Ontario.
2. MEC acquires, develops and operates horseracetracks and related pari-mutuel wagering operations. Inaddition, MEC owns a real estate portfolio which includesgolf courses and recreational facilities.
3. The capital stock of MEC consists of twoclasses - Class A Subordinate Voting Stock (the "ClassA Shares") and Class B Stock (the "Class B Shares").Holders of the Class A Shares are entitled to one vote pershare, holders of the Class B Shares are entitled to 20 votesper share and all holders vote together as a single class,except where separate class votes are required by law.
4. MEC's authorized capital stock consistsof 310,000,000 Class A Shares and 90,000,000 Class B Shares.As of December 31, 2002 there were 48,647,831 Class A Sharesissued and outstanding and 58,466,056 Class B Shares issuedoutstanding. All of the Class B Shares are owned, directlyor indirectly, by Magna International Inc. ("Magna International")and are convertible into Class A Shares on a one-for one basis.
5. The Class A Shares are listed on the TorontoStock Exchange (the "TSX") and on the NASDAQ NationalMarket.
6. Exchangeco is a company incorporated underthe laws of the Province of Ontario. The authorized sharecapital of Exchangeco consists of two classes: common sharesand Exchangeable Shares. All of the 100 issued and outstandingcommon shares of Exchangeco are held by MEC.
7. Until 5:00 p.m. on December 30, 2002, theExchangeable Shares were listed on the TSX, at which timethey were delisted.
8. On February 14, 2000, the Decision Makersmade a decision pursuant to the Legislation that the requirementscontained in the Legislation to issue a press release andfile a report with the Decision Makers upon the occurrenceof a material change, file interim financial statements andaudited annual financial statements with the Decision Makersand deliver such statements to the security holders of Exchangeco,make an annual filing with the Decision Makers in lieu offiling an information circular and comply with insider reportingrequirements shall not apply to Exchangeco or any insiderof Exchangeco who is not otherwise an insider of MEC, subjectto certain conditions.
9. Initially, Magna International held all14,823,187 outstanding Exchangeable Shares. On March 10, 2000,Magna International distributed 10,460,859 of its ExchangeableShares to certain shareholders of Magna International in conjunctionwith the spin-off of MEC as a separate public company by MagnaInternational.
10. The Exchangeable Shares, together withtheir ancillary rights, are economically equivalent to theClass A Shares. The share conditions of the Exchangeable Sharesprovide that they may be redeemed by Exchangeco at any timeon or after October 1, 2001 upon giving 60 days notice tothe holders thereof, the consideration for which may be satisfiedwith Class A Shares on a one-for-one basis. Similarly, holdersof Exchangeable Shares have the right to tender their ExchangeableShares at any time for redemption by Exchangeco (the "RetractionRight"), the consideration for which may be satisfiedwith Class A Shares on a one-for-one basis. In either case,MEC has a call right in respect of the subject ExchangeableShares, which MEC may invoke by providing notice to Exchangecoand delivering Class A Shares to the relevant holders of ExchangeableShares on a one-for-one basis.
11. As of October 31, 2002, 13,053,120 ExchangeableShares had been exchanged for Class A Shares as a result ofholders of Exchangeable Shares having exercised their respectiveRetraction Rights, all of which Class A Shares were providedby MEC in exercising its call right in respect of the ExchangeableShares submitted for exchange.
12. On October 31, 2002, Exchangeco calledfor the redemption, to take place on December 30, 2002, ofall outstanding Exchangeable Shares other than those heldby MEC or one of MEC's subsidiaries. MEC exercised its callright in respect of all such outstanding Exchangeable Sharesto be redeemed.
13. MEC owns all of the outstanding ExchangeableShares and all of the outstanding common shares of Exchangeco.There are no other securities of Exchangeco outstanding, includingdebt securities (except for secured letters of credit outstandingwith financial institutions and payables that may be owingto commercial creditors in the ordinary course of business,the evidence of which may constitute a security).
14. No securities of Exchangeco are listedon any exchange or quoted on any market.
15. Exchangeco does not currently intend toseek public financing by way of an offering of its securities.
AND WHEREAS pursuant to the System, thisMRRS Decision Document evidences the decision of each DecisionMaker (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 Makers underthe Legislation is that Exchangeco is deemed to have ceasedto be a reporting issuer or the equivalent under the Legislation.
February 7, 2003.
"Paul M. Moore" "KerryD. Adams"
AND IT IS HEREBY ORDERED by the OntarioSecurities Commission pursuant to subsection 1(6) of the OBCAthat Exchangeco is deemed to have ceased to be offering itssecurities to the public for the purposes of the OBCA.
February 7, 2003.
"Paul M. Moore" "KerryD. Adams"