PrimeWest Oil and Gas Corp. - MRRS Decision
Headnote
Mutual Reliance Review System for ExemptiveRelief Applications - Amendment to previous MRRS decision documentgranting an exemption from continuous disclosure requirements.Previous exemption granted to allow reporting issuer oil/gascompany to file continuous disclosure of parent oil/gas trust.Conditions of previous exemption included that oil/gas companycould only issue exchangeable shares to certain designated persons.Amendment granted to this condition to allow oil/gas companyto issue exchangeable shares to other persons in connectionwith management internalization transaction.
Applicable Ontario Statutes
Securities Act, R.S.O., c. S., as am., ss.
IN THE MATTER OF
THE SECURITIES LEGISLATIONOF
THE PROVINCES OF
ALBERTA AND ONTARIO
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEWSYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
PRIMEWEST OIL AND GAS CORP.
MRRS DECISION DOCUMENT
1. WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") ineach of Alberta and Ontario (the "Jurisdictions")issued a decision (the "Original Decision") on June18, 2001 pursuant to the securities legislation of the Jurisdictions(the "Legislation") that the requirements containedin the Legislation:
1.1 with respect to PrimeWest Oil and GasCorp. ("PrimeWest Oil"), to issue a press releaseand file a report with the Decision Makers in the Jurisdictionsupon the occurrence of a material change, file interim financialstatements and audited financial statements with the DecisionMakers in the Jurisdictions and deliver such statementsto the securityholders of PrimeWest Oil, file an informationcircular or make an annual filing with the Decision Makersin the Jurisdictions in lieu of filing an information circular,file an annual information form and provide management'sdiscussion and analysis of financial condition and resultsof operations (the "Continuous Disclosure Obligations"),shall not apply to PrimeWest Oil; and
1.2 to comply with the requirements of theLegislation in the Jurisdictions to file insider reportsand insider trading reports (the "Insider ReportingRequirements"), shall not apply to any insider of PrimeWestOil who is not also an insider of PrimeWest Energy Trust(the "Trust");
2. AND WHEREAS PrimeWest Energy Inc. ("PrimeWestEnergy"), the successor to PrimeWest Oil, has appliedto the Decision Makers for a decision pursuant to the Legislationvarying the Original Decision by amending one of the conditionsto the relief from the Continuous Disclosure Obligations;
3. AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Alberta Securities Commission is the principal regulatorfor this application;
4. AND WHEREAS PrimeWest Energy has representedto the Decision Makers that:
4.1 PrimeWest Energy was incorporated underthe Business Corporations Act (Alberta) on March 4, 1996and was amalgamated with PrimeWest Oil, PrimeWest ResourcesLtd. and PrimeWest Royalty Corp. on January 1, 2002 andcontinued as PrimeWest Energy;
4.2 the authorized capital of PrimeWestEnergy consists of an unlimited number of Class A commonshares ("Class A Common Shares"), an unlimitednumber of Class B common shares ("Class B Common Shares")and an unlimited number of Class A exchangeable shares ("ClassA Exchangeable Shares"), of which as at September 16,2002 there were 8,900,000 Class A Common Shares issued andoutstanding and owned by the Trust, 1,100,000 Class B CommonShares issued and outstanding and owned by PrimeWest ManagementInc., the current manager of the Trust (the "Manager")and 3,863,024 Class A Exchangeable Shares;
4.3 the Class A Exchangeable Shares arelisted and posted for trading on TSX Inc.;
4.4 PrimeWest Energy is the successor toPrimeWest Oil and as such is bound by the Original Decision;
4.5 the Class A Exchangeable Shares of PrimeWestEnergy are the equivalent of the PrimeWest Oil exchangeableshares to which the Original Decision pertained;
4.6 the Trust has proposed to internalizeits management by (i) acquiring all of the issued and outstandingshares of the Manager of the Trust for a cash payment of$13.1 million and the issuance of Class A Exchangeable Shareswhich, based upon an agreed exchange ratio, will be exchangeablefor approximately 491,000 Trust Units, (ii) assuming anobligation of the Manager to pay amounts to certain seniorofficers of PrimeWest Energy and the Manager in connectionwith the termination of the management incentive plan ofthe Manager in the amount of $1.5 million, (iii) creatinga retention bonus pool valued at $3.5 million payable inClass A Exchangeable Shares over a period of five yearsafter the completion of the purchase of the shares of theManager, and (iv) related transactions (collectively, the"Management Internalization Transaction").
4.7 the Management Internalization Transactionis subject to the approval of unitholders of the Trust andholders of the Class A Exchangeable Shares of PrimeWestEnergy at a special meeting to be held November 4, 2002;
4.8 the Original Decision prohibits theissuance of exchangeable shares to anyone other than theshareholders of Cypress Energy Inc. ("Cypress"),the target of a securities exchange take-over bid to whichthe Original Decision was directed;
4.9 the Management Internalization Transaction,if approved, will result in additional Class A ExchangeableShares being issued to other than the former shareholdersof Cypress; and
4.10 absent the variation requested PrimeWestEnergy will be unable to both comply with the Original Decisionand complete the Management Internalization Transaction;
5. AND WHEREAS pursuant to the System, thisMRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");
6. AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to makethe Decision has been met;
7. THE DECISION of the Decision Makers pursuantto the Legislation is that the Original Decision be variedby replacing paragraph 6.1.6 of the Original Decision with:
"The Filer does not issue any sharesto the public other than the Exchangeable Shares or othershares of the Filer which have substantially similar attributesto those of the Exchangeable Shares."
with the result that the Original Decisionas varied by this Decision will be in the form attached asSchedule "A".
October 25, 2002.
"Glenda A. Campbell" "EricT. Spink"
SCHEDULE "A"
IN THE MATTER OF
THE SECURITIES LEGISLATIONOF
THE PROVINCES OF
ALBERTA AND ONTARIO
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEWSYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
PRIMEWEST OIL AND GAS CORP.
MRRS DECISION DOCUMENT
1. WHEREAS the Canadian Securities Regulatoryauthority or regulator (the "Decision Maker") ineach of Alberta and Ontario (the "Jurisdictions")has received an application from PrimeWest Oil and Gas Corp.(the "Filer"), for a decision pursuant to the securitieslegislation of the Jurisdictions (the "Legislation")that the requirements contained in the Legislation:
1.1 with respect to the Filer, to issuea press release and file a report with the Decision Makersin the Jurisdictions upon the occurrence of a material change,file interim financial statements and audited financialstatements with the Decision Makers in the Jurisdictionsand deliver such statements to the securityholders of theFiler, file an information circular or make an annual filingwith the Decision Makers in the Jurisdictions in lieu offiling an information circular, file an annual informationform and provide management's discussion and analysis offinancial condition and results of operations (the "ContinuousDisclosure Obligations"), shall not apply to the Filer;
1.2 to comply with the requirements of theLegislation in the Jurisdictions to file insider reportsand insider trading reports (the "Insider ReportingRequirements"), shall not apply to any insider of theFiler who is not also an insider of PrimeWest Energy Trust.
2. AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Alberta Securities Commission is the principal regulatorfor this Application;
3. AND WHEREAS the Filer has represented tothe Decision Makers that:
3.1 The Filer was formed pursuant to Articlesof Amalgamation under the Business Corporations Act (Alberta)on March 29, 2001;
3.2 The authorized capital of the Filerconsists of an unlimited number of Class A Common Shares,an unlimited number of Class B Common Shares and an unlimitednumber of Exchangeable Shares;
3.3 There is currently 100 Class A CommonShares issued and outstanding held by PrimeWest Energy Trust("PWT") and 1 Class B Common Share issued andoutstanding held by PrimeWest Energy Inc. ("PWE").In addition, 5,440,000 Exchangeable Shares of the Filerwere issued to the public in connection with the Offer (asherein defined);
3.4 Cypress Energy Inc. was formed pursuantto Articles of Amalgamation under the Business CorporationsAct (Alberta) on September 1, 1999;
3.5 The authorized capital of Cypress consistsof an unlimited number of Class A Common Shares and an unlimitednumber of Class B Common Shares. There is currently issuedand outstanding 41,889,353 Class A Common Shares and 558,000Class B Common Shares of Cypress;
3.6 Each Exchangeable Share of the Filerentitles the holder to receive one PrimeWest Unit (as definedherein) and an additional number of PrimeWest Units calculatedbased on the amount of any subsequent distribution in respectof the PrimeWest Units;
3.7 Cypress is a reporting issuer underthe securities legislation in all provinces of Canada whichhas such a concept;
3.8 The Class A Common Shares of Cypresswere listed on The Toronto Stock Exchange under the symbol"CYZ.A" and have since been delisted;
3.9 The Class B Common Shares of Cypresswere listed on The Alberta Stock Exchange (now The CanadianVenture Exchange) under the symbol "CYZ.B" andhave since been delisted;
3.10 PWT is an open-end investment trustestablished under the laws of Alberta pursuant to a Declarationof Trust dated August 2, 1996 with its head office locatedin Calgary, Alberta. The Trust Company of Bank of Montrealis the trustee of PWT;
3.11 PWT is authorized to issue an unlimitednumber of transferable redeemable trust units (the "PrimeWestUnits") of which there were 100,562,826 PrimeWest Unitsoutstanding as at March 31, 2001;
3.12 PWT became a reporting issuer or theequivalent in each of the provinces of Canada upon obtaininga receipt for its prospectus dated October 3, 1996 and isnot in default of the Legislation;
3.13 The PrimeWest Units are listed on TheToronto Stock Exchange;
3.14 The Filer made an offer dated March6, 2001 (the "Offer") to purchase all of the issuedand outstanding Class A Common Shares and Class B CommonShares of Cypress. The Offer expired on March 28, 2001 havingbeen accepted by the holders of more than 97% of the ClassA Common Shares and 97% of the Class B Common Shares;
3.15 On March 29, 2001 the Filer becamethe sole shareholder of Cypress following the compulsoryacquisition of all of the Class A Common Shares and ClassB Common Shares of Cypress that had not previously beenacquired by the Filer pursuant to the Offer;
3.16 On March 29, 2001 the Filer amalgamatedwith Cypress pursuant to Articles of Amalgamation underthe provisions of the Business Corporations Act (Alberta);
3.17 The Exchangeable Shares provide a holderwith a security having economic, ownership and voting rightswhich are, as nearly as practicable, equivalent to thoseof PrimeWest Units;
3.18 Neither the Filer nor Cypress haveany securities outstanding other than the securities heldby PWT and PWE and the Exchangeable Shares; and
3.19 The Filer has applied to list the ExchangeableShares on The Toronto Stock Exchange.
4. AND WHEREAS pursuant to the System, thisDecision document confirms the determination of the DecisionMakers (the "Decision").
5. AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to makethe Decision has been met.
6. THE DECISION of the Decision Makers pursuantto the Legislation is that:
6.1 the Continuous Disclosure Obligationsshall not apply to the Filer, provided that at the timethat any such requirement would otherwise apply:
6.1.1 PWT is a reporting issuer underthe Legislation of the Jurisdiction;
6.1.2 PWT shall concurrently send to allholders of Exchangeable Shares resident in the Jurisdictionsall disclosure material furnished to holders of PrimeWestUnits pursuant to the Continuous Disclosure Obligations,including, but not limited to, copies of its annual reportand all proxy solicitation materials;
6.1.3 PWT shall comply with the requirementsof The Toronto Stock Exchange (or such other principalstock exchange on which the PrimeWest Units are then listed)in respect of making public disclosure of material informationon a timely basis and forthwith issues in the Jurisdictionsand files with the Decision Maker any press release thatdiscloses a material change in PWT's affairs;
6.1.4 the Filer shall issue a press releaseand file a report with the Decision Makers upon the occurrenceof a material change in respect of the affairs of theFiler that are not material changes in the affairs ofPWT;
6.1.5 PWT together with PWE shall remainthe direct or indirect beneficial owners of all of theissued and outstanding voting securities of the Filer;and
6.1.6 The Filer does not issue any sharesto the public other than the Exchangeable Shares or othershares of the Filer which have substantially similar attributesto those of the Exchangeable Shares.
6.2 the Insider Reporting Requirements shallnot apply to any insider of the Filer who is not also aninsider of the PWT.
June 18, 2001.
"Agnes Lau"