Shaw Communication Inc. & Moffat Communications Ltd. - MRRS Decision
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - take-over bid exempted from requirement inlegislation that consideration offered under bid must be at least equal to and in the same form as consideration offeredin any purchase not generally available and made within the 90-day period immediately preceding the take-over bid.
Applicable Ontario Statute
Securities Act, R.S.O. 1990, c.S.5, as am., ss. 94(5)(a) and 104(2)(c).
IN THE MATTER OF
THE SECURITIES LEGISLATION
OF ALBERTA, BRITISH COLUMBIA, SASKATCHEWAN,
MANITOBA, ONTARIO, QUEBEC, NOVA SCOTIA AND
NEWFOUNDLAND
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF SHAW COMMUNICATIONS INC.
AND
MOFFAT COMMUNICATIONS LIMITED
1. WHEREAS the Canadian securities regulatory authority or regulator (the "Decision Maker") in the provincesof British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia and Newfoundland (the"Jurisdictions") have received an application from Shaw Communications Inc. ("Shaw") and 911264 AlbertaLtd. ("Bidco", and together with Shaw, the "Offeror") for a decision pursuant to the securities legislation of theJurisdictions (the "Legislation") that the requirement under the Legislation that an offeror making a take-overbid must offer consideration for the securities deposited under the bid that is at least equal to and in the sameform as the highest consideration paid in a transaction that took place within the 90-day period immediatelypreceding the bid and that was not generally offered to all holders (the "Pre-Bid Integration Rule"), shall notapply to the offer (the "Offer") by the Offeror to acquire all of the issued and outstanding common shares (the"Moffat Shares") of Moffat Communications Limited ("Moffat") in respect of the Prior Transaction (definedbelow);
2. AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the"System"), the Alberta Securities Commission is the principal regulator for this application;
3. AND WHEREAS the Offeror has represented to the Decision Makers that:
3.1 Shaw is incorporated under the laws of Alberta and its head office is located in Calgary;
3.2 Shaw is a reporting issuer or the equivalent in the Jurisdictions and is not in default of any requirementof the Legislation;
3.3 the authorized share capital of Shaw consists of an unlimited number of Class A participating shares("Shaw Class A Shares"), an unlimited number of Shaw Class B Non-Voting Shares (the "Shaw Non-Voting Shares), an unlimited number of Class 1 preferred shares, issuable in series, and an unlimitednumber of Class 2 preferred shares, issuable in series. As at December 6, 2000, there were issuedand outstanding 11,419,972 Shaw Class A Shares, 194,231,342 Shaw Non-Voting Shares and nopreferred shares;
3.4 the Shaw Non-Voting Shares are listed and posted for trading on The Toronto Stock Exchange (the"TSE") and the New York Stock Exchange (the "NYSE");
3.5 Bidco is an indirect wholly-owned subsidiary of Shaw incorporated under the laws of Alberta. It hasnot carried on any business other than in respect of the Offer;
3.6 Moffat is incorporated under the laws of Canada;
3.7 Moffat is a reporting issuer or the equivalent in the Jurisdictions and is not in default of any of therequirements of the Legislation;
3.8 the authorized capital of Moffat consists of an unlimited number of Moffat Shares. As at November30, 2000, 38,689,520 Moffat Shares were issued and outstanding. In addition to the foregoing, as atNovember 30, 2000, up to 323,000 Moffat Shares may be issued pursuant to outstanding stock optionentitlements issued under Moffat's stock option plan;
3.9 the Moffat Shares are listed and posted for trading on the TSE;
3.10 on November 1, 2000, Shaw acquired 1,258,312 (approximately 3.3%) of the Moffat Shares in aprivate transaction at a price of $27.20 cash per Moffat Share (the "Prior Transaction");
3.11 on December 6, 2000, Shaw entered into a lock-up agreement (the "Lock-Up Agreement") withRandall L. Moffat and his holding company, 177139 Canada Limited (together, the "Sellers"), pursuantto which Shaw agreed to make, together with Bidco, and the Sellers irrevocably agreed to tender20,185,725 Moffat Shares to the Offer;
3.12 under the Offer, the Offeror will offer to purchase any and all of the Moffat Shares not currently ownedby Shaw and its subsidiaries;
3.13 as consideration for each Moffat Share to be taken up pursuant to the Offer, the Offeror will offer, atthe option of the holders of Moffat Shares, either (i) $35.00 cash or (ii) $0.05 plus 1.0508 Shaw Non-Voting Shares having a combined value of $35.00, subject to proration in accordance with thefollowing cash and share limits. The maximum amount of cash payable by the Offeror pursuant to theOffer shall not exceed $400 million (approximately 35% of the total consideration payable by theOfferor under the Offer) and the maximum amount of Shaw Non-voting Shares issuable under theOffer is 23,007,941 (approximately 65% of the total consideration payable by the Offeror under theOffer);
3.14 the $35.00 price offered under the Offer represents a 27% premium to the volume weighted averagetrading price of the Moffat Shares on the TSE for the 30 trading days prior to the announcement ofthe Offer on December 7, 2000;
3.15 the consideration to be received by holders of Moffat Shares pursuant to the Offer, including thoseholders who will receive all or a substantial portion of their consideration in Shaw Non-Voting Shares,represents a significant premium over the consideration paid by Shaw to those shareholders who soldMoffat Shares at $27.20 cash per share pursuant to the Prior Transaction, and Shaw has receivedan opinion from its financial advisors to that effect;
4. AND WHEREAS pursuant to the System, this MRRS Decision Document evidences the decision of eachDecision Maker (collectively, the "Decision");
5. 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;
6. THE DECISION of the Decision Makers under the Legislation is that the Offeror is exempt from the Pre-BidIntegration Rule with respect to the Prior Transaction in connection with the Offer.
DATED at Edmonton, Alberta this 5th day of January, 2001.
"Eric T. Spink" Thomas G. Cooke
Vice-Chair Q.C., Member