SOL Global Investments Corp.

Decision

Headnote


Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Issuer bid – Dutch auction –Application for relief from the requirement to take up all securities deposited under the issuer bid and not withdrawn if all the terms and conditions of the Offer have been complied with or waived unless and the Offer is under subscribed (subsection 2.32(4) of National Instrument 62-104 Take-Over Bids and Issuer Bids) – requested relief granted, subject to conditions.
 

Applicable Legislative Provisions

National Instrument 62-104 Take-Over Bids and Issuer Bid, ss. 2.32(4) and 6.1.
 

November 24, 2021


IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ONTARIO
(the “Jurisdiction”)
AND
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF
SOL GLOBAL INVESTMENTS CORP.
(the “Filer”)
 

DECISION


Background

The principal regulator in the Jurisdiction (the “Principal Regulator”) has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the “Legislation”) that, in connection with the proposed purchase by the Filer of a portion of its issued and outstanding common shares (the “Common Shares”) pursuant to a formal issuer bid (the “Offer”), the Filer be exempt, subject to the conditions set forth herein, from the requirement set out in subsection 2.32(4) of National Instrument 62-104 Take-Over Bids and Issuer Bids (“NI 62-104”) that the Offer not be extended if all the terms and conditions of the Offer have been complied with or waived unless the Filer first takes up all of the Common Shares deposited under the Offer and not withdrawn (the “Exemption Sought”).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

  1. the Ontario Securities Commission is the Principal Regulator for this application; and
  2. the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (“Ml 11-102”) is intended to be relied upon in British Columbia and Alberta.

Interpretation
Terms defined in National Instrument 14-101 Definitions and Ml 11-102 have the same meaning if used in this decision, unless otherwise defined herein.
Representations

  1. This decision is based on the following facts represented by the Filer:
  2. The Filer is a corporation validly existing under the Business Corporations Act (Ontario) and is in good standing.
  3. The head office and registered office of the Filer is located at 100 King Street West, Suite 5600, Toronto, Ontario, M5X 1C9.
  4. The Filer is a reporting issuer in the provinces of British Columbia, Alberta and Ontario and the Common Shares are listed for trading on the Canadian Securities Exchange (the “CSE”) under the symbol “SOL”. The Filer is not in default of any requirement of the securities legislation in any of the jurisdictions in which it is a reporting issuer.
  5. The Filer’s authorized share capital consists of an unlimited number of Common Shares, of which 52,018,533 Common Shares were issued and outstanding as of October 13, 2021. In addition, as of October 13, 2021, there were 149,000 Options outstanding, of which 121,962 Options had vested and were exercisable at the option of the Option holders to purchase an equivalent number of Common Shares. The expiry dates of such Options range from September 28, 2023 to June 21, 2024. The Options are not listed for trading on any stock exchange.
  6. On October 13, 2021, the closing price of the Common Shares on the CSE was $3.42. On the basis of this closing price, on such date the Common Shares had an aggregate market value of approximately $177.9 million (on a non-diluted basis).
  7. On October 20, 2021, the Filer commenced the Offer. The issuer bid circular dated October 20, 2021 prepared and sent by the Filer in connection with the Offer (the “Circular”) specifies that the Filer proposes to purchase, by way of a “Dutch auction” procedure in the manner described, up to $30,000,000 of the issued and outstanding Common Shares (the “Specified Maximum Dollar Amount”) at a purchase price of not less than $4.05 per Common Share and of no more than $4.25 per Common Share (the “Price Range”).
  8. Pursuant to Section 2.8(b) of NI 62-104, the Filer will make the Offer to each holder of Options that, before the expiry of the deposit period of the Offer, are convertible into Common Shares. Such Options may, at the option of the holder, be exercised for Common Shares in accordance with the terms of such Options prior to the expiry of the deposit period of the Offer. Common Shares issued upon the exercise of the Options may be tendered to the Offer in accordance with the terms of the Offer.
  9. The Filer will fund the purchase of Common Shares pursuant to the Offer, together with the fees and expenses of the Offer, using available cash on hand.
  10. A holder of Common Shares (a “Common Shareholder”, and collectively, the “Common Shareholders”) wishing to tender to the Offer will be able to do so by making an auction tender pursuant to which it agrees to sell to the Filer, at a specified price per Common Share within the Price Range (an “Auction Price”), a specified number of Common Shares (an “Auction Tender”).
  11. Common Shareholders may not deposit the same Common Shares pursuant to an Auction Tender at more than one price.
  12. Any Common Shareholder who owns fewer than 100 Common Shares and tenders all of such Common Shareholder's Common Shares pursuant to an Auction Tender at or below the Purchase Price will be considered to have made an “Odd Lot Tender”.
  13. The Filer will determine the purchase price payable per Common Share (the “Purchase Price”) based on the Auction Prices and the number of Common Shares specified in valid Auction Tenders. The Purchase Price will be the lowest price that enables the Filer to purchase that number of Common Shares tendered pursuant to valid Auction Tenders having an aggregate Purchase Price not to exceed an amount (the “Auction Tender Limit Amount”) equal to the Specified Maximum Dollar Amount.
  14. If the aggregate Purchase Price for Common Shares validly tendered pursuant to Auction Tenders (at Auction Prices at or below the Purchase Price) is less than or equal to the Auction Tender Limit Amount, the Filer will purchase, at the Purchase Price, all Common Shares so deposited pursuant to Auction Tenders at or below the Purchase Price.
  15. If the aggregate Purchase Price for Common Shares validly tendered pursuant to Auction Tenders (at Auction Prices at or below the Purchase Price) is greater than the Auction Tender Limit Amount, the Filer will purchase a portion of the Common Shares so deposited pursuant to Auction Tenders (at or below the Purchase Price), determined as follows: (i) the Filer will purchase all such Common Shares tendered by Common Shareholders pursuant to Odd Lot Tenders; and (ii) the Filer will purchase on a pro rata basis that portion of such Common Shares having an aggregate purchase price, based on the Purchase Price, equal to (A) the Auction Tender Limit Amount, less (B) the aggregate amount paid by the Filer for Common Shares tendered pursuant to Odd Lot Tenders, in each of the cases set forth in clauses (i) and (ii) of this paragraph, at the Purchase Price.
  16. The number of Common Shares that the Filer will purchase pursuant to the Offer and the aggregate Purchase Price will vary depending on whether the aggregate Purchase Price payable in respect of Common Shares required to be purchased pursuant to Auction Tenders (at or below the Purchase Price) (the “Aggregate Tender Purchase Amount”) is equal to or less than the Auction Tender Limit Amount. If the Aggregate Tender Purchase Amount is equal to the Auction Tender Limit Amount, the Filer will purchase Common Shares pursuant to the Offer for an aggregate Purchase Price equal to the Specified Maximum Dollar Amount; if the Aggregate Tender Purchase Amount is less than the Auction Tender Limit Amount, the Filer will purchase proportionately fewer Common Shares in the aggregate, with a proportionately lower aggregate Purchase Price.
  17. All Common Shares purchased by the Filer pursuant to the Offer (including Common Shares tendered at Auction Prices at or below the Purchase Price) will be purchased at the Purchase Price. Common Shareholders will receive the Purchase Price in cash. All Auction Tenders will be subject to adjustment to avoid the purchase of fractional Common Shares. All payments to Common Shareholders will be subject to deduction of applicable withholding taxes.
  18. All Common Shares tendered to the Offer and not taken up will be returned to the appropriate Common Shareholders.
  19. Until expiry of the Offer, all information about the number of Common Shares tendered and the prices at which the Common Shares are tendered will be required to be kept confidential by the depositary and the Filer until the Purchase Price has been determined.
  20. Common Shareholders who do not accept the Offer will continue to hold the same number of Common Shares owned before the Offer and their proportionate Common Share ownership will increase following completion of the Offer.
  21. The Offer is scheduled to expire at 5:00 p.m. (Eastern time) on November 26, 2021 (the “Expiration Date”).
  22. The Filer may elect to extend the Offer without first taking up all the Common Shares deposited and not withdrawn under the Offer if all the terms and conditions of the Offer have been complied with or waived by the Filer by the Expiration Date but the aggregate Purchase Price for Common Shares validly tendered pursuant to Auction Tenders is less than the Auction Tender Limit Amount. Pursuant to subsection 2.32(4) of NI 62-104, an issuer may not extend an issuer bid if all the terms and conditions of the issuer bid have been complied with or waived unless the issuer first takes up all the securities deposited and not withdrawn under the issuer bid.
  23. The Filer intends to rely on the exemption from the formal valuation requirements applicable to issuer bids under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“Ml 61-101”) set out in subsection 3.4(b) of Ml 61-101 (the “Liquid Market Exemption”).
  24. There was a “liquid market” for the Common Shares, as such term is defined in Ml 61-101, as of the date of the making of the Offer because the test in paragraph 1.2(1)(a) of Ml 61-101 is be satisfied. An opinion has been obtained by the Filer confirming that a liquid market exists for the Common Shares as of the date of the making of the Offer and such opinion has been included in the Circular (the “Liquidity Opinion”).
  25. Based on the maximum number of Common Shares that may be purchased under the Offer and the Liquidity Opinion dated October 13, 2021, the board of directors of the Filer determined that it is reasonable to conclude that, following the completion of the Offer in accordance with its terms, there will be a market for holders of Common Shares who do not tender to the Offer that is not materially less “liquid”, as such term is defined in Ml 61-101, than the market that existed at the time of the making of the Offer.
  26. The board of directors of the Filer has determined that the making of the Offer is in the best interests of the Filer.
  27. The Filer has disclosed in the Circular relating to the Offer the following information:
    1. the mechanics for the take up of and payment for Common Shares as described herein;
    2. that, by tendering Common Shares at the lowest price in the Price Range under an Auction Tender, a Common Shareholder can reasonably expect that the Common Shares so tendered will be purchased at the Purchase Price, subject to proration and other terms of the Offer as specified herein;
    3. that the Filer has applied for the Exemption Sought;
    4. the manner in which an extension of the Offer will be communicated to Common Shareholders;
    5. that Common Shares deposited pursuant to the Offer may be withdrawn at any time prior to the expiry of the Offer;
    6. if known after reasonable inquiry, the name of every person named in Item 11 of NI 62-104 who has accepted or intends to accept the Offer and the number of Common Shares in respect of which the person has accepted or intends to accept the Offer;
    7. the facts supporting the Filer’s reliance on the Liquid Market Exemption and the Liquidity Opinion; and
    8. the disclosure prescribed by applicable securities laws for issuer bids.

Decision

The Principal Regulator is satisfied that the decision meets the test set out in the Legislation for the Principal Regulator to make the decision.

 

The decision of the Principal Regulator under the Legislation is that the Exemption Sought is granted, provided that:

  1. the Filer takes up and pays for Common Shares deposited pursuant to the Offer and not withdrawn, in each case, in the manner described above; and
  2. the Filer is eligible to rely on the Liquid Market Exemption.

"David Mendicino"
Manager, Office of Mergers & Acquisitions
Ontario Securities Commission