Peerless Energy Inc. and Petrobank Energy and Resources Ltd. - MRRS Decision

Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- National Instrument 51-102 Continuous Disclosure Obligations- exemption from the requirement in item 14.2 of Form 51-102F5 Information Circular to include in an information circular the disclosure as prescribed by the form of prospectus, other than the short form prospectus, that an entity would be eligible to use for a distribution of securities, provided that the information circular includes information required by the short form prospectus rule.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations, s. 13.1.

Form 51-102F5 Information Circular, item 14.2.

Citation: Peerless Energy Inc. and Petrobank Energy and Resources Ltd., 2007 ABASC 919

December 17, 2007

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO (THE JURISDICTIONS)

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

PEERLESS ENERGY INC. (PEERLESS)

AND

PETROBANK ENERGY AND RESOURCES LTD.

(PETROBANK)

 

MRRS DECISION DOCUMENT

Background

1. The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from Peerless and Petrobank for a decision under the securities legislation of the Jurisdictions (the Legislation) that Peerless be exempt from the requirement under Item 14.2 of Form 51-102F5 Information Circular (Form 5l-102F5) to include in an information circular (the Information Circular) for the Arrangement (defined below) the disclosure about Petrobank as prescribed by the form of prospectus, other than a short form prospectus under National Instrument 44-101 Short Form Prospectus Distributions (the Short Form Prospectus Rule), that Petrobank would be eligible to use for a distribution of securities (the Long Form Prospectus Form) provided that the Information Circular includes information about Petrobank required by the Short Form Prospectus Rule.

Application of Principal Regulator System

2. Under Multilateral Instrument 11-101 Principal Regulator System (MI 11-101) and the Mutual Reliance Review System for Exemption Relief Applications:

(a) the Alberta Securities Commission is the principal regulator for Peerless;

(b) Peerless is relying on the exemption in Part 3 of MI 11-101 in all of the provinces in Canada except Alberta and Ontario; and

(c) this MRRS decision document evidences the decision of each Decision Maker.

Interpretation

3. Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are otherwise defined in this decision.

Representations

4. This decision is based on the following facts represented by Peerless and Petrobank:

(a) Each of Peerless and Petrobank is incorporated under the laws of the Province of Alberta and has its head office located in Calgary. Alberta.

(b) The Class A shares (Class A Shares) of Peerless are listed and posted for trading on the Toronto Stock Exchange (TSX) under the trading symbol "PRY.A" and the Class B shares (Class B Shares) of Peerless are listed and posted for trading on the TSX under the trading symbol "PRY.B".

(c) The common shares of Petrobank are listed and posted for trading on the TSX and the Oslo Børs Exchange under the trading symbol "PBG".

(d) Peerless is a reporting issuer, where such status exists, in each of the provinces of Canada.

(e) Peerless is not in default of any of its obligations as a reporting issuer pursuant to the applicable securities legislation in any of the provinces in which it is a reporting issuer.

(f) Petrobank is a reporting issuer, where such status exists, in each of the provinces of Canada.

(g) Petrobank is not in default of any of its obligations as a reporting issuer pursuant to the applicable securities legislation in any of the provinces in which it is a reporting issuer.

(h) Petrobank satisfies the basic qualification criteria as set out in section 2.2 of the Short Form Prospectus Rule. In particular, Petrobank filed on or about March 20, 2007 its annual information form for the year ended December 31, 2006, and filed on or about March 13, 2007 its annual financial statements for the year ended December 31, 2006 and related management's discussion and analysis.

(i) Petrobank has a current AIF and current annual financial statements as defined in section 1.1 of the Short Form Prospectus Rule.

(j) Petrobank has filed the notice required by section 2.8 of the Short Form Prospectus Rule and that notice has not been withdrawn.

(k) On November 22, 2007, Peerless and Petrobank entered into an arrangement agreement pursuant to which Petrobank will acquire all of the outstanding Class A Shares and Class B Shares pursuant to a Plan of Arrangement (the Arrangement) under the Business Corporations Act (Alberta). Pursuant to the Arrangement, holders of Class A Shares will receive, for each Class A Share held, $0.90 in cash and 0.08 of a Petrobank Share, and holders of Class B Shares will receive $10.00 in cash for each Class B Share held.

(l) The Information Circular detailing the Arrangement is anticipated to be mailed to Peerless Shareholders on or about December 21, 2007 for the meeting (the Meeting) of holders of Class A Shares and Class B Shares expected to take place on or about January 25, 2008. Closing of the Arrangement is expected to take place on or about January 28, 2008.

(m) Form 51-102F5 requires that the Information Circular contain, among other things, a detailed description of the Arrangement and disclosure (including financial statements) for Petrobank prescribed by the form of prospectus, other than a short form prospectus under the Short Form Prospectus Rule, that Petrobank would be eligible to use for a distribution of securities in the Jurisdictions.

(n) The form of prospectus other than a short form prospectus under the Short Form Prospectus Rule that Petrobank would be eligible to use for a distribution of securities is the form of prospectus prescribed by Ontario Securities Commission Form 41-501F1 Information Required in a Prospectus.

(o) The Information Circular will include, among other things, a detailed description of the Arrangement and the disclosure (including financial statements) for Petrobank prescribed by Form 44-101F1 Short Form Prospectus (Form 44-101F1).

(p) The Information Circular will incorporate by reference all documents of the type described in Item 11.1 of Form 44-101F1 filed by Petrobank after the date of the Information Circular and before the date of the Meeting.

(q) The Information Circular will contain sufficient information for shareholders of Peerless to make a reasoned decision about whether to approve the Arrangement.

Decision

5. The Decision Makers are satisfied that they each have jurisdiction to make this decision and that the relevant test contained under the Legislation has been met. The Decision of the Decision Makers is that Peerless is exempt from the requirement under Item 14.2 of Form 51-102F5 to include in the Information Circular for the Arrangement the disclosure about Petrobank prescribed by the Long Form Prospectus Form provided that:

(a) at the time of filing of the Information Circular, Petrobank satisfies the basic qualification criteria as set out in section 2.2 of the Short Form Prospectus Rule; and

(b) the Information Circular (and the documents incorporated by reference in the Information Circular) includes information about Petrobank required by the Short Form Prospectus Rule to be included or incorporated by reference in a short form prospectus.

"Blaine Young"
Associate Director, Corporate Finance
Alberta Securities Commission