Subsection 190(6) of the OBCA - Order granting relief from the 40 day noticerequirement of subsection 190(3) of the OBCA, in connection with an arrangement thatconstitutes a going private transaction.
Business Corporations Act, R.S.O. 1990, c.B.16, as amended, ss. 190(3), 190(6).
National Policy Statement No. 41
R.S.O. 1990, CHAPTER B.16 (the "OBCA")
IN THE MATTER OF
UPON the application of Jannock Limited ("Jannock") to the Ontario SecuritiesCommission (the "Commission") for an order pursuant to subsection 190(6) of the OBCAto exempt Jannock from the requirement of subsection 190(3) of the OBCA to send amanagement information circular (the "Circular") to shareholders of Jannock not less than40 days prior to the date of a special meeting of shareholders of Jannock (the "Meeting")in respect of a going private transaction to be effected by means of a plan of arrangement(the "Arrangement") described below;
AND UPON reading the application and considering the recommendation of staffof the Commission;
AND UPON it being represented by Jannock to the Commission as follows:
1. Jannock is a corporation governed by the OBCA. It is a reporting issuer under theSecurities Act (Ontario) (the "Act") and is not in default of any requirements of theAct or the regulations made thereunder. Its common shares (the "CommonShares") and Second Preference Shares are listed on The Toronto StockExchange, and its Common Shares are also quoted on the NASDAQ NationalMarket System.
2. Jannock has an unlimited number of authorized Common Shares, of which34,554,708 were issued and outstanding as of December 17, 1999. Jannock alsohas outstanding Second Preference Shares and Fourth Preference Shares. TheSecond Preference Shares are redeemable by Jannock, and the Fourth PreferenceShares are convertible into Common Shares.
3. On May 26, 1999, Jannock received a requisition from shareholders holding morethan 50 per cent of the issued Common Shares, requesting that the directors ofJannock call a meeting of shareholders. The purpose of the meeting would be toconsider a special resolution to reduce the stated capital of Jannock to $5 millionand to distribute the amount of such reduction to the common shareholders (the"Shareholders") of Jannock on a pro rata basis.
4. In early June, 1999, the board of directors of Jannock engaged Merrill Lynch & Co.("Merrill Lynch") as advisors to assist the management of Jannock in pursuingmeasures to maximize shareholder value. A number of alternatives wereconsidered, culminating in the decision announced on June 14, 1999, that it wouldbe in the best interests of the shareholders to offer the company for sale, and toconduct an auction process for this purpose. Merrill Lynch was retained to assistJannock's management and board in the search for purchasers and to aid in theanalysis of proposals received.
5. On June 22, 1999, Jannock announced that it had received written notification fromthe shareholders that had requisitioned a meeting of shareholders, confirming thatsuch requisition had been withdrawn.
6. As a result of the auction process conducted by Jannock, management and theboard concluded, in consultation with Merrill Lynch, that the best alternative formaximizing value for the shareholders would be to enter into negotiations for aproposed transaction that would result in Jannock becoming a subsidiary ofAmerican Buildings Company ("ABC") by way of a plan of arrangement.
7. ABC is a corporation governed by the laws of the State of Delaware. It is not areporting issuer in any jurisdiction of Canada and its securities are not publiclytraded. ABC and its associates and affiliates do not have a major shareholding inJannock.
8. Pursuant to the Arrangement, the steps set forth below will occur in the followingorder:
a. Jannock will sell certain assets (the "Non-Core Assets") to JannockProperties Limited ("Splitco"), a newly-created corporation governed by theOBCA. Splitco will issue common shares (the "Splitco Shares") to Jannockas the consideration for the Non-Core Assets. The Non-Core Assets willconsist of the following:
b. Jannock's real estate development business; and
c. a "non-control" investment by way of preferred shares and common sharesof Survivor Technologies Group, Inc., a private Delaware corporation.
9. Jannock will distribute, as a dividend in kind to the Shareholders, one Splitco Sharefor each Common Share held.
10. Jannock will redeem all of its issued and outstanding Second Preference Sharesat their redemption price as set forth in the articles of Jannock. The holders of theFourth Preference Shares will agree to convert those shares into Common Sharesprior to the implementation of the Arrangement.
11. All outstanding employee and director stock options of Jannock will be cancelled,with the holders of the options receiving consideration equivalent to the intrinsicvalue of the options based on a formula set out in the Arrangement.
12. Each Common Share held by a Shareholder will be exchanged with, and acquiredby, a wholly-owned subsidiary of ABC ("Subco") for cash and a senior subordinatednote of Subco (a "Note").
13. Jannock will amalgamate with Subco to form an amalgamated corporation governedby the OBCA ("Amalco").
14. On the amalgamation, all of the Common Shares will be cancelled, and all of thecommon shares of Subco will be converted, share for share, into common sharesof Amalco. Amalco will become a subsidiary of ABC.
15. On the amalgamation, the Notes will become the obligations of Amalco as thesuccessor corporation to Subco.
16. The Arrangement must be approved by the Ontario Superior Court and by theJannock shareholders.
17. The shareholders will have the right to dissent from the Arrangement under section185 of the OBCA, and the Circular will disclose full particulars of this right inaccordance with applicable law.
18. It is a term of the Arrangement that the Meeting be held no later than 30 days afterthe date on which the Circular and proxy materials are mailed to the shareholdersof Jannock. Accordingly, it will not be possible to comply with the 40-day noticerequirement provided for in subsection 190(3) of the OBCA.
19. Jannock will comply with the provisions of National Policy Statement No. 41 inconnection with the calling and holding of the Meeting and the mailing of theCircular.
AND UPON the Commission being of the opinion that to do so would not beprejudicial to the public interest;
IT IS ORDERED pursuant to subsection 190(6) of the OBCA that in connection withthe Arrangement, Jannock is exempted from the requirement of subsection 190(3) of theOBCA to send the Circular to the shareholders of Jannock 40 days in advance of theMeeting, provided that the Circular is sent to the Jannock shareholders not less than 25days prior to the Meeting and provided that Jannock otherwise complies with therequirements of National Policy Statement No. 41.
January 7th, 2000.
"Howard I. Wetston" "R. Stephen Paddon"