Dutch auction issuer bid - With respect to securities tendered at or below the clearing price,offer providing for full take-up of and payment for shares tendered by odd lot holders, aswell as additional purchases from certain shareholders in order to prevent the creation ofodd lots - Offeror exempt from the requirement in the legislation to take up and pay forsecurities proportionately according to the number of securities deposited by eachsecurityholder and the associated disclosure requirement - Offeror also exempt from therequirement to disclose the exact number of shares it intends to purchase - Offeror alsoexempt from the valuation requirement on the basis that there is a liquid market for thesecurities.
Ontario Statutes Cited
Securities Act, R.S.O. 1990, c. S.5, as am, ss. 95(7) and 104(2)(c)
Ontario Regulations Cited
Regulation made under the Securities Act, R.R.O. 1990, Reg. 1015, as am., s. 189(b) andItems 2 and 9 of Form 33
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
ALLIANCE FOREST PRODUCTS INC.
MRRS DECISION DOCUMENT
WHEREAS the Canadian securities regulatory authority or regulator (the "DecisionMaker") in each of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec,Nova Scotia and Newfoundland (the "Jurisdictions") has received an application fromAlliance Forest Products Inc. (the "Corporation") for a decision pursuant to the securitieslegislation (the "Legislation") that, in connection with the proposed purchase by theCorporation of a portion of its outstanding common shares ("Shares") pursuant to an issuerbid (the "Offer"), the Corporation be exempt from the requirements in the Legislation to: (i)take up and pay for securities proportionately according to the number of securitiesdeposited by each securityholder (the "Proportionate Take-up and PaymentRequirement"); (ii) provide disclosure in the issuer bid circular (the "Circular") as to thenumber of securities sought and of the proportionate take-up and payment (the"Associated Disclosure Requirements"); and (iii) obtain a valuation of the Shares andprovide disclosure in the Circular of such valuation, or a summary thereof, and of priorvaluations (the "Valuation Requirement").
AND WHEREAS pursuant to the Mutual Reliance Review System for ExemptiveRelief Applications (the "System"), the Commission des valeurs mobilières du Québec isthe Principal Regulator for this application;
AND WHEREAS the Corporation has represented to the Decision Maker as follows:
1. The Corporation is a reporting issuer or the equivalent in each of the Jurisdictions.
2. The Principal office of the Corporation is located in Montreal, Québec.
3. The Corporation is not in default of any securities legislation in the jurisdictions.
4. The authorized capital of the Corporation includes an unlimited number of Shares,of which approximately 35,212,286 Shares were outstanding as of January 31,2000.
5. The Shares are listed and posted for trading on The Toronto Stock Exchange (the"TSE"), and the New York Stock Exchange. On January 31, 2000, the closing priceof the Shares on the TSE was $17.20 per Share. Based upon such closing price, theShares had an aggregate market value of approximately $605,651,319.20 as at thatdate.
6. The Corporation has made up to a maximum of $100,000,000 available to purchaseShares under the Offer.
7. The Offer has been made pursuant to the following procedure:
(a) the Circular specifies the range of prices (the "Range") within which theCorporation is prepared to purchase Shares under the Offer;
(b) the maximum aggregate amount that the Corporation will expend to purchaseShares pursuant to the Offer is $100,000,000;
(c) any holder of Shares (a "Shareholder") wishing to tender to the Offer willhave the right to tender a specified number of Shares, representing all or aportion of the Shareholder's Shares at the Shareholder's discretion;
(d) a Shareholder wishing to tender to the Offer will have the right either to: (i)specify the lowest price within the Range at which he, she or it is willing tosell the tendered Shares (an "Auction Tender"); or (ii) elect to be deemedto have tendered the Shares subject to his, her or its Specified TenderElection at the Purchase Price determined in accordance with subparagraph7(e) below (a "Purchase Price Tender");
(e) the purchase price (the "Purchase Price") of the Shares tendered to the offerwill be the lowest price within the Range that will enable the Corporation topurchase tendered Shares having an aggregate Purchase Price notexceeding $100,000,000 with each Purchase Price Tender being considereda tender at the lowest price in the Range for the purpose of calculating thePurchase Price;
(f) any Shareholder who owns less than 100 Shares and tenders all of his, heror its Shares pursuant to a Specified Tender Election either pursuant to anAuction Tender at or below the Purchase Price or pursuant to a PurchasePrice Tender will be considered to have made an "Odd-Lot Tender";
(g) if the aggregate Purchase Price for Shares validly tendered to the offer andnot withdrawn is less than or equal to $100,000,000, the Corporation willpurchase all Shares so deposited pursuant to the Offer;
(h) the Corporation will take up and pay at the Purchase Price all Sharestendered below the Purchase Price;
(i) if more Shares are tendered for purchase at the Purchase Price than can bepurchased for $100,000,000, the Corporation will take up and pay fortendered Shares at the Purchase Price on a pro rata basis according to thenumber of Shares tendered by Shareholders, except that Shares tenderedpursuant to Odd-Lot Tenders shall not be subject to pro ration;
(j) all Shares tendered at prices above the Purchase Price will be returned tothe appropriate Shareholders; and
(k) all Shares tendered by Shareholders who specify a tender price for suchtendered Shares that fall outside the Range will be considered to haveimproperly tendered, will be excluded from the determination of the PurchasePrice, will not be purchased by the Corporation and will be returned to thetendering Shareholders.
8. Prior to the expiry of the Offer, all information regarding the number of Sharestendered and the prices at which such Shares are tendered will be kept confidential,and the depository will be directed by the Corporation to maintain suchconfidentiality until the Purchase Price is determined.
9. Since the Offer is for less than all the Shares, if the number of Shares tendered tothe Offer at or below the Purchase Price exceeds the maximum number of Sharesthat can be purchased for $100,000,000, the Legislation would require theCorporation to take up and pay for deposited Shares proportionately, according tothe number of Shares deposited by each Shareholder. In addition, the Legislationwould require disclosure in the Circular that the Corporation would, if Sharestendered to the Offer exceeded that number of Shares that can be purchased underthe Offer, take up such Shares proportionately according to the number of Sharestendered by each Shareholder.
10. The Circular:
(a) discloses the mechanics for the take-up of and payment for, or the return of,Shares as described in paragraph 7 above;
(b) explains that, by tendering Shares at the lowest price in the Range, aShareholder can reasonably expect that the Shares so tendered will bepurchased at the Purchase Price, subject to pro ration as described inparagraph 7 above; and
(c) will contain an opinion from Nesbitt Burns Inc. that there is a liquid market inthe Shares.
11. The Corporation received an opinion (the "Liquidity Opinion") from Nesbitt BurnsInc., an independent registered dealer, that there is a liquid market in the Shares forminority Shareholders before the making of the Offer and, following the Offer,minority Shareholders who decline the Offer will have available a market that is notmaterially less liquid than the market that existed prior to the making of the Offer.
12. The TSE, which is the principal Canadian stock exchange on which the Shares arelisted and traded, has stated that it concurs with the Liquidity Opinion.
AND WHEREAS pursuant to the System, this MRRS Decision Document evidencesthe decision of each Decision Maker (collectively, the "Decision");
AND WHEREAS each of the Decision Makers is satisfied that the test contained inthe Legislation that provides the Decision Maker with the jurisdiction to make the Decisionhas been met;
THE DECISION, of the Decision Makers in the Jurisdictions pursuant to theLegislation is that, in connection with the Offer, the Corporation is exempt from theProportionate Take-up and Payment Requirement, the Associated DisclosureRequirements and the Valuation Requirement, provided that Shares tendered to the Offerare taken up and paid for, or returned to the Shareholders, in the manner andcircumstances described in paragraph 7 above.
March 6th, 2000.
"Viateur Gagnon" "Guy Lemoine"