Securities Law & Instruments

Headnote

MRRS - Prospectus relief granted for first trades in limited partnership units receivedpursuant to a reorganization whereby a trust will be converted to a limited partnership.The limited partnership units will be listed on the TSE. Relief granted subject to certainconditions.

Statutes Cited

Securities Act, R.S.O. 1990, c.S.5, as am. s. 53, s. s. 74(1).

IN THE MATTER OF THE SECURITIES LEGISLATIONOF ALBERTA, BRITISH COLUMBIA, SASKATCHEWAN,MANITOBA, ONTARIO, QUEBEC, NEW BRUNSWICK, NOVA SCOTIA,PRINCE EDWARD ISLAND AND NEWFOUNDLAND

AND

IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF
TAYLOR GAS LIQUIDS FUND, TAYLOR NGL LIMITED PARTNERSHIP ANDTAYLOR GAS LIQUIDS LTD.

DECISION DOCUMENT


1. WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of Alberta, British Columbia, Saskatchewan, Manitoba, Ontario,Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland(the "Jurisdictions") has received an application from Taylor Gas Liquids Fund (the"Trust") for a decision under the securities legislation of the Jurisdictions (the"Legislation") exempting the distribution of limited partnership units ("LP Units") bythe Trust from the registration and prospectus requirements of the Legislation inrelation to a transaction (the "Conversion") pursuant to which the Trust will convertinto Taylor NGL Limited Partnership (the "Limited Partnership");

2. AND WHEREAS pursuant to the Mutual Reliance Review System for ExemptiveRelief Applications (the "System"), the Alberta Securities Commission is theprincipal regulator for this application;

3. AND WHEREAS the Trust has represented to the Decision Makers that:

3.1 the Trust is a trust formed under the laws of Alberta and is a reporting issueror the equivalent in each province of Canada where such concept isapplicable;

3.2 the Trust distributed its units to the public pursuant to a prospectus datedJuly 19, 1996;

3.3 the Trust has 9,719,675 units issued and outstanding;

3.4 the Trust's units are listed on The Toronto Stock Exchange and are widelyheld;

 

3.5 other than KeySpan Energy Canada Ltd., which holds 1,883,135, or 19.4%,of the issued and outstanding Trust units, and Guardian Capital Inc., whichexercised control or direction over 1,343,800 or 13.8% of the issued andoutstanding Trust units, no person, firm or corporation beneficially owns,directly or indirectly, or exercises control or direction over units of the Trustcarrying 10% of the votes attached to the units of the Fund;

3.6 the Trust is the sole holder of common shares and notes of Taylor GasLiquids Ltd. ("Taylor Ltd.");

3.7 Taylor Ltd. is the sole holder of Base Partnership Units and Class CExpansion Units of Taylor Gas Liquids Limited Partnership (the "PrivatePartnership") whose sole business purpose is to hold an interest in theYounger Extraction Plant at Taylor, British Columbia (the "Taylor Plant");

3.8 the Trust is converting to a limited partnership structure pursuant to whicheach unitholder of the Trust will receive one LP Unit for each unit of theTrust currently held;

3.9 the Conversion will occur in the following manner:

 

3.9.1 Taylor Ltd. will transfer all of the issued and outstanding BasePartnership Units and Class C Expansion Units of the PrivatePartnership to the Limited Partnership in exchange for LP Units.Taylor Ltd. will act as the general partner of the Limited Partnership(the "Limited Partnership GP");

3.9.2 Taylor Ltd. will repay the notes owing by it to the Trust and, to theextent necessary, repurchase its common shares, by transferring theLP Units to the Trust;

3.9.3 if the notes are not fully repaid pursuant to the transfer of the LP Unitsto the Trust, the Trust will transfer the remaining debt of Taylor Ltd.to the Limited Partnership in exchange for additional LP Units; and

3.9.4 the Trust will redeem all of its outstanding units by distributing the LPUnits to the current unitholders of the Trust;

3.10 the Trust will continue as a trust for the benefit of the limited partners of theLimited Partnership, the only assets of which trust will be 100% of thecommon shares of the Limited Partnership GP;

3.11 the manager of the Trust has determined that there will be certainoperational benefits to converting the Trust to a limited partnership structure:

3.11.1 under the proposed limited partnership structure, the Managerwill cease to be a holding entity between the assets of theTrust, being the Taylor Plant, and the unitholders of the Trust,thereby eliminating certain costs of operating this corporateentity, including taxation at the corporate level; and

3.11.2 certain of the disadvantages to a limited partnership structurewhich were present at the time of the Trust's initial publicoffering are no longer present;

3.12 the distribution of the LP Units by the Trust to the unitholders of the Trust onredemption of the Trust units will be completed pursuant to exemptions fortrades made with the securities holders of an offeree issuer pursuant to theissuer bid exemption applicable to the redemption of securities (the "IssuerBid Exemption") where such exemptions are available;

 

3.13 the other distributions of securities under the Conversion other than thedistribution of the LP Units by the Trust to the unitholders of the Trust onredemption of the Trust units will be carried out through exemptions from theregistration and prospectus requirements of the Legislation;

 

3.14 the Legislation of certain of the provinces does not provide exemptionsequivalent to the Issuer Bid Exemption;

3.15 the approval of the unitholders of the Trust for the conversion was obtainedat a meeting of the unitholders of the Trust held on June 2, 2000;

3.16 the material differences between the trust structure and the limitedpartnership structure have been set out in the Trust's information circulardated April 27, 2000 relating to the meeting of unitholders of the Trust atwhich approval of the Conversion was sought (the "Information Circular");

3.17 the information provided to the unitholders of the Trust in the InformationCircular regarding the Conversion, the Limited Partnership structure and thedifferences between the Limited Partnership and Trust structures isprospectus level disclosure;

3.18 following the Conversion, all of the current unitholders of the Trust will beholders of LP Units and the Limited Partnership will continue to hold anindirect interest in the Taylor Plant which will be unaffected by theConversion;

 

3.19 following the Conversion, the Trust will have no unitholders and will continueto exist merely to hold the shares of Taylor Ltd. which will act as the LimitedPartnership GP;

3.20 following the Conversion, the beneficiaries of the Trust will be the limitedpartners of the Limited Partnership, being the current unitholders of theTrust;

3.21 pursuant to the Legislation, the first trade in LP Units acquired by theunitholders under the Issuer Bid Exemption is a distribution unless, amongother conditions, the Limited Partnership has been a reporting issuer or theequivalent thereof for at least 12 months; and

3.22 the Limited Partnership has made applications to become a reporting issueror the equivalent thereof in Alberta, British Columbia, Saskatchewan,Ontario, Québec, and Nova Scotia (the "Reporting Jurisdictions");

4. AND WHEREAS under the System, this MRRS Decision Document evidences thedecision of each Decision Maker ( collectively, the "Decision");

5. 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 theDecision has been met;

6. THE DECISION of the Decision Makers pursuant to the Legislation is that thedistribution of LP Units by the Trust to unitholders of the Trust in relation to theConversion shall be exempt from the registration and prospectus requirements;

7. THE DECISION of the Decision Makers pursuant to the Legislation is that the firsttrade in any Jurisdiction in any LP Unit acquired pursuant to this Decision isdeemed to be a "distribution" if made in the Provinces of British Columbia, Alberta,Saskatchewan, Ontario, Québec, Nova Scotia or Newfoundland, a "primarydistribution to the public" if made in the Provinces of Manitoba or New Brunswickand a "distribution to the public" if made in the Province of Prince Edward Islandunless:

8.1 at the time of the first trade the Limited Partnership is a reporting issuer orthe equivalent thereof in the corresponding Reporting Jurisdiction;

8.2 if the first trade is made in Manitoba or Newfoundland, the LimitedPartnership has filed in that jurisdiction all disclosure materials that theLimited Partnership would otherwise be required to file in the ReportingJurisdictions;

8.3 the Limited Partnership is not in default of any requirements of theLegislation;

8.4 the vendor of the LP Units, if in a special relationship (where "specialrelationship" is defined under the Legislation) with the Limited Partnership,has no reasonable grounds to believe that the Limited Partnership is indefault of any requirement of the Legislation;

8.5 disclosure has been made to the Decision Maker of the Conversion, whichdisclosure has been made by the filing of the Information Circular;

8.6 no unusual effort is made to prepare the market or to create a demand forthe LP Units and no extraordinary commission is paid in respect of the trade;and

8.7 in all other Jurisdictions save for Québec, the first trade is not from theholdings of a person or company or a combination of persons or companiesholding a sufficient number of any securities of the Limited Partnership soas to affect materially the control of the Limited Partnership or more than20% of the outstanding voting securities of the Limited Partnership, exceptwhere there is evidence showing that the holdings of those securities doesnot affect materially the control of the Limited Partnership.

June 29th, 2000.

"Glenda A. Campbell"      "Thomas D. Pinder"