Sale of a unit in a limited partnership which owns a commercial building exempted fromsections 25 and 53 of the Act.
Securities Act, R.S.O. 1980, c. 466, as am., ss. 34(1)(5), 71(1)(d);
Securities Act, R.S.O. 1990, c.S.5, as am., ss. 25, 35(1)(5), 53, 72(1)(d), 72(4), 74(1).
Regulations made under the Securities Act, R.R.O. 1990, Reg. 1015, as am., s. 24.
OSC Rule 45-501 - Exempt Distributions, s. 3.10;
OSC Rule 14-501 - Definitions.
R.S.O. 1990, CHAPTER S. 5, AS AMENDED (the "Act")
IN THE MATTER OF
3101 BLOOR STREET WEST LIMITED PARTNERSHIP
UPON the application of 3101 Bloor Street West Limited Partnership (the"Partnership"), Dr. David Mitchell (the "Vendor") and 1176294 Ontario Limited (the"Purchaser") (together, the "Applicants") to the Ontario Securities Commission (the"Commission") for a ruling pursuant to subsection 74(1) of the Act exempting the sale bythe Vendor of a limited partnership unit (the "Unit") of the Partnership to the Purchaserfrom the requirements of sections 25 and 53 of the Act:
AND UPON considering the application and the recommendation of the staff of theCommission;
AND UPON the Applicants having represented to the Commission as follows:
1. The Partnership is a limited partnership formed on February 27, 1987 under thelaws of the Province of Ontario.
2. The Partnership is not, and has no intention of becoming, a reporting issuer in theProvince of Ontario or any other jurisdiction.
3. The Partnership was formed for the purpose of acquiring a four-story medical officebuilding (the "Building") municipally known as 3101 Bloor Street West, Etobicoke,Ontario.
4. As at the date hereof, the Partnership has 30 limited partners (the "LimitedPartners").
5. The Partnership issued the Unit to the Vendor pursuant to an offering memorandumdated March 13, 1987 in reliance upon the registration and prospectus exemptionscontained in section 34(1)21 and section 71(1)(d) (as they then were) of the Act.
6. The Purchaser is an Ontario corporation owned 50% by each of Dr. Eggert Boehlauand his wife, Dr. Grace Petrikowski.
7. On or about December 23, 1999, the Purchaser purchased from the Vendor for anaggregate purchase price of $185,000 substantially all of the undertaking, propertyand assets of the Purchaser relating to the orthodontic practice (the "Practice") ofthe Vendor carried on in Suite 407 of the Building.
8. The Purchaser has entered into a lease with the Partnership pursuant to which thePartnership has leased to the Purchaser for an initial term of five years Suite 407of the Building which was formerly occupied by the Vendor.
9. As part of the sale by the Vendor of the Practice, the Vendor wishes to sell the Unitto the Purchaser and the Purchaser wishes to purchase the Unit from the Vendoras of December 23, 1999 for a purchase price of approximately $57,366 to besatisfied as to $15,000 in cash and as to the balance of $42,366 by the assumptionof 1/40 share of the $1,694,627 outstanding principal amount owing by thePartnership under a first mortgage on the Building.
10. The Purchaser is a tenant of the Building.
11. The Purchaser has received copies of the following material contracts anddocuments in respect of the Partnership and has had an opportunity to review samewith its counsel:
(a) the Limited Partnership Agreement of the Partnership;
(b) the property management agreement relating to the Building;
(c) the partnership management agreement in respect of the Partnership;
(d) summary information relating to the terms of each of the leases entered intoby the tenants of the Building; and
(e) the audited financial statements of the Partnership for the years endingDecember 31, 1998 and 1999.
12. The Purchaser is familiar with and closely connected to the operations,management and financial condition of the Partnership.
13. The principals of the Purchaser have obtained expert advice in order to properlyevaluate the Purchaser's purchase of the Practice and its purchase of the Unit; thePurchaser has had the opportunity to negotiate the terms of each such purchaseincluding, without limitation, the scope and extent of the representations, warrantiesand indemnities.
AND UPON the Commission being satisfied to do so would not be prejudicial to thepublic interest:
IT IS RULED pursuant to subsection 74(1) of the Act that the trade by the Vendorof the Unit to the Purchaser is not subject to sections 25 and 53 of the Act, provided thatthe first trade in the Unit by the Purchaser shall be a distribution, unless such first tradeis made in accordance with:
(i) the provisions of subsection 72(4) of the Act as modified by section 3.10 ofCommission Rule 45-501 - Exempt Distributions, as if the Unit had beenacquired pursuant to an exemption referred to in subsection 72(4) of the Act,except that, for these purposes, it shall not be necessary to satisfy therequirements in clause 72(4)(a) of the Act that the issuer not be in default ofany requirement of the Act or the regulations made under the Act if the selleris not in a special relationship with the issuer, or, if the seller is in a specialrelationship with the issuer, the seller has reasonable grounds to believe thatthe issuer is not in default under the Act or the regulations made under theAct, where, for these purposes, "special relationship" shall have the samemeaning as in Commission Rule 14-501 - Definitions; or
(ii) the Ruling of the Commission dated December 8, 1998 grantingdiscretionary relief for trades in Units amongst Limited Partners (publishedat (1998) 21 OSCB 7605).
June 30th, 2000.
"Howard I. Wetston" "Robert W. Davis"