Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - Relief undersubsections 116(1), 123(c) and 184(2) of the Alberta Act from the requirements undersections 54 and 81 of the Alberta Act, the continuous disclosure requirements underPart 11 of the Alberta Act and the proxy solicitation requirements under Part 12 of theAlberta Act in connection with an arrangement conducted using a cross-border shareexchange structure.

Applicable Alberta Statutory Provisions

Securities Act, S.A., 1981, c.S-6.1, as amended - ss. 54, 81, 116(1), 116(1.1), Part 11,Part 12, 123(c) and 184(2).

IN THE MATTER OF THE SECURITIES LEGISLATIONOF ALBERTA, BRITISH COLUMBIA, SASKATCHEWAN, MANITOBA, ONTARIO,QUÉBEC, NOVA SCOTIA, NEW BRUNSWICK, NEWFOUNDLAND, PRINCEEDWARD ISLAND, NORTHWEST TERRITORIES, NUNAVUT AND YUKON

AND

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

AND

IN THE MATTER OF
WEATHERFORD INTERNATIONAL, INC., WEATHERFORD OIL SERVICES, INC., WEATHERFORD CANADA LTD.AND ALPINE OIL SERVICES CORPORATION

MRRS DECISION DOCUMENT


1. WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of Alberta, British Columbia, Saskatchewan, Manitoba, Ontario,Québec, Nova Scotia, New Brunswick, Newfoundland, Prince Edward Island,Northwest Territories, Nunavut and the Yukon (the "Jurisdictions") has received anapplication from Weatherford International, Inc. ("Weatherford"), Weatherford OilServices, Inc. ("Services") and Weatherford Canada Ltd. ("WCL") for a decisionunder the securities legislation of the Jurisdictions (the "Legislation") that:

1.1 the requirements under the Legislation to be registered to trade in a security(the "Registration Requirement") and to file and obtain a receipt for apreliminary prospectus and a prospectus (the "Prospectus Requirement")shall not apply to certain trades and distributions of securities to be made inconnection with an agreement to combine the businesses of Weatherfordand Alpine Oil Services Corporation ("Alpine") through a plan ofarrangement involving Weatherford, Services, WCL and Alpine; and

1.2 the requirements under the Legislation for a reporting issuer or theequivalent to issue a press release and file a report upon the occurrence ofa material change, file and deliver interim and annual financial statements,information circulars and annual information forms and providemanagement's discussion and analysis of financial conditions and results ofoperations (the "Continuous Disclosure Requirements") shall not apply toServices;

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 Weatherford, WCL and Services have represented to the DecisionMakers that:

3.1 Weatherford is a corporation incorporated under the laws of the State ofDelaware, with its head office in Houston, Texas;

3.2 the authorized capital of Weatherford includes 250,000,000 shares ofcommon stock ("Weatherford Common Stock"), of which 109,188,797 wereissued and outstanding as of June 26, 2000;

3.3 the Weatherford Common Stock is listed and posted for trading on The NewYork Stock Exchange (the "NYSE");

3.4 Weatherford is subject to the reporting requirements under the SecuritiesExchange Act of 1934 (the "1934 Act") in the United States of America;

3.5 Weatherford is not a reporting issuer or the equivalent in any of theJurisdictions;

3.6 Services is a corporation incorporated under the Business Corporations Act(Alberta) (the "ABCA"), with its head office in Edmonton, Alberta;

3.7 Services was incorporated on June 15, 2000 and has not carried on anybusiness to date;

 

3.8 the authorized capital of Services consists of an unlimited number ofcommon shares and an unlimited number of exchangeable shares, issuablein series;

3.9 there are currently 1,000 common shares of Services issued andoutstanding, all of which are held by wholly-owned subsidiaries ofWeatherford;

3.10 Services is not a reporting issuer or the equivalent in any of theJurisdictions;

 

3.11 WCL is a corporation incorporated under the ABCA, with its head office inEdmonton, Alberta;

3.12 all of the currently issued and outstanding securities of WCL are held bywholly- owned subsidiaries of Weatherford;

3.13 WCL is not a reporting issuer or the equivalent in any of the Jurisdictions;

3.14 Alpine is a corporation incorporated under the ABCA, with it head office inCalgary, Alberta;

 

3.15 the authorized capital of Alpine consists of an unlimited number of commonshares ("Alpine Shares") and an unlimited number of preferred shares;

3.16 28,838,261 Alpine Shares and 645,500 options to purchase Alpine Shares("Alpine Options") were issued and outstanding as of June 23, 2000;

3.17 the Alpine Shares are listed and posted for trading on The Toronto StockExchange (the "TSE");

 

3.18 Alpine is a reporting issuer or the equivalent in Alberta, British Columbia,Ontario and Québec;

3.19 Alpine is not in default of any requirements of the Legislation;

3.20 Services, Weatherford, WCL and Alpine have entered into an agreementwhich provides for the combination of the businesses of Weatherford andAlpine (the "Combination");

3.21 the Combination will be effected through an arrangement under section 186of the ABCA involving Services, Weatherford, WCL and Alpine (the"Arrangement");

3.22 the Arrangement is subject to the approval of the holders of Alpine Sharesand Alpine Options (the "Alpine Security Holders") and the Court of Queen'sBench of Alberta;

 

3.23 a meeting (the "Meeting") of the Alpine Security Holders has been scheduledfor August 4, 2000;

 

3.24 an information circular (the "Circular") prepared in accordance with theLegislation has been provided to the Alpine Security Holders in connectionwith the Meeting and filed with each of the Decision Makers;

3.25 the Circular contains prospectus-level disclosure concerning theCombination, the Arrangement and the businesses of Weatherford andAlpine;

3.26 under the Arrangement:

 

3.26.1 the articles of incorporation of Services will be amended todesignate a series of exchangeable shares of Services asSeries 1 Exchangeable Shares (the "Exchangeable Shares");

3.26.2 the Alpine Security Holders will transfer their Alpine Sharesand Alpine Options to Services in consideration for a numberof Exchangeable Shares determined in accordance withformulas described in the Circular;

3.26.3 Services will transfer the Alpine Shares and Alpine Options toWCL in consideration for a number of preferred shares ofWCL;

3.27 under the terms of the Exchangeable Shares, and certain rights to begranted in connection with the Arrangement, holders of ExchangeableShares will be able to exchange them at their option for WeatherfordCommon Stock on a one for one basis;

3.28 under the terms of the Exchangeable Shares, and certain rights to begranted in connection with the Arrangement, Weatherford or Services will beable to redeem, retract or acquire Exchangeable Shares in exchange forWeatherford Common Stock in certain circumstances;

3.29 in order to ensure that the Exchangeable Shares remain the economicequivalent of Weatherford Common Stock prior to their exchange, theArrangement provides for:

 

3.29.1 a support agreement to be entered into between Weatherfordand Services which will, among other things, restrictWeatherford from declaring or paying dividends onWeatherford Common Stock unless equivalent dividends aredeclared and paid on the Exchangeable Shares and fromsubdividing, consolidating or reclassifying WeatherfordCommon Stock unless economically equivalent changes aremade to the Exchangeable Shares;

 

3.29.2 an exchange trust agreement to be entered into betweenWeatherford, Services and a depository (the "Depostitory")which will, among other things, grant to the Depository, for thebenefit of holders of Exchangeable Shares, the right to requireWeatherford to indirectly exchange the Exchangeable Sharesfor Weatherford Common Stock upon the occurrence of certainspecified events (the "Exchange Rights");

3.29.3 the deposit by Weatherford of a special voting share (the"Voting Share") with the Depositary which will effectivelyprovide holders of Exchangeable Shares with voting rightsequivalent to those attached to Weatherford Common Stock;

3.30 the terms of the Arrangement, the terms of the Exchangeable Shares and theexercise of certain rights provided for in connection with the Arrangementmay result in the following trades or distributions, or the equivalent, underthe Legislation (collectively, the "Trades"):

3.30.1 the issuance by Services of Exchangeable Shares to theAlpine Security Holders in consideration for the Alpine Sharesand Alpine Options;

3.30.2 the transfer by the Alpine Security Holders of the AlpineShares and Alpine Options to Services in consideration forExchangeable Shares;

3.30.3 the grant by Weatherford of the Exchange Right to theDepository;

 

3.30.4 the issuance by Weatherford and delivery by Services ofWeatherford Common Stock to holders of ExchangeableShares upon the exercise of the Exchange Right;

3.30.5 the issuance by Weatherford of the Voting Share to theDepositary;

3.30.6 the grant by holders of Exchangeable Shares to Weatherfordof certain rights to purchase Exchangeable Shares forWeatherford Common Stock (the "Call Rights");

3.30.7 the grant by Weatherford to the holders of the ExchangeableShares of certain rights to require Weatherford to purchase theExchangeable Shares for Weatherford Common Stock (the"Put Rights");

3.30.8 the issuance by Weatherford of Weatherford Common Stockto holders of Exchangeable Shares upon the exercise of theCall Rights or Put Rights;

3.30.9 the issuance by Weatherford and delivery by Services ofWeatherford Common Stock to holders of ExchangeableShares upon the exchange, redemption or retraction of theExchangeable Shares under their terms; and

3.30.10 the transfer of Exchangeable Shares by the holders therof toWeatherford or Services in connection with the exercise of theExchange Right, the Call Rights or the Put Rights or upon theexchange, redemption or retraction of the ExchangeableShares under their terms;

3.31 Services has applied to have the Exchangeable Shares listed on the TSEfollowing the Arrangement;

3.32 Services will be a reporting issuer or the equivalent in Alberta, BritishColumbia, Ontario and Québec following the Arrangement. Services hasalso applied to be declared a reporting issuer in Nova Scotia following theArrangement. Services will not be, and does not intend to become, areporting issuer or the equivalent in any other Jurisdiction;

3.33 the Circular discloses that Weatherford and Services have applied for relieffrom the Registration and Prospectus Requirements and the ContinuousDisclosure Requirements. The Circular also identifies the limitationsimposed on any resale of Exchangeable Shares or Weatherford CommonStock and the continuous disclosure that will be provided to holders ofExchangeable Shares if the requested relief is granted;

3.34 Weatherford will concurrently send to holders of Weatherford CommonStock resident in the Jurisdictions all disclosure material it sends to holdersof Weatherford Common Stock resident in the United States;

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 under the Legislation is that:

6.1 the Registration Requirement and the Prospectus Requirement shall notapply to the Trades;

 

6.2 the first trade of Exchangeable Shares acquired under the Arrangement shallbe subject to the Prospectus Requirement unless:

6.2.1 the trade is exempt from the Prospectus Requirement under theLegislation of the Jurisdiction in which the trade takes place (the"Applicable Jurisdiction"); or

6.2.2 Services is a reporting issuer or the equivalent in the ApplicableJurisdiction or, if Services is not a reporting issuer or the equivalentin the Applicable Jurisdiction, the requirements described inparagraph 6.4 have been met in the Applicable Jurisdiction;

6.2.3 if the seller is in a special relationship with Services or Weatherford,as defined in the Legislation of the Applicable Jurisdiction, the sellerhas reasonable grounds to believe that Services and Weatherford arenot in default of any requirement of the Legislation of the ApplicableJurisdiction or of this Decision;

6.2.4 no unusual effort is made to prepare the market or to create ademand for the Exchangeable Shares and no extraordinarycommission or consideration is paid in respect of the trade; and

6.2.5 the trade is not a trade from the holdings of any person, company orcombination of persons or companies that holds a sufficient numberof securities of Services or Weatherford, or a combination ofsecurities of Services and Weatherford, to affect materially the controlof Services or Weatherford or holds, in the absence of evidenceshowing that the holding of those securities does not affect materiallythe control of Services or Weatherford, more than 20 percent of theoutstanding voting securities of Services or Weatherford;

6.3 the first trade of Weatherford Common Stock acquired upon the exercise ofthe Exchange Right, the Call Rights, the Put Rights or upon the exchange,redemption or retraction of the Exchangeable Shares under their terms shallbe subject to the Prospectus Requirement unless:

6.3.1 the trade is exempt from the Prospectus Requirement under theLegislation of the Jurisdiction where the trade takes place; or

 

6.3.2 the trade is made through the facilities of the NYSE, or such othermarket or exchange outside of Canada on which the WeatherfordCommon Stock may be quoted or listed for trading at the time that thetrade occurs, in accordance with the rules and regulations applicableto that market or exchange;

6.4 the Continuous Disclosure Requirements shall not apply to Services for aslong as:

 

6.4.1 Weatherford sends to all holders of Exchangeable Shares resident inthe Jurisdictions all disclosure material furnished to holders ofWeatherford Common Stock resident in the United States;

6.4.2 Weatherford files with each of the Decision Makers copies of alldocuments filed by it with the United States Securities and ExchangeCommission under the 1934 Act;

6.4.3 Weatherford complies with the requirements of the NYSE, or suchother market or exchange on which the Weatherford Common Stockmay be quoted or listed, in respect of making public disclosure ofmaterial information on a timely basis and forthwith issues in theJurisdictions and files with the Decision Makers any press releasethat discloses a material change in the affairs of Weatherford;

6.4.4 Services has provided each recipient or proposed recipient ofExchangeable Shares resident in the Jurisdictions with a statementindicating that, as a consequence of this Decision, Services will beexempt from certain disclosure requirements applicable to reportingissuers or the equivalent, specifying those requirements that Serviceshas been exempted from and identifying the disclosure that will bemade in substitution therefor;

6.4.5 Services complies with the requirements of the Legislation to issue apress release and file a report with the Decision Makers upon theoccurrence of a material change in the affairs of Services that is notalso a material change in the affairs of Weatherford;

6.4.6 Weatherford includes in all future mailings of proxy solicitationmaterials to holders of Exchangeable Shares a clear and conciseinsert explaining the reason for the mailed material being solely inrelation to Weatherford and not to Services, such insert to include areference to the economic equivalency between the ExchangeableShares and Weatherford Common Stock and the right to vote atmeetings of shareholders of Weatherford;

6.4.7 Weatherford remains the direct or indirect beneficial owner of all ofthe issued and outstanding voting securities of Services; and

6.4.8 Services does not conduct any business or any offering of securitiesunconnected with the Combination, the Arrangement or the fulfillingof the terms of the Exchangeable Shares.

August 3rd, 2000.

Glenda A. Campbell, Vice-Chair     James E. Allard, Member