Mutual Reliance Review System for Exemptive Relief Applications - relief fromprospectus and registration requirements for spin off of a business of a publicly tradedUK company to investors by issuing shares of spun off entity as dividends -reorganization technically not covered by prescribed reorganization exemptions -technical relief - no policy issues.
Applicable Ontario Statutes
Securities Act, R.S.O. 1990, c.S.5, as am., ss. 25, 35(1)12(ii), 35(1)15, 53, 72(1)(f)(ii),72(1)(i), 74(1).
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
NATIONAL POWER PLC AND INNOGY HOLDINGS PLC
MRRS DECISION DOCUMENT
WHEREAS the local 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 fromNational Power PLC ("National Power") on behalf of itself and Innogy Holdings plc("Innogy Holdings") for a decision pursuant to the securities legislation of the Jurisdictions(the "Legislation"):
(a) that the prospectus and registration requirements as defined in NationalInstrument 14-101 Definitions, contained in the Legislation (respectively, the"Prospectus Requirements" and the "Registration Requirements") shall notapply to the proposed issuance of securities of Innogy Holdings to Canadianholders of NP Shares and NP Shares evidenced by NP ADRs (as each isdefined below) provided that the first trade in Innogy Holdings Shares orInnogy Holdings Shares evidenced by Innogy ADRs (as each is definedbelow) is deemed to be a distribution under the Legislation, subject to certainconditions; and
(b) that National Power and the Depositary (as defined below) are not subjectto the Registration Requirements in relation to acts in furtherance of tradesof the Innogy Holdings Shares and Innogy Holdings Shares evidenced byInnogy Holdings ADRs (as defined below).
AND WHEREAS pursuant to the Mutual Reliance Review System for ExemptiveRelief Applications (the "System"), the Ontario Securities Commission is the principalregulator for this Application;
AND WHEREAS it has been represented by National Power to the Decision Makersthat:
1. National Power is a company registered under the laws of England and Wales asa public company limited by shares with authorized capital of 1,700,000,000ordinary shares of 50 pence each (the "NP Shares") and one special rightsredeemable preference share of £1; as of July 20, 2000, 1,116,693,403 NP Shareswere issued and outstanding.
2. The NP Shares are listed on the London Stock Exchange Limited (the "LSE").
3. Of the issued and outstanding NP Shares, 97,984,304 NP Shares (approximately8.8% of the issued NP Shares) have been lodged with The Bank of New York (the"Depositary"), as depositary under a sponsored American Depositary Shareprogram (as so lodged, a "NP ADS") and American Depositary Receipts ("NPADRs") issued in respect thereof, each NP ADR representing 4 NP ADSs; the NPADRs are listed on the New York Stock Exchange (the "NYSE").
4. National Power is not, and has no current intention of becoming, a reporting issuerin any jurisdiction in Canada.
5. Innogy Holdings is not, and has no current intention of becoming, a reporting issuerin any jurisdiction in Canada.
6. So far as National Power can determine after due inquiry, less than 10% of the NPShares are held by residents of Canada and less than 10% of the holders of NPShares are residents of Canada.
7. National Power proposes to demerge its UK business, in order to separate its twodistinct business areas: (i) its international business involved in the developmentof power projects worldwide and; (ii) its UK business involved in the generation andsupply of electricity and gas within the UK; its international business will thereafterbe conducted through National Power (to be renamed International Power plc); itsUK business will thereafter be conducted through a new public company limited byshares, Innogy Holdings.
8. Innogy Holdings is incorporated under the laws of England and Wales as a publiccompany limited by shares (the "Innogy Holdings Shares").
9. This demerger will take effect through a reorganization (the "Reorganization") asfollows:
9.1 National Power, Innogy Holdings and Innogy plc (a wholly-owned subsidiaryof National Power which holds most of National Power's UK assets andholds shares in UK companies carrying out the UK business of NationalPower ("Innogy")), will enter into a demerger agreement under English law(the "Demerger Agreement").
9.2 National Power will declare a dividend in specie on the NP Shares equal tothe book value of National Power's shareholding in Innogy, payable to theholders of NP Shares (the "Dividend"); the resolution declaring the Dividendwill specify that the Dividend will be satisfied by the steps referred to inparagraph 9.3 below.
9.3 Pursuant to the Demerger Agreement, the whole of the issued share capitalof Innogy held directly by National Power will be transferred to InnogyHoldings; in return, Innogy Holdings will issue new fully paid Innogy HoldingsShares to National Power shareholders on a one-for-one basis; holders ofNP ADRs will receive Innogy Holdings ADRs (as defined below) or, if anelection is provided, Innogy Holdings Shares.
9.4 Application has been made to the Financial Services Authority in its capacityas competent authority under the Financial Services Act 1986 (the "UKListing Authority") for the Innogy Holdings Shares to be admitted to theofficial list of the UK Listing Authority and to the LSE for the Innogy HoldingsShares to be admitted to trading on the LSE's market for listed securities; inconjunction with and as part of the Reorganization, Innogy Holdings Shareswill be lodged with the Depositary, as depositary under a sponsoredAmerican Depositary Share program for Innogy Holdings Shares (as solodged, the "Innogy Holdings ADSs") and American Depositary Receipts("Innogy Holdings ADRs") will be issued in respect thereof; the InnogyHoldings ADRs are expected to be approved for listing on the NYSE, subjectto official notice of issuance.
9.5 National Power will be renamed International Power plc.
10. There is no market in Canada for the Innogy Holdings Shares or Innogy HoldingsADRs and and none is expected to develop.
11. Holders of NP Shares in the UK will receive documentation (the "MeetingDocumentation") prepared pursuant to the laws of England and the rules of the UKListing Authority; the Meeting Documentation will include a circular which explainsthe Reorganization proposal (and contains notice of the annual general meetingand extraordinary general meeting of National Power) along with normal proxymaterial, listing particulars relating to the listing of the Innogy Holdings Shares onthe LSE and an information document relating to the international business ofNational Power; residents of the United States and Canada will also be sent theMeeting Documentation; included in the Meeting Documentation will be certainadditional disclosure relevant to Canadian shareholders.
12. NP ADR holders are entitled to receive the Meeting Documentation pursuant to andin accordance with the documentation setting up the NP ADRs.
13. The Meeting Documentation will be mailed to holders of NP Shares and NP ADRson or about August 21, 2000 in connection with the extraordinary general meetingto be held on September 29, 2000.
14. Holders of NP Shares and NP ADRs who are Canadian residents will have thesame rights at law, if any, in respect of the Meeting Documentation as the holdersof NP Shares and NP ADRs, respectively, who are residents of the United Kingdom.
15. Certain elements of the Reorganization may need to be approved by a specialresolution (approval of not less than 75% of the votes cast) of the holders of NPShares, with other elements of the Reorganization being approved by ordinaryresolution (approval of not less than 50% of the votes cast) of the holders of NPShares.
16. Immediately following the Reorganization, the holders of NP Shares and NP ADRswill hold Innogy Holdings Shares and Innogy Holdings ADRs in the same proportionas their holdings of NP Shares and NP ADRs immediately prior to theReorganization; each of International Power plc and Innogy Holdings will operateas a separate publicly listed company and no company will retain any beneficialshareholding in the other.
17. Following the Reorganization, holders of Innogy Holdings Shares and InnogyHoldings ADRs with addresses in Canada will receive the same disclosurematerials that are sent to holders of Innogy Holdings Shares and Innogy HoldingsADRs in the US.
AND WHEREAS pursuant to the System, this Decision Document evidences thedecision of each Decision Maker (collectively, the "Decision");
AND WHEREAS each of the Decision Makers is satisfied that the test in thelegislation that provides the Decision Maker with the jurisdiction to make the Decision hasbeen met;
THE DECISION of the Decision Makers pursuant to the Legislation is that:
(a) the distribution (or primary distribution to the public) of the Innogy HoldingsShares and the Innogy Holdings ADRs pursuant to the Reorganization isexempt from the Prospectus Requirements and the RegistrationRequirements of the Legislation, provided that the first trade in either of theInnogy Holdings Shares or Innogy Holdings ADRs acquired by holders ofNP Shares or NP ADRs in Canada pursuant to this Decision is a distribution(or primary distribution to the public) under the Legislation unless:
(i) it is executed through the facilities of a stock exchange or marketoutside Canada, and
(ii) it is made in accordance with the rules of the stock exchange ormarket upon which the trade is made and in accordance with the lawsapplicable to such stock exchange or market; and
(b) the Registration Requirements of the Legislation shall not apply to anytrades by National Power and the Depositary in connection with theReorganization.
August 16th, 2000.
"J. A. Geller" "R. Stephen Paddon"