Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - Relief undersubsection 104(2)(c) of the Act from the identical consideration requirement undersubsection 97(1) of the Act to permit the payment of sale proceeds in lieu of shares ofthe offeror to holders of offeree shareholders resident in the United States of America.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am. - subsections 97(1) and 104(2)(c).


IN THE MATTER OFTHE SECURITIES LEGISLATION OF ALBERTA, BRITISH COLUMBIA, SASKATCHEWAN,MANITOBA, ONTARIO, NOVA SCOTIA AND NEWFOUNDLAND

AND

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

AND

IN THE MATTER OF
REAL RESOURCES INC.

MRRS DECISION DOCUMENT


1. WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of Alberta, British Columbia, Saskatchewan, Manitoba, Ontario,Nova Scotia and Newfoundland (the "Jurisdictions") has received an applicationfrom Real Resources Inc. ("Real") for a decision under the securities legislationof the Jurisdictions (the "Legislation") exempting Real from the requirementcontained in the Legislation to offer all holders of the same class of securitiesidentical consideration (the "Identical Consideration Requirement") in connectionwith an offer to purchase all of the issued and outstanding common shares ofPrism Petroleum Inc. ("Prism");

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 Real has represented to the Decision Makers that:

3.1 Real is a corporation amalgamated under the Business Corporations Act(Alberta), with its head office in Calgary, Alberta;

3.2 Real is a reporting issuer or the equivalent in British Columbia, Alberta,Ontario, Saskatchewan, Nova Scotia and Quebec;

3.3 Real is not in default of any requirement of the Legislation;

3.4 the common shares of Real (the "Real Common Shares") are listed andposted for trading on The Toronto Stock Exchange (the "TSE");

3.5 Prism is a corporation incorporated under the Business Corporations Act(Alberta), with its head office in Calgary, Alberta;

3.6 Prism is a reporting issuer in Alberta;

3.7 Prism is not in default of any requirement of the Legislation;

 

3.8 the common shares of Prism (the "Prism Common Shares") are listed andposted for trading on The Canadian Venture Exchange;

3.9 Real has made an offer to acquire all of the outstanding Prism CommonShares (the "Offer");

3.10 Real will conduct the Offer by means of a formal take-over bid under theLegislation;

 

3.11 under the terms of the Offer, the holders of Prism Common shares mayelect to receive:

3.11.1 $1.85 in cash for each Prism Common Share, subject to amaximum aggregate cash consideration of $10,485,000; or

3.11.2 0.50 of a Real Common Share for each Prism CommonShare, subject to a maximum aggregate issuance of2,500,000 Real Common Shares; or

3.11.3 a combination thereof;

3.12 if the holders of Prism Common Shares elect to receive cashconsideration exceeding an aggregate of $10,485,000, that amount willbe paid to the holders on a pro rata basis with the balance of the offerprice being paid by the issuance of 0.50 of a Real Common Share foreach Prism Common Share not purchased for cash consideration;

3.13 if the holders of Prism Common Shares elect to receive considerationexceeding 2,500,000 Real Common Shares, that number of RealCommon Shares will be issued to the holders on a pro rata basis with thebalance of the offer price being paid in cash on the basis of $1.85 foreach Prism Common Share not purchased for consideration consisting ofReal Common Shares;

3.14 as at August 9, 2000, to the knowledge of Real after reasonable inquiry,there were six registered shareholders of Prism resident in the UnitedStates of America (the "U.S. Shareholders"), collectively holdingapproximately 1.09% of the outstanding Prism Common Shares;

3.15 the Real Common Shares that may be issued under the Offer to the U.S.Shareholders have not been and will not be registered or otherwisequalified for distribution under the securities legislation of the UnitedStates of America. Accordingly, the delivery of Real Common Shares toU.S. Shareholders without further action by Real may constitute aviolation of the laws of the United States of America;

3.16 to the extent that the U.S. Shareholders elect to receive or are allocatedReal Common Shares in exchange for their Prism Common Shares, Realproposes to deliver the Real Common Shares to Computershare InvestorServices Inc. (the "Depositary"), instead of to the U.S. Shareholders, forsale of such Real Common Shares on behalf of the U.S. Shareholders.The Depositary will, as soon as possible after such delivery, pool and sellthe Real Common Shares on behalf of the U.S. Shareholders. Such salewill be done through the facilities of the TSE in a manner that is intendedto minimize any adverse effect on the market price of Real CommonShares. As soon as possible after the completion of such sale, theDepositary will send to each U.S. Shareholder a cheque equal to suchU.S. Shareholder's pro rata share of the proceeds of the sale of all RealCommon Shares by the Depositary, net of sales commissions andapplicable withholding taxes;

3.17 the Offer will be made in compliance with the Legislation, except to theextent that exemptive relief is granted in respect of the IdenticalConsideration Requirement;

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

5. AND WHEREAS each of the Decision Makers is satisfied that the test containedin the Legislation that provides the Decision Maker with the jurisdiction to makethe Decision has been met;

6. THE DECISION of the Decision Makers under the Legislation is that, inconnection with the Offer, Real is exempt from the Identical ConsiderationRequirement insofar as U.S. Shareholders who accept the Offer may receivecash proceeds from the Depositary's sale

of Real Common Shares in accordance with the procedure set out inparagraph 3.16 above instead of Real Common Shares.

DATED at Calgary, Alberta this 31st day of August, 2000.

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