IN THE MATTER OF THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5, AS AMENDED (the "Act")
IN THE MATTER OF
ROGERS COMMUNICATIONS INC.
UPON the application (the "Application") of Rogers Communications Inc. ("RCI") to the Ontario Securities Commission (the "Commission") for a ruling, pursuant to subsection 74(1) of the Act that, subject to certain conditions, the first trade by shareholders (the "Vendors") of Cable Atlantic Inc. ("Cable Atlantic") in Class B Non-Voting Shares of RCI acquired in connection with the acquisition (the "Acquisition") by RCI of all of the shares of Cable Atlantic shall not be subject to section 53 of the Act;
AND UPON considering the Application and the recommendation of staff to the Commission;
AND UPON RCI having represented to the Commission as follows:
1.RCI is a company existing under the laws of British Columbia. RCI’s principal business office is located in Toronto, Ontario.
2.RCI has been a reporting issuer in all provinces of Canada (which recognize the concept of a reporting issuer) for more than 12 months.
3.The outstanding share capital of RCI includes 56,240,494 Class A Voting Shares (the "Class A Shares") and 147,701,694 Class B Non-Voting Shares (the "Class B Shares") as at September 30, 2000. The Class A Shares are listed and posted for trading on The Toronto Stock Exchange. The Class B Shares are listed and posted for trading on the New York Stock Exchange and The Toronto Stock Exchange. In addition, preferred shares of RCI of nine different series are outstanding (as at December 31, 1999), some of which are convertible into Class B Shares.
4.On September 18, 2000, RCI entered into an agreement (the "Agreement") with the Vendors and Cable Atlantic pursuant to which RCI has agreed to acquire all of the shares (the "Purchased Shares") in the capital of Cable Atlantic, a private Newfoundland corporation.
5.All of the Vendors are residents of Newfoundland.
6.The consideration payable by RCI for the Purchased Shares is $231.8 million, subject to adjustment.
7.RCI may be required to issue the following number of Class B Shares in respect of the Purchase Price, adjustments thereto and certain guarantees:
(i)$151.8 million of the Purchase Price is payable to the Vendors by the issuance of 4,170,330 Class B Shares (the "Purchase Price Shares"). The balance of the Purchase Price is payable in cash.
(ii)The Agreement provides that the Purchase Price will be adjusted to reflect the number of Cable Atlantic’s basic cable customers (computed as provided in the Agreement) as well as a result of actual working capital, long-term indebtedness and capital expenditures based on financial statements prepared as at the closing date. Any adjustment to the Purchase Price payable by RCI after closing may be satisfied in cash or Class B Shares (at the option of the Vendors). If any such adjustment to the Purchase Price is to be satisfied by the issuance of Class B Shares, the number of Class B Shares will be determined by dividing the Purchase Price adjustment by $36.40. RCI has estimated that no more than 600,000 Class B Shares should be issuable in respect of such adjustment (the "Adjusting Shares").
(iii)RCI has guaranteed the Vendors that within a period of two (2) years after the closing (or in the event of an earlier change of control or sale of RCI, at the Vendor’s option, within 60 days thereafter), that the weighted average market price of the Class B Shares on the Toronto Stock Exchange will exceed $48.00 per Class B Share on at least 20 consecutive trading days in such two year or shorter period, as applicable, (the "Guarantee Period"). In the event that at the end of the Guarantee Period, such guaranteed price has not been achieved, RCI may be required to issue up to an additional 1,329,007 Class B Shares if no Adjusting Shares are issued, or up to 1,520,215 Class B Shares if the 600,000 Adjusting Shares are issued, (such additional Class B Shares which RCI may be obliged to issue being called the "Guarantee Shares") to the Vendors. The number of Guarantee Shares will be equal to that number of Class B Shares which have an aggregate value (based on the Actual Price) equal to the product obtained by multiplying the sum of the number of Purchase Price Shares and Adjusting Shares held by the Vendors at the end of the Guarantee Period, by the difference between $48.00 and the Actual Price. The "Actual Price" is defined as the greater of (1) a price per share equal to the weighted average trading price on the Toronto Stock Exchange for the Class B Shares for the twenty consecutive trading days ending on expiry of the Guarantee Period and (2) $36.40 per share.
8.The aggregate number of Purchase Price Shares, Adjusting Shares and Guarantee Shares is not expected to exceed 6,290,545 Class B Shares (collectively, the actual number of such shares to be issued referred to as the "Payment Shares").
9. The issuance of the Payment Shares will be a distribution under the Securities Act (Newfoundland). The Payment Shares will be issued in connection with a take-over bid (as defined in clause 90(1)(l) of the Securities Act (Newfoundland)) which is exempt from the requirements of sections 96 to 101 of the Securities Act (Newfoundland) pursuant to clause 94(1)(d) thereof. The Payment Shares will be issued to the Vendors pursuant to the exemptions from the prospectus and registration requirements of the Securities Act (Newfoundland) contained in clauses 73(1)(j) and 36(1)(q) thereof respectively. The first trade in the Payment Shares will be subject to the requirements of subsection 73(5) of the Securities Act (Newfoundland) which does not require that the Payment Shares be held for a minimum period of time.
10.The issuance of the Payment Shares may also be a distribution under the Act and the Payment Shares will be issued to the Vendors pursuant to the exemption from the prospectus and registration requirements of the Act as set out in clauses 72(1)(l) and 35(1)(18) of the Act.
11.The issuance of the Payment Shares would have been exempt from the prospectus requirements of the Act under 72(1)(j) of the Act but for the fact that none of the Vendors are resident of Ontario.
12.The Acquisition will not be a "significant acquisition" as characterized in National Instrument 44-101 Short-Form Prospectus Distributions (the "National Instrument").
IT IS RULED, pursuant to subsection 74(1) of the Act, that the first trade in the Payment Shares shall not be subject to section 53 of the Act provided that the first trade in any of the Payment Shares shall be a distribution unless such first trade is made in accordance with the provisions of subsection 72(5) of the Act, as if such securities had been acquired pursuant to an exemption referred to in subsection 72(5) of the Act, except that for these purposes, it shall not be necessary to satisfy the requirement in clause 72(5)(a) of the Act that the issuer not be in default of any requirement of the Act or the regulations made under the Act if the seller is not in a special relationship with the issuer or, if the seller is in a special relationship with the issuer, the seller has reasonable grounds to believe that the issuer is not in default under the Act or the regulations made under the Act, where, for these purposes, "special relationship" shall have the same meaning as in
December 1st, 2000
"John A. Geller"Robert W. Davis"