Section 144 - revocation ofcease trade order upon remedying of default, updating of publicdisclosure record and mailing of disclosure information, togetherwith outstanding financial statements, to shareholders.
Securities Act, R.S.O. 1990,c.S.5 as am., ss.127, ss.144.
Ontario Securities CommissionNotice 35 - Revocation of Cease Trade Orders (1995) 18 OSCB5.
IN THE MATTER OF
THE SECURITIES ACT R.S.O.1990, C. S.5, AS AMENDED
IN THE MATTER OF
WHEREAS the securitiesof the Company are subject to a cease trade order issued bythe Director dated June 12, 2002 (the "Cease Trade Order")which extended a temporary cease trade order issued by the Directordated May 31, 2002;
AND WHEREAS the Companyhas applied to the Ontario Securities Commission (the "Commission")for a partial revocation of the Cease Trade Order pursuant tosection 144 of the Act;
AND UPON the Companyhaving represented to the Commission that:
1. The Company is a corporationincorporated under the laws of Ontario on September 29, 1975and is a reporting issuer under the Act, the SecuritiesAct (British Columbia) and the Securities Act (Alberta).
2. The authorized capitalof the Company consists of unlimited number of common shares(the "Common Shares") and an unlimited number ofSeries A, B, C and D preference shares (the "PreferenceShares") of which 14,808,365 Common Shares, 4,200 SeriesA Preference Shares, 50,000 Series B Preference Shares and1,968 Series D Preference Shares are issued and outstanding.The Notes (as defined below) are the only outstanding debtsecurities of the Company. Other than the Common Shares, SeriesA Preference Shares, Series B Preference Shares, Series DPreference Shares and the Notes, there are no other securitiesof the Company outstanding.
3. The Common Shares of theCompany were suspended from listing on the Toronto Stock Exchangeon April 18, 2002 for failure to meet its continuing listingrequirements.
4. The Cease Trade Order wasissued as a result of the Company's failure to file and deliverits annual financial statements for the year ended December31, 2001 and its interim financial statements for the periodended March 31, 2002 (collectively, the "Financial Statements").
5. The Company is also subjectto a cease trade order of the British Columbia SecuritiesCommission (the "BCSC") dated May 31, 2002 and theAlberta Securities Commission (the "ASC") datedJune 7, 2002. The Company has concurrently applied to theBCSC and the ASC for a partial revocation of the BCSC andthe ASC cease trade orders.
6. Other than its failureto file the Financial Statements, the Company is not in defaultof any of the requirements of the Act.
7. In connection with itsMay 2001 plan of compromise and arrangement under the CompaniesCreditor Arrangement Act (Canada), the Company issuedthe following notes to holders of its previously issued 111/2% senior notes due 2006 and 1% junior subordinated notesdue 2030:
(a) US$6,440,040 principalamount of 15 1/2% Senior Notes due 2006 (the "SeniorNotes");
(b) US$29,337,960 principalamount of 1% Junior Series A Subordinated Notes due 2030(the "Junior A Notes"); and
(c) US$21,766,414 principalamount of 1% Junior Series B Subordinated Notes due 2030(the "Junior B Notes");
(collectively referred toas the "Notes").
8. Based on information availableto the Company, every holder of Junior A Notes and of JuniorB Notes is also a holder of Senior Notes. However, not everyholder of Senior Notes holds both Junior A Notes and JuniorB Notes.
9. Each series of Notes isgoverned by the terms of separate trust indentures among theCompany and Computershare Trust Company of Canada dated asof June 1, 2001. The Notes are not convertible into any othersecurities or series of securities of the Company. Certificatesrepresenting the Notes are held by the Depository Trust Company.Management of the Company believes that the Notes are ownedby fewer than 25 beneficial owners.
10. After obtaining the approvalof its shareholders and holders of its Senior Notes, on March31, 2002, the Company completed a restructuring (the "Restructuring")which resulted in a transfer of 75% of its equity interestin Camtx Corporation ("Camtx"), the Company's principaloperating subsidiary at the time, and certain other assets(including loans receivable from Camtx) in settlement of theCompany's obligations to senior secured creditors and theirassignees. As part of the Restructuring, all guarantees byCamtx and its subsidiaries in respect of the Senior Noteswere released.
11. As a result of the Restructuring,effective May 31, 2002, the assets of the Company consistedprimarily of a 25% interest (or 3,750,000 common shares) inCamtx and its liabilities consist primarily of its obligationsunder the Notes. The only liabilities of the Company (whichhave not been assumed by Camtx) in addition to its liabilitiesin respect of the Notes are trade payables not exceeding $10,000.
12. The Company believes thaton a liquidation basis, any consideration which may be offeredfor the 25% interest in the shares of Camtx held by the Companywould be nominal and that the realizable market value of asale of its 25% interest in Camtx would therefore generateproceeds significantly lower than the principal amount outstandingunder the Senior Notes.
13. In its information summarydated February 25, 2002 (the "Information Summary")prepared and delivered to all holders of Notes in connectionwith the Restructuring and in its management information circulardated February 15, 2002 prepared and delivered to its shareholdersin connection with a special meeting of shareholders to approvethe Restructuring, the Company disclosed that it would considerthe feasibility of distributing all or part of its remaining25% equity interest in Camtx to holders of Senior Notes inexchange for their Notes.
14. The Company mailed tothe holders of Senior Notes an offer (the "Offer")dated May 15, 2002 to purchase all of the Notes on the basisof 5.82 common shares of Camtx for each US$10 principal amountof Senior Notes tendered. Holders of Senior Notes are alsorequired to tender any Junior A Notes and/or Junior B Notesthey may hold to accept the Offer.
15. The Offer is not an issuerbid within the meaning of the Act as it is an offer to acquiredebt securities of the Company (which are not convertibleinto other securities).
16. The Company does not havethe resources to have the financial statements for the yearended December 31, 2001 or subsequent periods prepared oraudited.
17. None of the Notes areheld by insiders of the Company.
18. The Offer clearly indicatesthat financial statements of the Company for periods subsequentto September 30, 2001 are not available.
19. Camtx is a "closely-heldissuer" within the meaning of Rule 45-501 of the OntarioSecurities Commission and a "private issuer" withinthe meaning of Multilateral Instrument 45-103 of the ASC andBCSC.
20. The Offer provides thatshares of Camtx will only be issued to:
(i) residents of Canadaif they are (A) resident of Ontario, Alberta or BritishColumbia and are "accredited investors" withinthe meaning of Rule 45-501 of the Commission or MultilateralInstrument 45-103 or (B) other purchasers recognized byapplicable securities regulatory authorities as being ableto acquire the shares of Camtx pursuant to an exemptionfrom the prospectus requirements of applicable Canadiansecurities laws;
(ii) U.S. persons if theyare institutional "accredited investors" as definedin Regulation D under the Securities Act of 1933;and
(iii) non-U.S. persons outsidethe United States in reliance upon Regulation S under theSecurities Act of 1933.
21. The Company believes thatthe Offer is in the interest of the holders of Senior Notesand will result in an orderly and efficient distribution ofits remaining assets to its creditors.
22. In the event that a partialrevocation of the Cease Trade Order is not granted, bankruptcyor other liquidation proceedings would have to be institutedto liquidate the assets of the Company for the benefit ofthe holders of Notes, resulting in a more time-consuming andexpensive process and a lower realization of the Company'sassets by holders of the Senior Notes than could otherwisebe achieved by completing the transaction contemplated bythe Offer.
23. The distribution by theCompany of its 25% equity interest in Camtx would not involvea trade in the securities of the Company were it to occurin the context of bankruptcy or other liquidation proceedings(rather than under the Offer).
24. Disclosure of the assetsand liabilities of the Company were provided to holders ofNotes in the Information Summary. There has been no materialchange in the assets and liabilities of the Company sincethe date of the Information Summary.
25. The decision by a holderof Senior Notes with respect to whether or not to tender tothe Offer is voluntary.
AND UPON consideringthe application and the recommendation of the Staff of the Commission;
AND UPON the Commissionbeing satisfied that to do so would not be prejudicial to thepublic interest;
IT IS ORDERED under section144 of the Act that the Cease Trade Order be and is hereby partiallyrevoked solely to permit the following trades:
1. the tender of the Notesto the Company by holders of Senior Notes pursuant to theOffer; and
2. the purchase by the Companyof all Notes tendered by holders of Senior Notes pursuantto the Offer.
June 25, 2002.
"H. Lorne Morphy" "RobertL. Shirriff"