A wholly-owned subsidiary of an issuer is exempt from the requirement to pay participation fees, subject to certain conditions.
Securities Act, R.S.O. 1990, c. S.5, as am.
Ontario Securities Commission Rule 13-502 Fees (2003), 26 O.S.C.B. 890, ss. 2.2 and 6.1.
IN THE MATTER OF
THE SECURITIES ACT
R.S.O. 1990, C. S.5, AS AMENDED
ONTARIO SECURITIES COMMISSION RULE 13-502 FEES
(the "Fee Rule")
IN THE MATTER OF
LOBLAW COMPANIES LIMITED
AND PROVIGO INC.
(Section 6.1 of the Fee Rule)
UPON the Director having received an application (the "Application") from Loblaw Companies Limited (the "Applicant" or "Loblaw"), on its own behalf and on behalf of Provigo Inc. ("Provigo") seeking a decision pursuant to section 6.1 of the Fee Rule exempting Provigo from the requirement in section 2.2 of the Fee Rule to pay a participation fee;
AND UPON considering the Application and the recommendation of the staff of the Ontario Securities Commission;
AND UPON the Applicant having represented to the Director as follows:
1. Provigo was continued on June 1, 1982 under the Companies Act (Quebec). Its head office is located at 400 Avenue Ste. Croix, St. Laurent, Quebec H4N 3L4. Provigo is engaged, through its subsidiaries, in food retailing in the province of Quebec.
2. Provigo is authorized to issue an unlimited number of common shares ("Common Shares") and an unlimited number of preference shares, issuable in series. As of October 7, 2003, Provigo had 108,300,457 Common Shares outstanding, 100% of which are held, directly or indirectly, by Loblaw. There are no preference shares of Provigo outstanding.
3. Provigo is a reporting issuer in the provinces of Ontario, Quebec and British Columbia.
4. Provigo currently has two debt issues outstanding: $125,000,000 principal amount of 8.70% Debenture Series 1996 due May 23, 2006 and $100,000,000 principal amount of 6.35% Debenture Series 1997 due December 1, 2004 (the "Debentures"). The Debentures are the only securities of Provigo held by the public. The Debentures are not listed or posted for trading on any exchange or market.
5. Provigo is not in default of any of the requirements under the Securities Act (the "Act") or rules promulgated thereunder (the "Rules"), except in respect of the requirements from which Provigo is presently seeking an exemption.
6. Loblaw was incorporated on January 18, 1956 and continued under the Canada Business Corporations Act by certificate of continuance dated May 7, 1980. Its principal executive office is located at 22 St. Clair Avenue East, Suite 1500, Toronto, Ontario, M4T 2S8. Loblaw, through its subsidiaries, is engaged in food retailing across Canada.
7. Loblaw is a reporting issuer in all the provinces and territories of Canada and is not on the list of defaulting issuers in any of those jurisdictions. Loblaw's common shares are listed and posted for trading on the Toronto Stock Exchange.
8. On September 22, 1999, the Commission issued an order (the "Prior Order") exempting Provigo from the continuous disclosure requirements of filing annual audited financial statements and interim financial statements and from the requirement to file an annual report on Form 28, subject to certain conditions.
9. The exemption in the Prior Order was subject to several conditions, including:
(a) Loblaw fully and unconditionally guarantee the Debentures;
(b) Loblaw maintain its 100% direct or indirect ownership of Provigo;
(c) Provigo not issue any securities to the public in addition to the Debentures; and
(d) Provigo file with the Commission abridged interim and annual financial information containing certain prescribed line items.
10. On December 23, 1999, the Commission issued a "no-action" letter (the "No-Action Letter") to Provigo which stated that, based on Privigo's representation that the only outstanding shares of Provigo are the Common Shares, all of which are held directly or indirectly by Loblaw, the Commission would not initiate any regulatory action by reason of Provigo not filing an AIF or MD&A, provided that Loblaw continues to hold, directly or indirectly, all of the Common Shares.
11. Loblaw has fully and unconditionally guaranteed the Debentures pursuant to an Agreement of Guarantee between Loblaw and CIBC Mellon Trust Company, the trustee for the Debentures, dated September 22, 1999.
12. Provigo and Loblaw do not intend for Provigo to issue any securities to the public in addition to the Debentures.
13. Provigo's financial results and condition are consolidated with that of Loblaw in its audited financial statements and therefore the value of the Debentures is included in the calculation of Loblaw's annual participation fee payable under the Fee Rule.
AND UPON the Director being satisfied that to do so would not be prejudicial to the public interest;
IT IS THE DECISION of the Director, pursuant to section 6.1 of the Fee Rule, that Provigo is exempt from the requirement in section 2.2 of the Fee Rule to pay a participation fee for each of its financial years ending after the date of this order, for so long as:
(a) the Prior Order remains in full force and effect, without variation,
(b) the representation given by Privigo in connection with the Prior Order that the only outstanding shares of Provigo are the Common Shares, all of which are held directly or indirectly by Loblaw, is true and correct and Loblaw continues to hold directly or indirectly all of the Common Shares, such that Provigo is able to rely upon the No-Action Letter,
(c) all of the equity securities of Provigo continue to be held beneficially, directly or indirectly, by Loblaw,
(d) Loblaw is a reporting issuer in Ontario,
(e) Loblaw has paid its participation fee pursuant to section 2.2 of the Fee Rule, and in calculating such fee has included the market value of each of the Debentures outstanding at the relevant time, and
(f) Provigo does not issue any further securities to the public,
provided further that upon any further issuance of securities to the public of Provigo, a participation fee shall be immediately paid by Provigo in respect of the financial year during which such securities are issued (such fee to be pro rated to reflect the number of entire months remaining in such financial year) and in respect of subsequent financial years during which such securities remain outstanding.
December 17, 2003.