Mutual Reliance Review System for Exemptive Relief Applications -- Relief granted from the requirement to file certain financial statements with a business acquisition report provided that the business acquisition report will include, or incorporate by reference, the financial statements pertaining to the acquired business that were included in a final prospectus.
National Instrument 51-102 -- Continuous Disclosure Obligations, Part 8.
National Instrument 44-101 -- Short Form Prospectus Distributions.
September 16, 2004
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA, SASKATCHEWAN, MANITOBA,
ONTARIO, QUEBEC, NEW BRUNSWICK, NOVA SCOTIA
AND NEWFOUNDLAND AND LABRADOR (the Jurisdictions)
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
PBB GLOBAL LOGISTICS INCOME FUND (the Filer)
MRRS DECISION DOCUMENT
The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from the Filer for (i) a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption from the requirement that certain financial statements prescribed by section 8.4 of NI 51-102 be filed with the business acquisition report prepared by the Filer in connection with the Filer's acquisition of Clarke Logistics and (ii) in Quebec, for a revision of the general order that will provide the same result as an exemption order (the Requested Relief).
Under the Mutual Reliance Review System for Exemptive Relief Applications
(a) Ontario is the principal regulator for this application, and
(b) this MRRS decision document evidences the decision of each Decision Maker.
Defined terms contained in NI 14-101 Definitions have the same meaning in this decision unless they are defined in this decision.
This decision is based on the following facts represented by the Filer:
1. The Filer is a limited purpose trust established under the laws of the Province of Ontario pursuant to an amended and restated declaration of made as of June 25, 2002, as amended.
2. The Filer's head office is located at 33 Walnut Street, Fort Erie, Ontario L2A 5M7.
3. The Filer is a reporting issuer, or the equivalent, in each of the Jurisdictions and, to the best of its knowledge, is currently not in default of any applicable requirements under the securities legislation thereunder.
4. Although the Filer is also a reporting issuer, or the equivalent, in Prince Edward Island, the Yukon, the Northwest Territories and Nunavut, an application is not being made to the securities regulatory authorities in this province and territories as we understand that NI 51-102 has not been adopted in these jurisdictions.
5. Although the Filer is also a reporting issuer in British Columbia, an application is not being made in this province as BC Implementing Rule 51-801 exempts issuers from Part 8 of NI 51-102 in British Columbia.
6. On June 1, 2004, Clarke Inc. and the Filer signed a purchase agreement which provided for the purchase and sale of Clarke Inc.'s Canadian logistics division and two U.S. subsidiaries, Clarke Transportation Services Inc. and Focus Carriers Inc. (the Acquisition) to the Filer or its affiliates, for a purchase price of approximately CDN $40,000,000. The business carried on by this division and the subsidiaries is referred to as "Clarke Logistics".
7. On June 1, 2004, the Filer filed a preliminary short form prospectus in all of the provinces and territories for an offering of subscription receipts (the Offering). The proceeds of the Offering were intended to finance the Acquisition.
8. On June 17, 2004, the Filer filed its final prospectus (the Prospectus) in each of the provinces and territories of Canada in connection with the Offering, qualifying 2,500,000 subscription receipts for total gross proceeds of CDN $40,000,000.
9. On June 25, 2004, the Filer closed the Offering.
10. On July 5, 2004, the Filer completed the Acquisition, and the subscription receipts were exchanged for units (Units) of the Filer on a one-for-one basis.
11. The Units are listed on the Toronto Stock Exchange. As at August 13, 2004, the Filer had 8,646,000 Units issued and outstanding.
12. The Acquisition constitutes a "significant acquisition" of the Filer for the purposes of NI 51-102, requiring the Filer to file a business acquisition report on or before September 17, 2004 pursuant to sections 8.2 and 8.5(1)2 of NI 51-102.
13. Pursuant to section 8.4 of NI 51-102, the business acquisition report must be accompanied by certain financial statements, including: (i) audited financial statements for Clarke Logistics for the years ended March 31, 2003 and March 31, 2004; (ii) interim financial statements for Clarke Logistics for the three month period ended June 30, 2004 together with a comparative interim financial statement for the three month period ended June 30, 2003; (iii) a pro forma balance sheet for the Filer as at June 30, 2004; (iv) pro forma income statements for the Filer for the year ended December 31, 2003 and the six month period ended June 30, 2004; and (v) a compilation report for the Filer to accompany the Filer's pro forma financial statements (the BAR Financial Statements).
14. NI 44-101 sets out the financial statements required to be included or incorporated by reference in a short form prospectus, including financial statements relating to "significant acquisitions".
15. Pursuant to NI 44-101, the Filer's short form prospectus dated June 17, 2004 included the following financial statements: (i) audited financial statements of Clarke Logistics for the years ended March 31, 2002 and March 31, 2003; (ii) audited financial statements of Clarke Logistics for the nine month period ended December 31, 2003; (iii) unaudited financial statements of Clarke Logistics for the three month period ended March 31, 2004; (iv) a pro forma balance sheet for the Filer as at March 31, 2004; (v) a pro forma income statement for the Filer for the three month period ended March 31, 2004; (vi) a pro forma income statement for the Filer for the twelve month period ended March 31, 2004; (vii) a pro forma income statement for the Filer for the year ended December 31, 2003; and (viii) a compilation report for the Filer on the pro forma financial statements (the Prospectus Financial Statements).
16. Compliance with the financial statement requirements in NI 44-101 does not necessarily satisfy the financial statement requirements in section 8.4 of NI 51-102.
17. The Prospectus was filed 18 days before the closing of the Acquisition and the financial statements of Clarke Logistics for the year ended March 31, 2003 (audited), for the nine months ended December 31, 2003 (audited) and three months ended March 31, 2004 are included in the Prospectus.
18. Pursuant to requirements in NI 51-102, the business acquisition report must be accompanied by certain financial statements of Clarke Logistics.
Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.
The decision of the Decision Makers under the Legislation is that the Requested Relief is granted provided that the business acquisition report filed by the Filer includes or incorporates by reference the Prospectus Financial Statements.
Manager, Corporate Finance
Ontario Securities Commission