Securities Law & Instruments

Headnote

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 the financial statements pertaining to the acquired business that were included in a final prospectus.

Rules Cited

National Instrument 51-102, Continuous Disclosure Obligations, Part 8.

Ontario Securities Commission Rule 41-501, General Prospectus Requirements.

January 7, 2005

IN THE MATTER OF

THE SECURITIES LEGISLATION

OF ALBERTA, SASKATCHEWAN, MANITOBA,

ONTARIO, QUÉBEC, NEW BRUNSWICK, NOVA SCOTIA,

AND NEWFOUNDLAND AND LABRADOR (THE JURISDICTIONS)

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

ATLANTIC POWER CORPORATION (THE FILER)

 

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the Decision Maker, and collectively the Decision Makers) in each of the Jurisdictions has received an application (the Application) from the Filer for: (i) a decision under the securities legislation of the Jurisdictions (the Legislation) exempting the Filer from the requirements prescribed by section 8.4 of National Instrument 51-102 (NI 51-102) which require that interim financial statements for the Projects (as defined below) for the nine month period ended September 30, 2004 and as at September 30, 2004 and pro forma financial statements for the Filer for the nine month period ended September 30, 2004 and as at September 30, 2004 be included in a business acquisition report (a BAR) to be filed by the Filer in connection with the Filer's acquisition of indirect interests in 15 power generation projects primarily located in the United States (each, a Project) on November 18, 2004; and (ii) in Quebec, 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) the Ontario Securities Commission (the OSC) is the principal regulator for the Application, and

(b) this MRRS decision document evidences the decision of each Decision Maker.

Interpretation

Unless otherwise defined, the terms herein have the same meaning set out in National Instrument 14-101 Definitions.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer was incorporated on June 18, 2004 and is validly existing under the laws of the Province of Ontario.

2. The Filer is a reporting issuer in all of the Jurisdictions and the income participating securities (IPSs) of the Filer, each representing one common share and $5.767 aggregate principal amount of 11% subordinated notes of the Filer, are listed and posted for trading on the Toronto Stock Exchange.

3. Although the Filer is also a reporting issuer, or the equivalent, in the Province of Prince Edward Island, the Yukon, the Northwest Territories and Nunavut, an application is not being made to the securities regulatory authorities in these jurisdictions as we understand that NI 51-102 has not been adopted in such jurisdictions.

4. Although the Filer is also a reporting issuer in the Province of 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.

5. The Filer is not in default of any material requirement of the Legislation and is not on the list of defaulting reporting issuers maintained pursuant to subsection 72(9) of the Securities Act (Ontario) or equivalent provisions of the Legislation.

6. On October 6, 2004, the Filer filed a preliminary prospectus (the Preliminary Prospectus) in connection with an initial public offering (IPO) of IPSs which disclosed, among other things, that the Filer has been established to indirectly hold interests in the Projects. A preliminary mutual reliance review system (MRRS) decision document, evidencing the issue of a preliminary receipt by the securities regulatory authority in each of the Jurisdictions, was issued by the OSC on October 8, 2004.

7. On October 21, 2004, the Filer filed an amended and restated preliminary prospectus (the Amended and Restated Preliminary Prospectus) for the IPO which contained substantially the same disclosure as the Preliminary Prospectus. An MRRS decision document, evidencing the issue of an amended preliminary receipt by the securities regulatory authority in each of the Jurisdictions, was issued by the OSC on October 22, 2004.

8. On November 10, 2004, the Filer filed a final prospectus (together with the Preliminary Prospectus and the Amended and Restated Preliminary Prospectus, the Prospectus) for the IPO which contained substantially the same disclosure as the Amended and Restated Preliminary Prospectus. A final MRRS decision document, evidencing the issue of a final receipt by the securities regulatory authority in each of the Jurisdictions, was issued by the OSC on November 10, 2004.

9. On November 18, 2004, the Filer completed the IPO and used the proceeds to indirectly acquire interests in the Projects described in the Prospectus (the Acquisition).

10. The prospectus requirements under the Legislation sets out the financial statements required to be included in a prospectus, including financial statements relating to "significant acquisitions."

11. Compliance with the prospectus financial statement requirements under the Legislation does not necessarily satisfy the financial statement requirements in section 8.4 of NI 51-102.

12. The Prospectus was filed eight days prior to the closing of the Acquisition. The Prospectus contains full, true and plain disclosure of all material facts relating to the Filer and the Acquisition and the financial statement disclosure for significant probable acquisitions pursuant to section 6.4 of OSC Rule 41-501 in respect of the Acquisition. Accordingly, the Prospectus contains: (i) the unaudited consolidated financial statements of Teton Power Funding, LLC (Teton Funding), the owner of interests in 12 of the Projects, as at June 30, 2004 and for the period from March 13, 2004 to June 30, 2004; (ii) the audited combined financial statements of UtilCo SaleCo LLC, the predecessor of Teton Funding, as at December 31, 2003 and 2002 and for the years then ended and unaudited combined statements of income, comprehensive income and cash flows for the periods from January 1, 2004 to March 12, 2004 and January 1, 2003 to June 30, 2003; (iii) the unaudited pro forma financial statements of the Filer giving effect to the Acquisition as at June 30, 2004 and for the six months then ended and for the year ended December 31, 2003; and (iv) the audited balance sheet of the Filer as at June 30, 2004. (collectively, the Prospectus Financial Statements).

13. The Acquisition constitutes a "significant acquisition" of the Filer for the purposes of NI 51-102, requiring the Filer to file a BAR within 75 days of completing the Acquisition.

14. Unless otherwise exempt, the Filer is required, pursuant to section 8.4 of NI 51-102, to include in the BAR prepared in respect of the Acquisition: (i) statements of income, retained earnings and cash flows for the Projects for the years ended December 31, 2003 and 2002, and the nine months ended September 30, 2004 and 2003; (ii) balance sheets for the Projects as at December 31, 2003 and 2002 and September 30, 2004; (iii) pro forma statements of income for the Filer for the year ended December 31, 2003 and for the nine months ended September 30, 2004; and (iv) the pro forma balance sheet for the Filer as at September 30, 2004.

15. From June 30, 2004, the date of the most recent financial statements included in the Prospectus, to September 30, 2004, no material change in the financial condition or results of operations of the Projects (considered as a whole) occurred.

Decision

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 BAR filed by the Filer includes the Prospectus Financial Statements.

"Charlie MacCready"
Assistant Manager, Corporate Finance
Ontario Securities Commission