Securities Law & Instruments

Headnote

Mutual Reliance Review System for Applications -- take-over bid made to offeree security holders resident in Ontario -- offer made in compliance with the laws of The Netherlands -- securities of offeree issuer held partially in bearer form, so that offeror unable to definitively determine the number of Ontario shareholders or percentage of securities held by Ontario shareholders - de minimis exemption unavailable because Ontario shareholders believed to own just over 5% of the issuer's shares, exceeding the 2% threshold permitted by the exemption, and because The Netherlands is not a recognized jurisdiction for the purposes of the exemption -- bid exempted from requirements of Part XX, subject to certain conditions including the announcement of the bid in a national Canadian newspaper and the provision of all offer materials to Ontario shareholders whose addresses are known to the applicant.

Applicable Ontario Statutes

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 93(1)(e), 95-100, 104(2)(c).

Recognition Orders Cited

In the Matter of the Recognition of Certain Jurisdictions (Clauses 93(1)(e) and 93(3((h) of Act) (1997) 20 OSCB 1035.

June 28, 2005

IN THE MATTER OF

THE SECURITIES LEGISLATION

OF

ONTARIO AND QUEBEC

(the "Jurisdictions")

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

BERGSON HOLDINGS N.V.

(the "Filer")

 

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the "Decision Maker") in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the "Legislation") that the formal take-over bid requirements contained in the Legislation, including the provisions relating to delivery of an offer and take-over bid circular and any notices of change or variation thereto, delivery of a director's circular and any notices of change or variation thereto, minimum deposit periods and withdrawal rights, take-up of and payment for securities tendered to a take-over bid, disclosure, financing, restrictions upon purchases of securities, identical consideration and collateral benefits (collectively, the "Take-over Bid Requirements") shall not apply to trades made in connection with the proposed offer (the "Offer") by the Filer for the outstanding ordinary shares (the "Target Shares") of Hunter Douglas N.V. (the "Target").

1. The Filer is a public limited liability company incorporated under Netherland Antilles law with its principal place of business being The Netherlands.

2. The Filer is not a reporting issuer in either of the Jurisdictions and is not a reporting issuer or equivalent under the laws of any other province or territory of Canada. The Filer's securities are not listed or quoted for trading on any Canadian stock exchange or market.

3. The Filer was incorporated as a special purpose vehicle solely for the purpose of making the Offer and is wholly-owned by Mr. R. Sonnenberg ("Sonnenberg"), the CEO, President and majority shareholder of the Target;

4. As at the date of the Application, Mr. R. Sonnenberg, directly or indirectly, owned or controlled:

(i) 22,075,148 Target Shares (representing 52.6% of the issued and outstanding Target Shares);

(ii) 54,807,000 of the preferred shares of the Target (representing 97.4% of the issued and outstanding ("Preferred Shares") Preferred Shares; and

(iii) 200,000 options to purchase Common Shares.

5. Sonnenberg will transfer approximately 18 million Target Shares to the Filer and will pledge all of the Preferred Shares he controls to the banks providing financing to the Filer in respect of the Offer.

6. The Filer is making this application at the request of Sprucegrove Investment Management ("Sprucegrove"), a portfolio manager located in Toronto, Ontario, so as to permit Sprucegrove to participate in the Offer on behalf of two of its pooled funds and specified client accounts which hold Target Shares. Sprucegrove has full discretionary authority over these accounts.

7. The Target is a public limited liability company incorporated under the laws of the Netherland Antilles.

8. The registered and head office of the Target is in Piekstraat 2, 3071 EL Rotterdam, The Netherlands.

9. The Target is not a reporting issuer in either of the Jurisdictions and is not a reporting issuer or equivalent under the laws of any other province or territory of Canada. The Target's securities are not listed or quoted for trading on any Canadian stock exchange or market.

10. The group of companies owned by the Target is the world market leader in alternative window coverings and a major manufacturer of architectural products.

11. The Target Shares trade on the Euronext Stock Exchange in Amsterdam and on the Deutsche Börse AG under the symbol "HDG". The Preferred Shares are listed on the ESX under the symbol "HUNP".

12. As at June 6, 2005, the Target had issued and outstanding 41,937,063 Common Shares.

13. The Filer anticipates commencing the Offer in early July, 2005.

14. The Offer will be to purchase 10.5 million of the outstanding Target Shares out of a public float of approximately 19.2 million Target Shares. In addition, a member of the controlling family of the Target intends to tender 2.5 million Target Shares to the Offer. The price paid per Target Share (the "Clearing Price") will be determined through a reverse book building process (along the lines of a "Dutch Auction") through which shareholders can tender Common Shares at a specified price not to exceed EUR 46.00.

15. The Offer will be made, and the offer document reflecting the terms of the Offer (the "Offer Document") is being prepared, in accordance with the laws of the Netherlands and in particular in compliance with BTE 1995.

16. The Offer Document is a lengthy disclosure document prepared under Dutch law, which, in turn, consists of implementations of European Union Directives. In particular, the Offer Document will be prepared in compliance with the Dutch 1995 Act on the supervision of the securities trade, and the Dutch 1995 Decree on the supervision of the securities trade, each as amended. The Offer Document will contain disclosure similar to what would be contained in a take-over bid circular prepared in accordance with the Legislation, including the terms of the Offer and details regarding payment of the consideration.

17. The first draft of the Offer Document was submitted to the Dutch regulators, The Netherlands Authority for Financial Markets ("AFM"), for review on May 26, 2005. In accordance with Dutch laws the Offer Document will be made available on the internet in various places, including the Target's website at www.hunterdouglasgroup.com, and a public announcement will be made in a daily national Dutch newspaper and the Financial Times with explanation of where and how shareholders may obtain a copy of the Offer Document free of charge.

18. As permitted by Dutch law, the Target has issued ordinary shares in bearer form as well as registered form. Other than certain shares held by members of the controlling family of the Target, most of the Target Shares are held by Dutch banks in street name at a Dutch securities depository. Accordingly, almost all shareholders are holding the Target Shares with accounts at Dutch banks. Given Dutch privacy laws, the Dutch banks will not disclose the names of their clients and some of those clients are not beneficial owners, but rather other banks. As such, it is virtually impossible to identify the holders of Target Shares.

19. There is an Antillean law requiring that shareholdings of 5% or greater give notice of ownership of their shares. Aside from members of the controlling family, no shareholder has given such notice to the Target.

20. On occasion, the Target also periodically reviews commercial databases such as Bloomberg's that report on institutional ownership of shares. The Bloomberg's report contains the majority of public shareholders but it is not possible to confirm whether the list is current or that the reports by these institutions are correct.

21. Investor relations staff at the Target compiles information regarding ownership of the Target Shares based on references to the Bloomberg's reports and statements made by shareholders that contact the investor relations staff. It is not possible to confirm the accuracy of this information.

22. Based on the abovementioned compiled information, the Target was able to identify Sprucegrove as the holder of approximately 5% of the Target Shares. Based on the Applicant's discussions with Sprucegrove and its efforts generally to identify holders of Target Shares, the Applicant has determined the following:

(i) of the approximately 5% of Target Shares held by Sprucegrove:

(A) approximately 1.095% are held in two Sprucegrove pooled funds which are located in Ontario;

(B) approximately 0.90% are held in accounts for eight Ontario investors;

(C) approximately 0.117% are held in client accounts for two Quebec investors (the "Quebec Investors");

(D) the remainder of the Target Shares are held on behalf of U.S. clients.

(ii) approximately 0.50% of Target Shares are held by Ontario persons other than through Sprucegrove; and

(iii) it is not possible to determine if Target Shares are held by any other persons in Canada but the Applicant believes this to be unlikely.

23. Subject to the requested relief being granted, the Filer will make the Offer Documents available to Ontario and Quebec holders of Target Shares, and will publicly announce the making of the Offer in both a Dutch newspaper and the Financial Times. Such announcement will specify where and how the shareholders may obtain a copy of the Offer Documents, including a toll-free number to permit shareholders of the Target who are resident in Ontario and Quebec to request a copy of the Offer Documents free of charge. Any materials required to be sent to shareholders under Netherlands law will also be sent to Ontario and Quebec shareholders.

24. A public announcement in English in a national Canadian newspaper will be made simultaneously with the advertisement in the Dutch newspaper and the Financial Times. Copies of this public announcement will also be sent by Sprucegrove to the Quebec Investors. The public announcement will specify where and how all Canadian shareholders may obtain a copy of the Offer Document. In particular, the announcement will include a phone number, which will be established to permit holders of the Target Shares who are resident in Canada to call and request a copy of the Offer Document free of charge.

25. All holders of the Target's Shares to whom the Offer is made will be treated equally.

26. Pursuant to the Legislation, if the relief requested is not granted, holders of Target Shares resident in the Jurisdictions will be prohibited from participating in the Offer and will remain shareholders in the Target, the shares of which will likely be less liquid following completion of the Offer.

27. The relief is being sought at the request of Sprucegrove, which has made this request to enable both itself and its clients to participate in the Offer.

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 Maker under the Legislation is that the Filer is exempt from the Take-over Bid Requirements in making the Offer to the shareholders of the Target who are resident in the Jurisdictions, provided that:

(i) the Offer and all amendments to the Offer are made in compliance with the laws of The Netherlands, and

(ii) any material relating to the Offer that is sent to the holders of the Target Shares in The Netherlands (which will be in English or an English translation will be provided) will be sent to the holders of the Target Shares resident in the Jurisdictions whose addresses are known to the Filer and copies thereof filed with the Decision Maker in each Jurisdiction.

"Paul M. Moore"

"Suresh Thakrar"