Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - Relief granted from the requirement for an income trust to include a pro forma interim income statement of an acquired business in a business acquisition report provided that the business acquisition report includes the financial statements pertaining to the acquired business that were included in the income trust's final prospectus, and the Fund's MD&A filed with its interim financial statements includes a discussion of pro forma results with a comparison to the preceding year.

National Instruments Cited

National Instrument 51-102 Continuous Disclosure Obligations.

October 18, 2005

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA, SASKATCHEWAN, MANITOBA, ONTARIO,

QUEBEC, NOVA SCOTIA, NEW BRUNSWICK

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

NORCAST INCOME FUND

(the Fund)

 

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 Fund for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting the Fund from the requirement under paragraph 8.4(3)(b)(ii) of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) that the Fund include a pro forma income statement of the Fund for the six months ended June 30, 2005 in its business acquisition report in respect of the Acquisition (as defined below) (the Requested Relief).

Under the Mutual Reliance Review System for Exemptive Relief Applications

(a) the Ontario Securities Commission is the principal regulator for this application, and

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

Interpretation

Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are defined in this decision.

Representations

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

1.1 The Fund is an open-ended limited purpose trust established under the laws of the Province of Ontario pursuant to a declaration of trust dated as of May 10, 2005 and amended and restated on June 15, 2005.

1.2 The Fund filed a prospectus dated June 15, 2005 (the Prospectus) in each of the provinces and territories of Canada in connection with the initial public offering of 7,702,500 units (Units) of the Fund.

1.3 The Fund became a reporting issuer, or the equivalent, in each of the provinces and territories of Canada upon the filing of the Prospectus and, to the best of its knowledge, is currently not in default of any applicable requirements under the securities legislation thereunder, except in respect of the requirements in paragraph 8.4(3)(b)(ii) of NI 51-102 as it pertains to the business acquisition report of the Fund dated September 5, 2005, from which this application is seeking relief.

1.4 The Fund is also a reporting issuer or the equivalent in Prince Edward Island, the Yukon, the Northwest Territories and Nunavut, however, an application is not being made to the securities regulatory authorities for this province and the territories as the Fund understands that NI 51-102 has not been adopted in those jurisdictions.

1.5 The Units are listed on the Toronto Stock Exchange. As at September 2, 2005, the Fund had 7,702,500 Units issued and outstanding.

1.6 The Fund was formed for the purpose of indirectly acquiring and holding a 100% interest in Norcast Casting Company Ltd.

1.7 Norcast Casting Company Ltd. is a company incorporated under the laws of the Province of Ontario and is a manufacturer of mill liners and small grinding media for the global mining industry.

1.8 On June 22, 2005, the date of closing of its initial public offering, the Fund acquired all of the shares of Norcast Casting Company Ltd. for a purchase price of approximately CDN$84,053,500 (the Acquisition).

1.9 The Prospectus contained the following financial statements (the Fund's Prospectus Financial Statements):

(i) unaudited financial statements of Norcast Casting Company Ltd. for the three months ended March 31, 2005 and March 31, 2004;

(ii) audited financial statements of Norcast Casting Company Ltd. for the three years ended December 31, 2004, December 31, 2003 and December 31, 2002;

(iii) a pro forma consolidated balance sheet of the Fund as at March 31, 2005;

(iv) a pro forma consolidated income statement of the Fund for the year ended December 31, 2004;

(v) a pro forma consolidated income statement of the Fund for the three month period ended March 31, 2005; and

(vi) a compilation report for the Fund to accompany the pro forma financial statements signed by the Fund's auditor.

1.10 On August 11, 2005, the Fund filed interim financial statements for the interim period ended June 30, 2005 (the Interim Financial Statements). The Interim Financial Statements included a consolidated balance sheet as at June 30, 2005, and a statement of operations, consolidated statement of retained earnings and consolidated statement of cash flow, each for the period from May 10, 2005 to June 30, 2005. The Interim Financial Statements gave effect to the Acquisition as of June 22, 2005.

1.11 The Management Discussion and Analysis (MD&A) that was filed concurrently with the Interim Financial Statements presented combined operating results for the 13 weeks ended June 30, 2005 and the 26 weeks ended June 30, 2005. These combined results combined the actual results of the Fund and Norcast over the applicable period and compared those results to the results Norcast for the same period in the prior financial year.

1.12 A copy of each of the Interim Financial Statements and the MD&A are available on SEDAR.

1.13 As the Fund had no material assets prior to the Acquisition, the Acquisition constitutes a "significant acquisition" of the Fund for the purposes of NI 51-102 requiring the Fund to file a business acquisition report on or before September 5, 2005 pursuant to section 8.2 of NI 51-102.

1.14 Pursuant to section 8.4 of NI 51-102, a business acquisition report must be accompanied by certain financial statements, including:

[8.4(3)(b)] a pro forma income statement of the reporting issuer that gives effect to significant acquisitions completed after the ending date of the reporting issuer's most recently completed financial year for which financial statements are required to have been filed, as if they had taken place at the beginning of that financial year, for each of the following financial periods:

(i) the reporting issuer's most recently completed financial year for which financial statements are required to have been filed; and

(ii) the reporting issuer's most recently completed interim period that ended after the period in subparagraph (i) for which financial statements are required to have been filed;

1.15 Concurrently with filing the application, the Fund has filed a business acquisition report which includes the Fund's Prospectus Financial Statements.

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.

"John Hughes"
Manager
Ontario Securities Commission