Wenzel Downhole Tools Ltd. - s. 144

Headnote

Section 144 -- Revocation of cease trade order -- Issuer subject to cease trade order as a result of its failure to file annual and interim financial statements -- Issuer has brought filings up to date and is otherwise not in default of Ontario securities law.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 127(1)2, 127(5), 127(1), 144.

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, CHAPTER S.5,

AS AMENDED (the Act)

AND

IN THE MATTER OF

WENZEL DOWNHOLE TOOLS LTD.

ORDER

(Section 144)

WHEREAS the securities of Wenzel Downhole Tools Ltd. (Wenzel) are subject to a Temporary Order of the Director dated July 29, 2004 under paragraph 127(1)2 and subsection 127(5) of the Act, as extended by an Order of the Director dated August 10, 2005 under subsection 127(1) of the Act (together, the Cease Trade Order) directing that trading in the securities of Wenzel cease until the Cease Trade Order is revoked by the Director;

AND WHEREAS Wenzel has applied to the Ontario Securities Commission (the Commission) for revocation of the Cease Trade Order pursuant to section 144 of the Act;

AND UPON Wenzel having represented to the Commission that:

1. Wenzel was incorporated under the Business Corporations Act (Alberta) on June 9, 1994. Its head office is located in Edmonton, Alberta.

2. Wenzel is a reporting issuer in Alberta, British Columbia and Ontario.

3. The authorized capital of Wenzel is comprised of an unlimited number of common shares and an unlimited number of preferred shares, issuable in series, of which 30,697,924 common shares are issued and outstanding, 2,400,000 common shares are reserved for issuance pursuant to the exercise of stock options and 4,600,000 Series 1 preferred shares are issued and outstanding.

4. The common shares of Wenzel are listed for trading on the Toronto Stock Exchange but are currently suspended from trading as a result of the Cease Trade Order and the cease trade orders issued against Wenzel by the securities commissions in Alberta and British Columbia.

5. On March 19, 2004, the Alberta Securities Commission (ASC) issued an interim cease trade order and a Notice of Hearing against Wenzel, Douglas Brian Wenzel and 376348 Alberta Ltd. With respect to Wenzel, the Notice of Hearing alleged that its 2002 year-end audited financial statements were not prepared in accordance with generally accepted accounting principles and contained false or misleading statements.

6. Wenzel retained PricewaterhouseCoopers LLP to conduct a forensic investigation (the PwC investigation) of Wenzel's 2002 financial statements and the affairs that were the subject of the Notice of Hearing.

7. Wenzel waited for PricewaterhouseCoopers LLP to complete its forensic investgation of the 2002 financial statements, which was completed in February 2005, before preparing and filing further financial statements.

8. The Cease Trade Order was issued as a result of Wenzel's failure to file its audited annual financial statements for the year ended December 31, 2003 and interim statements for the three-month period ended March 31, 2004 as required by Ontario securities law.

9. Once the PwC investigation was completed in February 2005, Wenzel restated its financial statements for the year ended December 31, 2002 and prepared, and had audited, comparative annual financial statements for the year ended December 31, 2003 and then December 31, 2004.

10. Wenzel has filed the following documents with the Commission on SEDAR:

(a) audited annual financial statements, related management discussion and analysis and certificates (Certificates) required under Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings for the years ended December 31, 2003 and December 31, 2004 and the interim periods ended March 31, 2005, June 30, 2005 and September 30, 2005 respectively;

(b) an annual information form dated October 14, 2005 for the year ended December 31, 2004;

(c) a notice and information circular for its annual general and special meeting of shareholders, which was held on November 18, 2005;

(d) restated audited annual financial statements for the year ended December 31, 2004; and

(e) restated management discussion and analysis for the interim period ended September 30, 2005.

11. Wenzel is up-to-date with all its other continuous disclosure obligations, has paid all filing fees associated with those obligations and has complied with National Instrument 51-102 Continuous Disclosure Obligations regarding delivery of financial statements.

12. In 2005 Wenzel underwent a corporate reorganization and restructuring that included the appointment of new members to the board of directors, new officers and a reorganization of internal controls over Wenzel's operations in Canada and the United States.

13. On October 28, 2005 Wenzel applied to the Alberta Securities Commission for an order to revoke the cease trade order issued by the Alberta Securities Commission, which was granted at a hearing held November 2, 2005.

14 Except for the Cease Trade Order, Wenzel is not otherwise in default of any requirement of Ontario securities law.

AND UPON considering the application and the recommendation of staff of the Commission;

AND UPON the Commission being satisfied that it would not be prejudicial to the public interest to revoke the Cease Trade Order;

IT IS ORDERED pursuant to section 144 of the Act that the Cease Trade Order be revoked.

DATED January 23, 2006.