Securities Law & Instruments

Headnote

Mutual Reliance Review System -- OSC Rule 61-501 -- take-over bid and subsequent business combination -- Rule 61-501 requires sending of information circular and holding of meeting in connection with second step business combination -- target's declaration of trust provides that a resolution in writing executed by unitholders holding more than 66 2/3% of the outstanding units is valid and binding as if such voting rights had been exercised in favour of such resolution at a meeting of Unitholders -- second step business combination to be subject to minority approval, calculated in accordance with section 8.2 of Rule 61-501 -- relief granted from requirement that information circular be sent and meeting be held.

Applicable Ontario Rule

OSC Rule 61-501 Insider Bids, Issuer Bids, Business Combinations and Related Party Transactions, ss. 4.2, 9.1.

Securities Act, R.S.O. 1990, c. S.5, as am.

February 28, 2007

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

QUEBEC AND ONTARIO

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF THE

POTENTIAL TAKE-OVER BID FOR

AMTELECOM INCOME FUND BY

BELL ALIANT REGIONAL COMMUNICATIONS

HOLDINGS, LIMITED PARTNERSHIP

 

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the "Decision Maker") in each of Quebec and Ontario (the "Jurisdictions") has received an application from Bell Aliant Regional Communications Holdings, Limited Partnership (the "Applicant"), in connection with a proposed take-over bid (the "Bid") for Amtelecom Income Fund ("Amtelecom"), for a decision pursuant to the securities legislation of the Jurisdictions (the "Legislation") that the requirements of the Legislation that:

(1) a Compulsory Acquisition or Subsequent Acquisition Transaction (each as defined below), as applicable, be approved at a meeting of the Unitholders of Amtelecom (the "Unitholders"); and

(2) an information circular be sent to the Unitholders in connection with either a Compulsory Acquisition or Subsequent Acquisition Transaction, as applicable;

be waived (collectively, the "Requested Relief").

Under the Mutual Reliance Review System ("MRRS") for Exemptive Relief Applications:

(a) the OSC 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 representations by the Applicant:

1. The Applicant is a limited partnership established under the laws of the Province of Manitoba on July 5, 2006. The head office of the Applicant is located at 7 South Maritime Centre, 1505 Barrington Street, Halifax, Nova Scotia. The Applicant's limited partners are Bell Aliant Regional Communications Inc., Bell Canada and 6583458 Canada Inc. and it is an indirect subsidiary of Bell Aliant Regional Communications Income Fund (the "Fund"). The Applicant and the Fund are reporting issuers.

2. The outstanding units of Amtelecom (the "Units") are held by CDS Clearing and Depository Services Inc. in book-entry only form.

3. On February 16, 2007, the Applicant announced its intention to make a take-over bid to acquire all of the outstanding Units at a price of $13.00 per Unit.

4. It is currently expected that

(a) one of the conditions of the Bid will be that there shall have been validly deposited under the Bid and not withdrawn at the expiry' of the Bid that number of Units (including the Units held at the date of the expiry of the Bid by or on behalf of the Applicant and any of its affiliates) representing at least 662/3% of the Units on a fully-diluted basis;

(b) if the conditions to the Bid are satisfied (or waived by the Applicant) and the Applicant takes up and pays for Units deposited pursuant to the Bid, the Applicant may proceed with a compulsory acquisition of the Units not deposited to the Bid as permitted by Amtelecom's Declaration of Trust (the "Declaration of Trust") for the same consideration per Unit as was paid under the Bid, if within 120 days after the date of the Bid, the Bid is accepted by Unitholders of not less than 90% of the Units (other than Units held at the date of the Bid by or on behalf of, or issuable to, the Applicant or an affiliate or an associate of the Applicant) (a "Compulsory Acquisition");

(c) in connection with either a Compulsory Acquisition, if available and if the Applicant elects to proceed thereunder, or a Subsequent Acquisition Transaction (as defined below), the Applicant currently intends to amend the Declaration of Trust by the Written Resolution (as defined below) to provide that non tendering offerees will be deemed to have elected to transfer and to have transferred their Units to the offeror immediately on the giving of the offeror's notice prescribed by the Declaration of Trust notifying non tendering offerees that, among other things, the offeror is entitled to acquire their Units by way of Compulsory Acquisition or Subsequent Acquisition Transaction, as applicable (as opposed to 20 days after receipt of an offeror's notice, as currently provided) (the "Notice Amendment");

(d) if a Compulsory Acquisition as permitted under the Declaration of Trust is not available to the Applicant or the Applicant elects not to proceed under those provisions, the Applicant currently intends to acquire the Units not deposited to the Bid by:

i causing the Declaration of Trust to be amended as permitted pursuant to its terms (the "Declaration of Trust Amendment") to provide that a compulsory acquisition may be effected if the Applicant and its affiliates, after take-up and payment of Units deposited under the Bid, hold not less than 662/3% of the Units calculated on a fully-diluted basis or to make such other amendment as is necessary and permitted under the Declaration of Trust, in order to provide for the acquisition of the Units not deposited to the Bid in each case at the same price as the price paid under the Bid (the acquisition following such amendment referred to herein as a "Subsequent Acquisition Transaction"); and

ii proceeding with the Subsequent Acquisition Transaction in respect of the Units not deposited to the Bid as permitted by the Declaration of Trust, as so amended;

(e) in order to effect either a Compulsory Acquisition, if available and if the Applicant elects to proceed thereunder, or a Subsequent Acquisition Transaction in accordance with the foregoing, rather than seeking the Unitholders' approval at a special meeting of the Unitholders to be called for such purpose, the Applicant intends to rely on Section 11.8 of the Declaration of Trust, which specifies that a resolution in writing executed by Unitholders holding more than 662/3% of the outstanding Units at any time (the "Written Resolution") is as valid as if such resolution had been passed at a meeting of Unitholders duly called and convened; which Written Resolution will approve, among other things, the Declaration of Trust Amendment and the Notice Amendment and any Compulsory Acquisition or Subsequent Acquisition Transaction undertaken in accordance therewith, as applicable; and

(f) if the Applicant decides not to pursue either the Compulsory Acquisition or the Subsequent Acquisition Transaction in the manner described above, the Applicant reserves the right, to the extent permitted by applicable law, to (i) purchase additional Units in the open market or in privately negotiated transactions or otherwise, or (ii) take no further action to acquire additional Units, or (iii) acquire Amtelecom's assets by way of an arrangement, amalgamation, merger; reorganization, consolidation, recapitalization, redemption or other transaction involving the Applicant and/or any of its affiliates and Amtelecom and/or its subsidiaries. Alternatively, the Applicant may sell or otherwise dispose of any or all Units acquired pursuant to the Bid.

5. Notwithstanding Section 11.8 of the Declaration of Trust, in certain circumstances the Legislation requires that the Compulsory Acquisition or the Subsequent Acquisition Transaction, as applicable, be approved at a meeting of Unitholders called for that purpose.

6. To effect either a Compulsory Acquisition or Subsequent Acquisition Transaction, as applicable, the Applicant will obtain minority approval, as that term is defined in the Legislation, calculated in accordance with the terms of Section 8.2 of Autorite des marches financiers du Quebec Policy Q-27, and Section 8.2 of Ontario Securities Commission Rule 61-501 (the "Minority Approval"), albeit not at a meeting of Unitholders, but by Written Resolution.

7. The offer and take-over bid circular provided to Unitholders in connection with the Bid will contain all disclosure required by applicable securities laws, including without limitation the take-over bid provisions and form requirements of the securities legislation in the Jurisdictions and the provisions of Ontario Securities Commission Rule 61-501 relating to the disclosure required to be included in information circulars distributed in respect of business combinations.

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 Minority Approval shall have been obtained by Written Resolution.

"Naizam Kanji"
Manager, Mergers & Acquisitions
Ontario Securities Commission