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 Legislative Provisions

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

June 18, 2007

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO AND QUEBEC

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF THE

TAKE-OVER BID FOR

VOXCOM INCOME FUND BY

6764495 CANADA INC.

 

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the Decision Maker) in each of Ontario and Quebec (the Jurisdictions) has received an application from 6764495 Canada Inc. (the Offeror), an indirectly wholly-owned subsidiary of UE Waterheater Income Fund, in connection with a take-over bid (the Offer) for VOXCOM Income Fund (VOXCOM), 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 a Subsequent Acquisition Transaction (each as defined below) be approved at a meeting of the unitholders of VOXCOM (the Unitholders); and

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

be waived (collectively, the Requested Relief).

Under the Mutual Reliance Review System (MRRS) 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 representations by the Offeror:

1. The Offeror is a corporation incorporated under the laws of Canada. The Offeror's head office is located in Toronto, Ontario. The Offeror is a wholly-owned subsidiary of UE Waterheater Operating Trust.

2. VOXCOM is an unincorporated income trust established pursuant to the amended and restated declaration of trust dated May 20, 2005 (the Declaration of Trust). VOXCOM's head office is located in Edmonton, Alberta. VOXCOM is a reporting issuer in all provinces and territories in Canada. The Units are listed on the Toronto Stock Exchange under the trading symbol "VOX.UN".

3. The Offer is for all of the 8,190,909 outstanding Units at a price of $13.25 in cash per Unit.

4. One of the conditions of the Offer is that there has been validly deposited under the Offer and not withdrawn at the expiry of the Offer and at the time of the initial take up by the Offeror under the Offer such number of Units which, together with any Units directly or indirectly owned by the Offeror at that time, constitutes more than 66-2/3% of the outstanding Units (calculated on a fully-diluted basis) at that time.

5. If the conditions to the Offer are satisfied (or varied or waived by the Offeror) and the Offeror takes up and pays for the Units deposited pursuant to the Offer, the Offeror may proceed with a compulsory acquisition of the Units not deposited to the Offer (a Compulsory Acquisition) as permitted by the Declaration of Trust for the same consideration per Unit as was paid under the Offer, if within 45 days after the date of the Offer, the Offer is accepted by Unitholders representing at least 90% of the outstanding Units (other than Units beneficially owned, or over which control or direction is exercised at the date of the Offer by or on behalf of the Offeror or an affiliate or an associate of the Offeror or any person or company acting jointly or in concert with the Offeror).

6. If a Compulsory Acquisition as currently permitted under the Declaration of Trust is not available to the Offeror or the Offeror elects not to proceed under those provisions, the Offeror currently intends to:

(a) acquire the Units not deposited to the Offer by causing the Declaration of Trust to be amended to provide that a Compulsory Acquisition may be effected if the Offeror and its affiliates, after take up of and payment for the Units deposited under the Offer, hold more than 66-2/3% of the Units calculated on a fully-diluted basis; or

(b) conduct an arrangement, amalgamation, merger, reorganization, consolidation, recapitalization or other transaction involving VOXCOM, Voxcom Incorporated and the Offeror or any affiliate of the Offeror which, if successfully completed, would result in the Offeror owning, directly or indirectly, all of the remaining Units and/or all of the assets and assumed liabilities of VOXCOM

(collectively, a Subsequent Acquisition Transaction).

7. In connection with either a Compulsory Acquisition, if available and if the Offeror elects to proceed thereunder, or a Subsequent Acquisition Transaction, the Offeror currently intends to amend Section 13.13 of the Declaration of Trust by a Written Resolution (as defined below) to provide that dissenting 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 dissenting offerees that, among other things, the Offeror is entitled to acquire their Units by way of a Compulsory Acquisition or a Subsequent Acquisition Transaction, as applicable.

8. To effect 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 Offeror intends to rely on Section 12.10 of the Declaration of Trust, which specifies that a resolution executed by Unitholders holding more than 66-2/3% of the votes attaching to the outstanding Units at that time, if such resolution is a special resolution, is as valid and binding as if such special resolution had been passed at a meeting of Unitholders duly called for the purpose.

9. To effect either a Compulsory Acquisition or a Subsequent Acquisition Transaction, the Offeror will obtain minority approval, as that term is defined in the Legislation, calculated in accordance with the terms of section 8.2 of OSC Rule 61-501 and section 8.2 of AMF Regulation Q-27 (Minority Approval), albeit not at a meeting of Unitholders, but by written resolution.

10. The take-over bid circular provided to Unitholders in connection with the Offer contains 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 OSC Rule 61-501 relating to the disclosure required to be included in a disclosure document for a formal bid in respect of a second-step business combination.

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, albeit not at a meeting of Unitholders, but by written resolution.

"Naizam Kanji"
Manager
Ontario Securities Commission