Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- OSC Rule 61-501 - going-private transaction - Rule 61-501 requires sending of information circular and holding of meeting in connection with a going-private transaction - target's declaration of trust provides that a resolution in writing executed by the requisite percentage 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 - going-private transaction 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 Statutory Provisions

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

July 3, 2007

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

QUÉBEC AND ONTARIO

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

THE TAKE-OVER BID FOR

OSPREY MEDIA INCOME FUND BY

4411986 CANADA INC.,

A WHOLLY-OWNED SUBSIDIARY

OF QUEBECOR MEDIA INC.

 

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 4411986 Canada Inc. (the "Applicant"), a wholly-owned subsidiary of Quebecor Media Inc. ("Quebecor Media"), in connection with a take-over bid (the "Offer") for Osprey Media Income Fund ("Osprey"), 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 Osprey (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 Autorité des marchés financiers 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 exists under the Canada Business Corporations Act. The Applicant has not carried on any activities prior to the date of the Circular (as defined below), other than those in respect of its formation and relating to the entering into an acquisition and support agreement with Osprey and lock-up agreements with certain Unitholders and the making of the Offer. The Applicant's registered office is located at 612 St. Jacques Street, Montréal, Québec, Canada H3C 4M8. The Applicant is not a reporting issuer. The Applicant is a wholly-owned subsidiary of Quebecor Media, a private company based in Montréal, Québec. Quebecor Media is held, directly or indirectly, at 54.7% by Quebecor Inc. ("Quebecor"), a publicly-traded communications holding company, and 45.3% by CDP Capital d'Amérique Investissements Inc. ("CDP Capital"). Quebecor's primary assets are its interests in Quebecor Media and in Quebecor World Inc., one of the world's largest commercial printers. CDP Capital is a wholly owned subsidiary of Caisse de dépôt et placement du Québec, Canada's largest pension fund. Both Quebecor and CDP Capital are based in Montréal, Québec.

2. Osprey is an unincorporated, limited purpose trust established under the laws of the Province of Ontario to invest in the newspaper industry through its ownership of all of the outstanding limited partnership units of Osprey Media L.P., a Manitoba limited partnership which operates the Osprey newspaper business. Osprey was established by a declaration of trust dated January 1, 2004, as amended and restated as of January 1, 2006 (the "Declaration of Trust"). The head office of the Fund is located at 100 Renfrew Drive, Suite 110, Markham, Ontario L3R 9R6. Osprey is a reporting issuer in all of the provinces of Canada and all the issued and outstanding units of Osprey (the "Units") are listed and posted for trading on the Toronto Stock Exchange under the symbol "OSP.UN".

3. The Units are held by CDS Clearing and Depository Services Inc. in book-entry only form.

4. Pursuant to the take-over bid circular dated June 13, 2007 (the "Circular") mailed to the Unitholders, in connection with the Offer:

(a) the Offer is for all of the outstanding Units at a price of $7.25 in cash per Unit;

(b) one of the conditions of the Offer is that the number of Units (including the Units held at the date of the expiry of the Offer by or on behalf of the Applicant and any of its affiliates) representing at least 662/3% of the outstanding Units shall have been validly deposited under the Offer and not withdrawn at the expiry of the Offer;

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

(d) 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 dissenting offerees will be deemed to have elected to transfer and to have transferred their Units to an 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 Compulsory Acquisition or Subsequent Acquisition Transaction, as applicable (as opposed to the 20 days after sending of an offeror's notice, as currently provided) (the "Notice Amendment");

(e) 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 Offer by:

(i) causing the Declaration of Trust to be amended as permitted pursuant to its terms (the "Threshold Amendment") to provide that a Compulsory Acquisition may be effected if the Applicant and its affiliates, after take-up of and payment for the Units deposited under the Offer, hold not less than 662/3% of the Units 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 Offer in each case at the same price as the price paid under the Offer (the acquisition following such Threshold Amendment being 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 Offer as permitted by the Declaration of Trust, as so amended;

(f) 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 12.10 of the Declaration of Trust, which specifies that a resolution signed in writing by the Unitholders holding a proportion of all the outstanding votes equal to the proportion of votes required to vote in favour thereof at a meeting of the Unitholders to approve that resolution is as valid as if it had been passed at a meeting of the Unitholders (the "Written Resolution"); which Written Resolution will approve, among other things, the Threshold Amendment and the Notice Amendment and any Compulsory Acquisition or Subsequent Acquisition Transaction undertaken in accordance therewith, as applicable; and

(g) if the Applicant is unable to effect 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 and subject to the terms and conditions of the Acquisition and Support Agreement made as of May 31, 2007 among the Applicant, Quebecor Media and Osprey (a copy of which was filed on SEDAR on June 6, 2007), to (i) purchase additional Units in the open market or in privately negotiated transactions, in another take-over bid or exchange offer or otherwise or from Osprey, or (ii) take no further action to acquire additional Units. Alternatively, the Applicant may sell or otherwise dispose of any or all Units acquired pursuant to the Offer.

5. Notwithstanding Section 12.10 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 Regulation Q-27 -- Respecting Protection of Minority Securityholders in the Course of Certain Transactions, ("Regulation Q-27") and Section 8.2 of Ontario Securities Commission Rule 61-501 -- Insider Bids, Issuer Bids, Business Combination and Related Party Transactions (the "Minority Approval"), albeit not at a meeting of Unitholders, but by Written Resolution.

7. The 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 Regulation Q-27 relating to the disclosure required to be included in information circulars distributed in respect of going private transactions.

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.

Josée Deslauriers
Directrice des marchés des capitaux
Autorité des marchés financiers