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.
August 9, 2007
IN THE MATTER OF
THE SECURITIES LEGISLATION
OF ONTARIO AND QUEBEC
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
6770134 CANADA LIMITED AND
FORT CHICAGO ENERGY PARTNERS L.P.
MRRS DECISION DOCUMENT
1. The local securities regulatory authority or regulator (the "Decision Maker") in each of Ontario and Quebec (the "Jurisdictions") has received an application from 6770134 Canada Limited (the "Offeror") and Fort Chicago Energy Partners L.P. (the "Parent" and together with the Offeror, the "Applicants") for a decision (the "Requested Relief") under the securities legislation of the Jurisdictions (the "Legislation") that the Applicants be exempt in the Jurisdictions from the requirements under section 4.2(2) of Ontario Securities Commission Rule 61-501 - Insider Bids, Issuer Bids, Business Combinations and Related Party Transactions ("OSC Rule 61-501") and section 4.2(1) of Regulation Q-27 of the Autorité des marchés financiers - Protection of Minority Securityholders in the Course of Certain Transactions ("Q-27")
(a) to call a meeting of holders of Units ("Unitholders") to approve any Compulsory Acquisition (as defined below) or Subsequent Acquisition Transaction (as defined below), and
(b) to send an information circular to Unitholders in connection with a Compulsory Acquisition or Subsequent Acquisition Transaction
in connection with the proposed offers by the Offeror to purchase all of the issued and outstanding units (the "Units") of Countryside Power Income Fund (the "Fund") (the "Unit Offer"), and all of the outstanding 6.25% exchangeable unsecured subordinated debentures (the "Exchangeable Debentures") issued on November 14, 2005 by Countryside Canada Power Inc.
2. Under the Mutual Reliance Review System for Exemptive Relief Applications (the "MRRS"):
(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.
3. This decision is based on the following facts represented by the Applicants:
(a) The Offeror is a corporation governed by the Canada Business Corporations Act. The Offeror's registered office is located at 4500 Bankers Hall East, 855 2nd Street S.W., Calgary, Alberta. The Offeror is not a reporting issuer in any jurisdiction.
(b) The Offeror is indirectly wholly-owned by the Parent. The Parent is a publicly traded limited partnership formed under the Partnership Act (Alberta).
(c) The Offeror commenced the Offers on July 5, 2007 by delivering the Offers and a take-over bid circular (the "Circular"), prepared in compliance with the Legislation and the securities legislation of the other provinces and the territories of Canada, to Unitholders.
(d) The Offeror has made the Unit Offer (including any Units issuable upon the conversion of any Exchangeable Debentures prior to the expiry of the Unit Offer) at a price per Unit of $9.60 in cash and all of the issued and outstanding Exchangeable Debentures at a price per Exchangeable Debentures of US$1,010 per US$1,000 principal amount of Exchangeable Debentures tendered pursuant to the Offers (as defined in the Circular).
(e) All of the issued and outstanding Units are held by CDS Clearing and Depository Services Inc. ("CDS") in book-entry only form.
(f) If the conditions to the Unit Offer are satisfied or waived (including the condition that such number of Units which, together with Units held directly or indirectly by the Offeror, represents more than 66 2/3% of the issued and outstanding Units (on a fully diluted basis, as defined in the Circular) shall have been deposited under the Unit Offer (the "Minimum Condition")) and the Offeror takes up and pays for the Units deposited under the Unit Offer, the Offeror will, to the extent possible, acquire, or cause the redemption of, directly or indirectly, the Units not tendered to the Unit Offer (the "Remaining Units") through a Compulsory Acquisition or a Subsequent Acquisition Transaction.
(g) If the Unit Offer is accepted by Unitholders representing at least 90% of the issued and outstanding Units (excluding Units held by or on behalf of the Offeror or an affiliate or associate), the Offeror will be entitled to acquire (a "Compulsory Acquisition") the Remaining Units for the consideration per Unit payable under the Unit Offer by complying with the provisions of the Fund's declaration of trust (the "Declaration of Trust").
(h) If the Offeror is not entitled to acquire the Remaining Units through a Compulsory Acquisition or the Offeror decides not to avail itself of such right, the Offeror currently intends to use all reasonable commercial efforts to proceed with an arrangement, amalgamation, merger, reorganization, consolidation, recapitalization, wind-up or other transaction involving the Fund and/or its subsidiaries and the Offeror or an affiliate of the Offeror (including a transaction involving amendments to the Declaration of Trust) which, if successfully completed, would result in the Offeror or an affiliate of the Offeror owning, directly or indirectly, all of the Units and/or all of the assets of the Fund (a "Subsequent Acquisition Transaction").
(i) Rather than seeking the approval of Unitholders for a Compulsory Acquisition or a Subsequent Acquisition at a special meeting called for that purpose, the Offeror intends to rely on section 12.10 of the Declaration of Trust, which would permit the Unit Special Resolutions to be approved in writing by Unitholders holding more than 66 2/3% of the issued and outstanding Units ("Written Resolution").
(j) If the Minimum Condition is satisfied, the Offeror will own a sufficient number of Units to approve a Compulsory Acquisition or Subsequent Acquisition Transaction by Written Resolution.
(k) A Compulsory Acquisition and a Subsequent Acquisition Transaction would each be a "business combination" within the meaning of OSC Rule 61-501 and a "going private transaction" within the meaning of Q-27.
(l) 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 Q-27 ("Minority Approval"), albeit not at a meeting of Unitholders, but by Written Resolution.
(m) The Circular 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.
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 pursuant to the Legislation is that the Requested Relief is granted provided that (i) the Offeror takes up and pays for Units tendered to the Unit Offer, and (ii) Minority Approval is obtained by Written Resolution.