Securities Law & Instruments

Headnote

Clause 104(2)(c) -- Issuer bid -- relief from issuer bid requirements in sections 94 to 94.8 and 97 to 98.7 of the Act -- Issuer proposes to purchase, at a discounted purchase price, up to 780,000 of its Class A shares from one of its shareholders and/or such shareholder's affiliates -- due to discounted purchase price, proposed purchases cannot be made through TSX trading system - but for the fact that the proposed purchases cannot be made through the TSX trading system, the Issuer could otherwise acquire the subject shares in reliance upon the issuer bid exemption available under section 101.2 of the Securities Act and in accordance with the TSX rules governing normal course issuer bid purchases -- no adverse economic impact on or prejudice to issuer or public shareholders -- proposed purchases exempt from issuer bid requirements in sections 94 to 94.8 and 97 to 98.7 of the Act, subject to conditions, including that the issuer not purchase more than one-third of the maximum number of shares to be purchased under its normal course issuer bid by way of off-exchange block purchases.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 94 to 94.8, 97 to 98.7, 104(2)(c).

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c. S.5, AS AMENDED

(the "Act")

AND

IN THE MATTER OF

METRO INC.

ORDER

(clause 104(2)(c))

UPON the application (the "Application") of Metro inc. (the "Issuer") to the Ontario Securities Commission (the "Commission") for an order pursuant to clause 104(2)(c) of the Act exempting the Issuer from the requirements of sections 94 to 94.8 and 97 to 98.7 of the Act (the "Issuer Bid Requirements") in respect of the proposed purchases by the Issuer of up to 780,000 (collectively, the "Subject Shares") of its Class A Subordinate Shares (the "Class A Shares") in one or more trades from The Toronto-Dominion Bank or one of its affiliates (the "Selling Shareholder");

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

AND UPON the Issuer (and the Selling Shareholder in respect of paragraphs 5, 6, 7, 10, 15 and 22 as they relate to the Selling Shareholder) having represented to the Commission that:

1. The Issuer is a corporation governed by Part IA of the Companies Act (Québec).

2. The head office and registered office of the Issuer are at 11011 Maurice-Duplessis Boulevard, Montréal, Quebec, H1C 1V6.

3. The Issuer is a reporting issuer in each of the provinces of Canada and the Class A Shares of the Issuer are listed for trading on the TSX under the symbol "MRU.A". The Issuer is not in default of any requirement of the securities legislation in the jurisdictions in which it is a reporting issuer.

4. The authorized share capital of the Issuer consists of an unlimited number of Class A Shares, Class B Shares and First Preferred Shares, of which approximately 104,091,422 Class A Shares and 631,440 Class B Shares were issued and outstanding as of November 4, 2010.

5. The corporate headquarters of the Selling Shareholder are located in the Province of Ontario.

6. The Selling Shareholder does not directly or indirectly own more than 5% of the issued and outstanding Class A Shares.

7. The Selling Shareholder owns the Subject Shares and the Subject Shares were not acquired in anticipation of resale to the Issuer pursuant to private agreements under an issuer bid exemption order issued by a securities regulatory authority ("Off-Exchange Block Purchases").

8. Pursuant to a "Notice of Intention to Make a Normal Course Issuer Bid" filed with the TSX as of September 8, 2010 and amended as of November 12, 2010 (the "Notice"), the Issuer is permitted to make normal course issuer bid (the "Normal Course Issuer Bid") purchases (each, a "Bid Purchase") to a maximum of 6,000,000 of its Class A Shares in accordance with sections 628 to 629.3 of Part VI of the TSX Company Manual (the "TSX NCIB Rules"). As of November 4, 2010, 623,800 Class A Shares have been purchased under the Normal Course Issuer Bid, none of which were purchased pursuant to Off-Exchange Block Purchases. The Subject Shares represent approximately 13% of the 6,000,000 Class A Shares authorized to be purchased under the Normal Course Issuer Bid.

9. In addition to making Bid Purchases by means of open market transactions, the Notice contemplates that the Issuer may purchase Class A Shares by such other means as may be permitted by the TSX, including by private agreements pursuant to an issuer bid exemption order issued by a securities regulatory authority.

10. The Issuer and the Selling Shareholder intend to enter into one or more agreements of purchase and sale (each, an "Agreement") pursuant to which the Issuer will agree to acquire the Subject Shares from the Selling Shareholder by one or more purchases each occurring on or before January 31, 2011 (each such purchase, a "Proposed Purchase") for a purchase price (the "Purchase Price") that will be negotiated at arm's length between the Issuer and the Selling Shareholder. The Purchase Price will be at a discount to the prevailing market price and below the bid-ask price for the Issuer's Class A Shares at the time of each Proposed Purchase.

11. The purchase of the Subject Shares by the Issuer pursuant to the Agreement will constitute an "issuer bid" for purposes of the Act to which the Issuer Bid Requirements would apply.

12. Because the Purchase Price will be at a discount to the prevailing market price and below the bid-ask price for the Issuer's Class A Shares at the time of each Proposed Purchase, each Proposed Purchase cannot be made through the TSX trading system and, therefore, will not occur "through the facilities" of the TSX. As a result, the Issuer will be unable to acquire the Subject Shares from the Selling Shareholder in reliance upon the exemption from the Issuer Bid Requirements that is available pursuant to section 101.2(1) of the Act.

13. But for the fact that the Purchase Price will be at a discount to the prevailing market price and below the bid-ask price for the Issuer's Class A Shares at the time of each Proposed Purchase, the Issuer could otherwise acquire the Subject Shares as a "block purchase" (a "Block Purchase") in accordance with Section 629(l)7 of the TSX NCIB Rules and the exemption from the Issuer Bid Requirements in Section 101.2(1) of the Act.

14. The Issuer will be able to acquire the Subject Shares from the Selling Shareholder in reliance upon the exemption from the dealer registration requirements of the Act that is available as result of the combined effect of section 2.16 of NI 45-106 and section 4.1(a) of Commission Rule 45-501 Ontario Prospectus and Registration Exemptions.

15. The Selling Shareholder is at arm's length to the Issuer and is not an "insider" of the Issuer or "associate" of an "insider" of the Issuer, or an "associate" or "affiliate" of the Issuer, as such terms are defined in the Act. In addition, the Selling Shareholder is an "accredited investor" within the meaning of National Instrument 45-106 Prospectus and Registration Exemptions ("NI 45-106").

16. Management is of the view that the Issuer will be able to purchase the Subject Shares at a lower price than the price at which the Issuer would be able to purchase the Class A Shares under the Normal Course Issuer Bid through the facilities of the TSX and management is of the view that this is an appropriate use of the Issuer's funds.

17. The purchase of the Subject Shares will not adversely affect the Issuer or the rights of any of the Issuer's securityholders and it will not materially affect the control of the Issuer. The Proposed Purchases will be carried out with a minimum of cost to the Issuer.

18. To the best of the Issuer's knowledge, as of November 4, 2010, the public float for the Class A Shares represented more than 65% of all issued and outstanding Class A Shares for purposes of the TSX NCIB Rules.

19. The market for the Class A Shares is a "liquid market" within the meaning of section 1.2 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions.

20. Other than the Purchase Price, no additional fee or other consideration will be paid in connection with the Proposed Purchases.

21. At the time that each Agreement is entered into by the Issuer and the Selling Shareholder and at the time of each Proposed Purchase, the Issuer will not be aware of any "material change" or "material fact" (each as defined in the Act) in respect of the Issuer that has not been generally disclosed.

22. At the time that each Agreement is entered into by the Issuer and the Selling Shareholder and at the time of each Proposed Purchase, neither the Selling Shareholder, nor personnel of the Selling Shareholder that have negotiated such Agreement or have made or participated in the making of or provided advice in connection with the decision to enter into such Agreement and sell the Subject Shares will be aware of any "material change" or "material fact" (each as defined in the Act) in respect of the Issuer that has not been generally disclosed.

AND UPON the Commission being satisfied to do so would not be prejudicial to the public interest;

IT IS ORDERED pursuant to clause 104(2)(c) of the Act that the Issuer be exempt from the Issuer Bid Requirements in connection with each Proposed Purchase, provided that:

(a) the Proposed Purchases will be taken into account by the Issuer when calculating the maximum annual aggregate limit that is imposed upon the Issuer's Normal Course Issuer Bid in accordance with the TSX NCIB Rules;

(b) the Issuer will refrain from conducting a Block Purchase in accordance with the TSX NCIB Rules during the calendar week that it completes each Proposed Purchase and may not make any further Bid Purchases for the remainder of that calendar day;

(c) the Purchase Price is not higher than the last "independent trade" (as that term is used in paragraph 629(l)1 of the TSX NCIB Rules) of a board lot of Class A Shares immediately prior to the execution of each Proposed Purchase;

(d) the Issuer will otherwise acquire any additional Class A Shares pursuant to its Normal Course Issuer Bid and in accordance with the TSX NCIB Rules;

(e) immediately following each Proposed Purchase of the Subject Shares from the Selling Shareholder, the Issuer will report the purchase of the Subject Shares to the TSX;

(f) at the time that each Agreement is entered into by the Issuer and the Selling Shareholder and at the time of each Proposed Purchase, neither the Issuer, nor the Selling Shareholder, nor personnel of the Selling Shareholder that have negotiated such Agreement or have made or participated in the making of or provided advice in connection with the decision to enter into such Agreement and sell the Subject Shares will be aware of any "material change" or "material fact" (each as defined in the Act) in respect of the Issuer that has not been generally disclosed;

(g) the Issuer will issue a press release in connection with the Proposed Purchases; and

(h) the Issuer does not purchase, pursuant to Off-Exchange Block Purchases, more than one-third of the maximum number of Class A Shares the Issuer can purchase under the Normal Course Issuer Bid.

DATED at Toronto this 16th day of November, 2010.

"Paulette L. Kennedy"
Commissioner
Ontario Securities Commission
 
"James Turner"
Commissioner
Ontario Securities Commission