Securities Law & Instruments

Headnote

Section 144 -- partial revocation of cease trade order -- Applicant has applied for a variation of the cease trade order to permit certain trades in connection with a reorganization under Section 191 of the Canada Business Corporations Act- Proposal to the Applicant's unsecured creditors approved by the Superior Court of Quebec and the Applicant's unsecured creditors -- partial revocation granted subject to conditions.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 127, 144.

National Policy 12-202 Revocation of a Compliance-related Cease Trade Order.


IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, c. S.5, AS AMENDED
(THE “ACT”)

AND

IN THE MATTER OF
PRESTIGE TELECOM INC.

ORDER
(Section 144)



WHEREAS the securities of Prestige Telecom Inc. ("Prestige") are subject to a temporary cease trade order made by the Director dated October 18, 2011 under subsections 127(1) and 127(5) of the Act and as extended by a further cease trade order made by the Director dated October 31, 2011 under subsection 127(1) of the Act directing that trading in and acquisitions of securities of Prestige cease unless revoked by a further order of revocation (the "Ontario Cease Trade Order");

AND WHEREAS Prestige has applied to the Ontario Securities Commission (the "Commission") pursuant to section 144 of the Act (the "Application") for a partial revocation of the Ontario Cease Trade Order in connection with a reorganization of the capital of Prestige pursuant to a proposal under the Bankruptcy and Insolvency Act (Canada) (the "BIA");

AND WHEREAS Prestige has represented to the Commission that:

1. Prestige was incorporated under the Canada Business Corporations Act, R.S.C. (1985), c. C-44 (the "CBCA") on July 30, 2007;

2. Prestige's head office is located at 575 Morgan Blvd., Baie D'Urfé, Québec, H9X 3T6;

3. Prestige operates in the fields of construction, engineering, equipment supply, refurbishing and installation of telecom wireless application and telephone exchanges and is also engaged in designing, mapping and laying cable for telecom and cable industries;

4. Prestige is a reporting issuer in each of the provinces of Québec, Ontario, Alberta and British Columbia;

5. Prestige's authorized share capital consists of an unlimited number of common shares and an unlimited number of preferred shares, issuable in series, none of which have been issued. Currently, there are 118,182,568 common shares issued and outstanding;

6. Prestige's common shares are listed for trading on the TSX Venture Exchange (the "TSX-V") under the symbol "PR" but trading in the common shares of Prestige has been suspended by the TSX-V since October 7, 2011. The common shares were transferred to NEX on March 14, 2012;

7. The Ontario Cease Trade Order was issued by the Commission as a consequence of Prestige filing interim unaudited financial statements for the three-month period ended June 30, 2011 prepared in accordance with Canadian generally accepted accounting principles ("GAAP") and not in accordance with International Financial Reporting Standards ("IFRS"), as now required for publicly-listed companies such as Prestige (the "Default") and Prestige has acknowledged the Default in a news release dated October 7, 2011. Since then, Prestige has not filed any financial statements prepared in accordance with IFRS, nor any officer certification or management discussion and analysis relating thereto, nor any annual information form nor any executive compensation disclosure.

8. In addition to the Ontario Cease Trade Order, Prestige is subject to similar orders rendered by the securities regulatory authorities in each of the provinces of Québec, Alberta and British Columbia. Applications for the partial revocation of such cease trade orders are being made by Prestige concurrently with the Application;

9. Prestige issued a news release on November 23, 2011 and filed a material change report on November 30, 2011 announcing that it had filed a notice of intention to submit a proposal to its creditors pursuant to the BIA and appointed Raymond Chabot Inc. as trustee following the receipt from its main lender and secured creditor of a prior notice of its intention in accordance with section 244 of the BIA;

10. On November 25, 2011, Prestige announced that it had received leave from the Commercial Chamber of the Superior Court of Québec to complete the sale of substantially all of Prestige's assets to 792285 Canada Inc. ("Thornhill");

11. On November 29, 2011, Prestige announced that Thornhill purchased substantially all of the assets of Prestige;

12. On February 15, 2012, Prestige announced that it had submitted a proposal (the "Proposal") to its creditors under the BIA and on March 6, 2012, the Proposal received approval by the statutory majority of Prestige's unsecured creditors under the BIA;

13. The Proposal involves the acceptance of an offer from Thornhill and the reorganization of Prestige's share capital in such a manner as to allow Thornhill to be the sole shareholder of Prestige. As such, the Proposal includes the filing of articles of reorganization providing, inter alia, for:

(a) The creation of a new class of redeemable shares of the capital of Prestige (the "Redeemable Shares");

(b) The conversion of each issued and outstanding common share of Prestige into 0.00000001 of a Redeemable Share;

(c) The automatic redemption of all of the outstanding Redeemable Shares and fractional interests therein following their issuance, without notice to the holders of such Redeemable Shares for a nominal consideration;

(d) Immediately following the redemption of all of the Redeemable Shares, the cancellation, removal and deletion of the authorized share capital of Prestige; and

(e) The creation of a new class of common shares of the capital of Prestige, the Class A Common Shares, to be issued to Thornhill and which will represent 100% of the issued and outstanding shares of Prestige;

Following the completion of the reorganization and after Thornhill becoming the sole shareholder of Prestige, it is intended that Prestige will be liquidated and dissolved pursuant to the CBCA (the transactions set forth in this paragraph constitute the "Reorganization");

14. Prestige intends to rely on the exemption in section 2.11 of National Instrument 45-106 -- Prospectus and Registration Exemptions to complete the trades in securities of Prestige in connection with the Proposal and the Reorganization;

15. On March 28, 2012, Prestige received a final order from the Commercial Chamber of the Superior Court of Québec approving the Proposal and authorizing the Reorganization of Prestige's share capital pursuant to section 191 of the CBCA;

16. The Proposal and Reorganization are not subject to any shareholder approval pursuant to any corporate or securities legislation, including Multilateral Instrument 61-101 Protection of Minority Security Holders In Special Transactions;

17. As the Proposal and Reorganization will involve trades in securities of Prestige (including, for greater certainty, acts in furtherance of trades in securities of Prestige), Prestige cannot complete the Proposal and Reorganization without a partial revocation of the Ontario Cease Trade Order;

18. Given the circumstances described above, the preparation and filing of continuous disclosure materials required to remedy the Ontario Cease Trade Order will serve no purpose and would be of no benefit to securityholders of Prestige;

19. Prior to the completion of the Proposal and the Reorganization, Prestige:

(a) will provide Thornhill with a copy of the Ontario Cease Trade Order and a copy of this Order; and

(b) will obtain from Thornhill a signed and dated acknowledgement that all of Prestige's securities, including the Class A Common Shares to be issued in connection with the Reorganization, will remain subject to the Ontario Cease Trade Order, and that the granting of this Order does not guarantee the issuance of a full revocation order in the future.

20. Except for the Default that led to the issuance of the Ontario Cease Trade Order and other continuous disclosure defaults since the issuance of the Ontario Cease Trade Order, Prestige is not in default of any requirements of the Ontario Cease Trade Order or the Act or the rules and regulations made pursuant thereto;

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

AND WHEREAS the Director being satisfied that to do so would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to section 144 of the Act, that the Ontario Cease Trade Order is partially revoked solely to permit trades in securities of Prestige in connection with the Proposal and the Reorganization and all other acts in furtherance of the Reorganization that may be considered to fall within the definition of "trade" within the meaning of the Act, provided that:

(a) Prior to the completion of the Proposal and Reorganization, Prestige:

(i) will provide Thornhill with a copy of the Ontario Cease Trade Order and a copy of this Order; and

(ii) will obtain from Thornhill a signed and dated acknowledgement that all of Prestige's securities, including the Class A Common Shares to be issued in connection with the Reorganization, will remain subject to the Ontario Cease Trade Order, and that the granting of this Order does not guarantee the issuance of a full revocation order in the future.

(b) Prestige provide a copy of the written acknowledgment mentioned above to the Commission.

DATED this 22nd day of March, 2013.

"Lisa Enright"
Manager, Corporate Finance
Ontario Securities Commission