Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- application for relief whereas distributions of Notes issued by either the Filer or Agrium U.S. Inc. and offered for sale in Canada are exempt from the prospectus requirement under the Legislation -- requested relief granted.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 74(1).

Citation: Re Agrium Inc., 2015 ABASC 755

June 26, 2015

IN THE MATTER OF THE SECURITIES LEGISLATION OF ALBERTA AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF AGRIUM INC. (the Filer)

DECISION

Background

The securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation), in respect of certain negotiable promissory notes or commercial paper maturing not more than one year from the date of issue (Notes), that distributions of Notes issued by either the Filer or Agrium U.S. Inc. (Agrium US) and offered for sale in Canada are exempt from the prospectus requirement under the Legislation (the Multiple-Jurisdiction Relief).

The Alberta Securities Commission has received an application from the Filer for a decision under subsection 144(1) of the Securities Act (Alberta) (the Act) that distributions of Notes issued by the Filer and offered for sale in the United States are exempt from subsection 110(1) of the Act (the Alberta-Only Relief).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this application;

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in respect of the Multiple-Jurisdiction Relief in each of British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador;

(c) this decision is the decision of the principal regulator; and

(d) this decision evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions or MI 11-102 have the same meaning if used in this decision, unless otherwise defined herein.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation organized under the Canada Business Corporations Act with its head and registered office located in Calgary, Alberta.

2. Agrium US, a corporation organized under the laws of the State of Colorado, United States, is a wholly-owned subsidiary of the Filer.

3. The Filer is a reporting issuer in each of the provinces of Canada and is not in default of its obligations as a reporting issuer under the securities legislation of any of the jurisdictions in which it is a reporting issuer.

4. The Filer is a registrant under securities laws of the United States.

5. The common shares of the Filer are listed on the Toronto Stock Exchange and the New York Stock Exchange.

6. The Filer has implemented a commercial-paper program that involves the sale, from time to time, of Notes issued by the Filer or Agrium US to purchasers principally located in the United States and to purchasers located in Canada.

7. The offering and sale of Notes issued by the Filer and the offering and sale of Notes issued by Agrium US in Canada are subject to the prospectus requirement under the Legislation.

8. ASC Policy 45-601 Distributions Outside Alberta indicates that the offering and sale of Notes issued by the Filer to purchasers in the United States are subject to the prospectus requirement under Alberta securities legislation.

9. Currently, the Notes are sold pursuant to, and in accordance with, the terms and conditions of the order of the Decision Maker dated November 13, 2013 (Re Agrium Inc., 2013 ABASC 515).

10. The Notes currently have a designated rating of "P-2" from Moody's Canada Inc. and "A-2" from Standard & Poor's Ratings Services (Canada), both of which are below the rating categories prescribed in the prospectus exemption in paragraph 2.35(1)(b) of National Instrument 45-106 Prospectus Exemptions (NI 45-106).

11. Accordingly, the Filer is not able to rely on the prospectus exemption in section 2.35 of NI 45-106 for the distribution of Notes.

12. All Notes will have a maturity not exceeding 365 days from the date of issuance. All Notes will be sold in denominations of not less than US$250,000.

13. The Notes will only be offered and sold to purchasers in the United States pursuant to an exemption (the US Commercial-Paper Exemption) from the registration requirements under the 1933 Act and only:

(a) through investment dealers registered, or exempt from the requirement to register, under applicable US securities laws (US Dealers); and

(b) to persons or companies (US Qualified Purchasers) that are either:

(i) institutions that are "accredited investors" within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the 1933 Act; or

(ii) "qualified institutional buyers" within the meaning of Rule 144A under the 1933 Act.

14. The Notes will be offered and sold in Canada only:

(a) through investment dealers registered, or exempt from the requirement to register, under applicable securities legislation in Canada (Canadian Dealers); and

(b) to persons or companies (Canadian Qualified Purchasers) that are "accredited investors" as defined in NI 45-106, other than those that are either:

(i) an individual referred to in any of paragraphs (j), (j.1), (k) and (l) of that definition; or

(ii) a person or company referred to in paragraph (t) of that definition in respect of which any owner of an interest, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, is an individual referred to in any of paragraphs (j), (j.1), (k) and (l).

15. The Filer will require each US Dealer to apply procedures to ensure that sales and any subsequent resales of previously-issued Notes in the United States by the US Dealer are made only to US Qualified Purchasers.

16. The Filer will require each Canadian Dealer to apply procedures to ensure that sales and any subsequent resales of previously-issued Notes in Canada by the Canadian Dealer are made only to Canadian Qualified Purchasers.

Decision

Each of the Decision Makers is satisfied that the decision concerning the Multiple-Jurisdiction Relief meets the test set out in the Legislation to make the decision.

The decision of the Decision Makers is that the Multiple-Jurisdiction Relief is granted in respect of the distribution of a Note, provided that:

(a) the Note is not convertible or exchangeable into, or accompanied by a right to purchase, another security other than a Note;

(b) the Note is not a "securitized product", as defined in NI 45-106;

(c) the Note is of a class of Notes that has a rating issued by a "designated rating organization" or a "DRO affiliate", both as defined in NI 45-106, at or above one of the following rating categories:

Designated Rating Organization

Rating

 

DBRS Limited

R-1 (low)

 

Fitch, Inc.

F2

 

Moody's Canada Inc.

P-2

 

Standard & Poor's Ratings Services (Canada)

A-2 (global scale)

(d) the distribution is made

(i) to a purchaser that is purchasing as principal and is a Canadian Qualified Purchaser; and

(ii) through a Canadian Dealer; and

(e) each Canadian Dealer has agreed to apply the procedures referred to in paragraph 16 of this decision.

The decision of the principal regulator is that the Alberta-Only Relief is granted in respect of the distribution of a Note, provided that:

(a) the Note is not convertible or exchangeable into, or accompanied by a right to purchase, another security other than a Note;

(b) the Note is not a "securitized product", as defined in NI 45-106;

(c) the distribution is made

(i) in accordance with the US Commercial-Paper Exemption;

(ii) through a US Dealer; and

(iii) to a US Qualified Purchaser; and

(d) each US Dealer has agreed to apply the procedures referred to in paragraph 15 of this decision.

For the Commission:

"Tom Cotter"
Vice-Chair
 
"Fred R.N. Snell, FCA"
Commission Member