Securities Law & Instruments

Headnote

Consent given to an offering corporation under the Business Corporations Act (Ontario) to continue under the Business Corporations Act (British Columbia).

Statutes Cited

Business Corporations Act, R.S.O. 1990, c.B.16, as am., s. 181.

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

Regulations Cited

Ont. Reg. 289/00, as am., s. 4(b), made under the Business Corporations Act, R.S.O. 1990, c.B.16, as am.

IN THE MATTER OF R.R.O. 1990, REGULATION 289/00, AS AMENDED (the "Regulation") MADE UNDER THE BUSINESS CORPORATIONS ACT (ONTARIO), R.S.O. 1990, c. B.16, AS AMENDED (the "OBCA") AND IN THE MATTER OF REGAL LIFESTYLE COMMUNITIES INC.

CONSENT (Subsection 4(b) of the Regulation)

UPON the application (the "Application") of Regal Lifestyle Communities Inc. (the "Applicant") to the Ontario Securities Commission (the "Commission") requesting a consent from the Commission, pursuant to subsection 4(b) of the Regulation, for the Applicant to continue in another jurisdiction (the "Continuance") pursuant to section 181 of the OBCA;

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

AND UPON the Applicant having represented to the Commission that:

1. The Applicant is a corporation incorporated under the OBCA by articles of incorporation effective April 11, 2012.

2. The Applicant's registered and head office is located at 155 University Avenue, Suite 207, Toronto, Ontario M5H 3B7.

3. The Applicant's authorized share capital consists of an unlimited number of common shares (the "Common Shares"). As at October 2, 2015, 31,196,039 Common Shares are issued and outstanding. All of the issued and outstanding Common Shares are listed and posted for trading on the Toronto Stock Exchange (the "TSX") under the symbol "RLC".

4. As at October 2, 2015, the Applicant had $25 million aggregate principal amount outstanding of 6.0% convertible unsecured subordinated debentures due December 31, 2018 (the "Convertible Debentures"). The Convertible Debentures bear interest at the rate of 6.0% per annum, payable semi-annually in arrears on June 30 and December 31 in each year, commencing on December 31, 2013. The maturity date for the Convertible Debentures is December 31, 2018. The Convertible Debentures are listed and posted for trading on the TSX under the symbol "RLC.DB". None of the Applicant's securities are listed or posted for trading on any other stock exchange.

5. The general nature of the Applicant's business is that of an owner of retirement communities offering a continuum of care from independent services living to a full range of assisted living programs.

6. On June 18, 2015, the Applicant announced that it had entered into an arrangement agreement (the "Arrangement Agreement") with HCN-Revera Joint Venture ULC (the "Purchaser"), an unlimited liability company incorporated under the laws of the Province of British Columbia and indirectly jointly-owned by Welltower Inc. (formerly known as Health Care REIT, Inc.) and Revera Inc. Pursuant to the Arrangement Agreement, the Purchaser agreed to acquire, by way of a statutory plan of arrangement under the OBCA (the "Arrangement"), all of the Common Shares at a price of $12.00 in cash per Common Share.

7. Following completion of the Arrangement, the Applicant will be a wholly-owned subsidiary of the Purchaser. At such time, the Purchaser, as the sole shareholder of the Applicant, will approve the Continuance in accordance with Section 181 of the OBCA. The Purchaser intends to have the Applicant continued under the Business Corporations Act (British Columbia), S.B.C. 2002, c. 57 (the "BCBCA") as soon as possible following the Arrangement, for the purpose of amalgamating with the Purchaser.

8. At the request of the Purchaser, the Applicant has agreed to the Continuance and has agreed to use its commercially reasonable efforts to facilitate the Continuance. If the Arrangement is not completed, the Applicant will not proceed with the Continuance.

9. The Applicant's management information circular dated July 14, 2015 (the "Circular") discloses the Arrangement and includes a copy of the Arrangement Agreement, which contains a covenant regarding the Purchaser's intention to have the Applicant continued under the BCBCA after the Arrangement and the Applicant's obligation to use its commercially reasonable efforts to facilitate the Continuance.

10. Pursuant to section 181 of the OBCA, the Applicant proposes to submit to the Director appointed under the OBCA an application (the "Application for Continuance") for authorization to continue as a corporation under the BCBCA.

11. Pursuant to subsection 4(b) of the Regulation, where a corporation applying to continue to another jurisdiction is an offering corporation (as such term is defined in the OBCA), the Application for Continuance must be accompanied by a consent from the Commission.

12. The Applicant is an "offering corporation" under the OBCA and is a reporting issuer under the Securities Act (Ontario), R.S.O. 1990, c. S.5, as amended (the "Act"), and is also a reporting issuer under the securities legislation of all of the other jurisdictions in Canada. The Commission is currently the Applicant's principal regulator.

13. The Applicant is not in default under any provision of the OBCA, the securities legislation of any jurisdiction in Canada, the regulations or rules made under the securities legislation of any jurisdiction in Canada, or any rules, regulations or policies of the TSX.

14. The Applicant is not a party to any proceeding under the Act or, to the best of its knowledge, information and belief, any pending proceeding under the OBCA, the Act or under the securities legislation of any jurisdiction in Canada.

15. In accordance with the interim order received from the Ontario Superior Court of Justice (Commercial List) (the "Court") on July 13, 2015, the special resolution authorizing the Arrangement was approved at the special meeting (the "Meeting") of holders of Common Shares ("Shareholders") held on August 18, 2015 by more than 662/3% of all of the votes cast by Shareholders and also by a majority of the votes validly cast by Shareholders other than those required to be excluded in determining such approval pursuant to Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions. At the Meeting, 58.46% of the Common Shares were represented in person or by proxy and 99.70% of the votes cast were voted in favour of the special resolution. On August 21, 2015, a final order approving the Arrangement was obtained from the Court.

16. Pursuant to Section 185 of the OBCA, all Shareholders of record as of the record date, being July 8, 2015, for the Meeting were entitled to dissent rights with respect to the Arrangement (the "Dissent Rights").

17. A description of the Arrangement was included in the Circular mailed on July 20, 2015 to Shareholders of record on July 8, 2015 and filed on SEDAR on July 20, 2015. The Circular advised the Shareholders of their Dissent Rights. None of the Shareholders of the Applicant exercised Dissent Rights pursuant to section 185 of the OBCA.

18. On August 20, 2015, at a special meeting of holders of Convertible Debentures ("Debentureholders"), Debentureholders approved an extraordinary resolution by more than 662/3% of all of the votes cast by Debentureholders to authorize certain amendments to the trust indenture between the Applicant and Computershare Trust Company of Canada (the "Trustee") dated October 2, 2013 that will require the Applicant to redeem the Convertible Debentures for cash, at a redemption price of 129.5% of the aggregate principal amount thereof, plus accrued and unpaid interest, up to, but excluding the date of redemption, at any time on, or within 30 days following, the effective date ("Effective Date") of the Arrangement and conditional upon closing of the Arrangement. At the special meeting, 62.42% of the Convertible Debentures were represented in person or by proxy and 100% of the votes cast were voted in favour of the extraordinary resolution.

19. On or before the redemption date for the Convertible Debentures, the Purchaser will deposit or cause to be deposited with the Trustee, an amount equal to the aggregate redemption amount of the Convertible Debentures and from such amount the Trustee will pay or cause to be paid to the registered holders of the Convertible Debentures the portion of the aggregate redemption amount to which they are respectively entitled. Registered holders of Convertible Debentures are not required to take any further action to receive payment from the Trustee.

20. The Applicant anticipates that both the Common Shares and, assuming that the Convertible Debentures are redeemed immediately prior to or at or shortly following the Effective Date, the Convertible Debentures will be de-listed from the TSX on or following the Effective Date.

21. As soon as practicable following completion of the Arrangement and subsequent amalgamation with the Purchaser, it is anticipated that the Applicant will apply to cease being a reporting issuer under the Act.

AND UPON the Commission being satisfied that to do so is not prejudicial to the public interest;

THE COMMISSION HEREBY CONSENTS to the continuance of the Applicant under the BCBCA.

DATED at Toronto on this 6th day of October, 2015.

"Timothy Moseley"
Commissioner
Ontario Securities Commission
 
"Mary Condon"
Commissioner
Ontario Securities Commission