Regulation 11-102 Passport System and Policy Statement 11-203 Process for Exemptive Relief applications in Multiple Jurisdictions -- BAR -- Exemption from the requirement to file a BAR under Part 8 of Regulation 51-102 Continuous Disclosure Obligations (Regulation 51-102) -- The acquisition is non-significant applying the asset and investment tests; applying the profit or loss test produces an anomalous result because the significance of the acquisition under this test is disproportionate to its significance on an objective basis in comparison to the results of the other significance tests and all other business, commercial, financial and practical factors; the Filer has provided additional measures that demonstrate the non-significance of the Acquisition to the Filer and that are generally consistent with the results when applying the asset and investment tests.
Applicable Legislative Provisions
Regulation 51-102 Continuous Disclosure Obligations, ss. 8.4, 13.1(1).
December 9, 2015
IN THE MATTER OF THE SECURITIES LEGISLATION OF QUÉBEC AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF NAPEC INC. (the Filer)
The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) granting relief from the requirement in Part 8 of Regulation 51-102 respecting Continuous Disclosure Obligations (Regulation 51-102) to file a business acquisition report (BAR) in connection with the Filer's acquisition, by its U.S. wholly-owned subsidiary, of Bemis, LLC (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
a) the Autorité des marchés financiers is the principal regulator for this application;
b) the Filer has provided notice that Subsection 4.7(1) of Regulation 11-102 respecting Passport System (Regulation 11-102) is intended to be relied upon in British Columbia and Alberta; and
c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Terms defined in Regulation 14-101 respecting Definitions, Regulation 11-102 and Regulation 51-102 have the same meaning if used in this decision, unless otherwise defined herein.
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation existing under the Canada Business Corporations Act.
2. The Filer's head office is located at 1975 rue Jean-Berchmans-Michaud, Drummondville, Québec, J2C 0H2.
3. The Filer is a reporting issuer in British Columbia, Alberta, Ontario and Québec and is not in default of securities legislation in any of the jurisdictions.
4. The Filer's common shares are listed for trading on the Toronto Stock Exchange under the ticker symbol NPC.
5. On October 9, 2015, the Filer announced that its wholly-owned U.S. subsidiary, Riggs Distler & Company, Inc., had acquired Bemis, LLC (the Acquired Business) for a purchase price of US$19.2 million, subject to certain customary adjustments (the Acquisition).
6. The Acquisition constitutes a significant acquisition of the Filer for the purposes of Part 8 of Regulation 51-102, requiring the Filer to file a BAR within 75 days of the Acquisition pursuant to section 8.2(1) of Regulation 51-102
Significance Tests for the BAR
7. Under Part 8 of Regulation 51-102, the Filer is required to file a BAR for any completed acquisition that is determined to be a significant acquisition based on the acquisition satisfying any of the three significance tests set out in section 8.3(2) of Regulation 51-102.
8. The Acquisition is not a significant acquisition under the asset test in Subsection 8.3(2)(a) as the value of the consolidated assets of the Acquired Business as of December 31, 2014 represented approximately 4.0% of the consolidated assets of the Filer as of December 31, 2014.
9. The Acquisition is not a significant acquisition under the investment test in Subsection 8.3(2)(b) as the Filer's acquisition costs for the Acquired Business represents approximately 13.45% of the consolidated assets of the Filer as of December 31, 2014.
10. The Acquisition is, however, a significant acquisition under the profit or loss test in Subsection 8.3(2)(c) of Regulation 51-102; in particular, the Filer's proportionate share of the consolidated specified profit or loss of the Acquired Business exceeds 20% of the consolidated specified profit or loss of the Filer calculated using the audited annual financial statements of the Filer for the year ended December 31, 2014.
11. When applying the optional signification tests or the alternative applications available under Subsections 8.3(3) and 8.3(4) of Regulation 51-102, the Acquisition still represents a significant acquisition requiring the filing of a BAR under Part 8 or Regulation 51-102.
12. The application of the profit or loss test produces an anomalous result for the Filer because it exaggerates the significance of the Acquisition on an objective basis in comparison to the results of the asset and investment tests.
De Minimis Acquisition
13. The Filer does not believe (nor did it believe at the time it made the Acquisition) that the Acquisition is significant to it from a commercial, business, practical or financial perspective.
14. The Filer has provided the principal regulator with additional financial and operational measures, all of which are generally important metrics for the Filer and the industry in which it operates, which further demonstrate the non-significance of the Acquisition to the Filer; these additional financial and operational measures include revenues, working capital, number of employees, and inventory of equipment and automotive equipment of the Filer and the Acquired Business, and the results of those measures are generally consistent with the results of the asset test and the investment test.
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted.