Securities Law & Instruments

Headnote

Subsection 104(2)(c) of the Act -- 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 up to 564,691 of its class A non-voting shares from a holding company controlled by a director and former officer of the Issuer -- 86.7% of the voting shares of the holding company are held by the director and former officer of the Issuer and the remaining 13.3% of the voting shares are held by the director and former officer's family -- if the Issuer purchased the subject shares directly from the director and former officer, such purchase would be exempt from the issuer bid requirements in reliance on the employee, executive officer, director and consultant exemption set out in section 101.1 of the Act -- the independent directors of the Issuer determined that the purchase of subject shares was in the best interests of the Issuer and its shareholders and have no actual knowledge that the purchase of subject shares will be prejudicial to the interests of any of the Issuer's shareholders -- proposed purchases of subject shares exempt from the issuer bid requirements in section 94 to 94.8 and 97 to 98.7 of the Act, subject to conditions, including that the subject shares purchased under the order, when aggregated with all other class A shares acquired by the Issuer in reliance on the exemption set out in section 101.1 of the Act within any period of 12 months, will not exceed 5% of the issued and outstanding class A shares at the beginning of such 12 month period, the purchase price per subject share paid in connection with purchases made pursuant to the order will not exceed the market price of the class A non-voting shares on the date of such purchase, and the Issuer will issue and file a news release at least seven days in advance of any purchase of subject shares pursuant to the order and will report information relating to such purchase on SEDAR the day following such purchase.

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 AND IN THE MATTER OF ANDREW PELLER LIMITED

ORDER (Clause 104(2)(c))

UPON the application (the "Application") of Andrew Peller Limited (the "Issuer") to the Ontario Securities Commission (the "Commission") for an order pursuant to clause 104(2)(c) of the Securities Act (Ontario) (the "Act") exempting the Issuer from the requirements of sections 94 to 94.8, inclusive, and 97 to 98.7, inclusive, of the Act (the "Issuer Bid Requirements") in connection with the proposed purchase by the Issuer from Jalger Limited ("Jalger"), a holding company controlled by a director and former officer of the Issuer, of up to 564,691 Class A non-voting shares of the Issuer (the "Subject Shares") during the 12 month period commencing on the date hereof;

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

AND UPON the Issuer (and Jalger in respect of paragraphs 6, 7, 8 and 9 as they relate to Jalger) having represented to the Commission that:

1. The Issuer is a corporation existing under the Canada Business Corporations Act (the "CBCA") with its registered and head office located at 697 South Service Road, Grimsby, Ontario, L3M 4E8.

2. The Issuer is a reporting issuer in each of the provinces and territories of Canada other than Manitoba (the "Jurisdictions") and is not in default of any requirement of the securities legislation in any of the Jurisdictions.

3. The authorized capital of the Issuer consists of an unlimited number of Class A non-voting shares (the "Class A Shares"), an unlimited number of Class B voting shares (the "Class B Shares") and an unlimited number of preference shares issuable in series, of which 11,293,829 Class A Shares, 3,004,041 Class B Shares and no preference shares were issued and outstanding as at January 11, 2016.

4. The Class A Shares and Class B Shares are listed on the Toronto Stock Exchange (the "TSX") under the symbols "ADW.A" and "ADW.B", respectively.

5. To the knowledge of the directors and officers of the Issuer, as at January 11, 2016, the only persons who beneficially own, directly or indirectly, more than 10% of the outstanding Class A Shares or Class B Shares are: (i) Dr. Joseph A. Peller ("Dr. Peller"), who controls, directly and indirectly, an aggregate of 1,558,435 Class A Shares and 1,999,404 Class B Shares, representing 13.8% and 66.6% of the issued and outstanding Class A Shares and Class B Shares, respectively (collectively, the "Dr. Peller Shares"); (ii) Mr. John E. Peller, who owns an aggregate of 1,459,847 Class A Shares, representing 12.9% of the issued and outstanding Class A Shares; and (iii) Mr. E.J. Kernaghan, who controls, directly and indirectly, an aggregate of 1,314,000 Class A Shares and 328,200 Class B Shares, representing 11.6% and 10.9% of issued and outstanding Class A Shares and Class B Shares, respectively.

6. The Dr. Peller Shares include 1,557,067 Class A Shares and 1,998,036 Class B Shares, all of which are held indirectly by Dr. Peller through Jalger. Dr. Peller is currently a director of the Issuer and has formerly served as Chairman of the board of directors and as President and Chief Executive Officer of the Issuer.

7. Jalger is a holding company that neither carries on any active business nor owns any material assets other than cash and Class A Shares and Class B Shares, including substantially all of the Dr. Peller Shares. Dr. Peller beneficially owns, directly or indirectly, approximately 86.7% of the issued and outstanding voting shares of Jalger. The remaining approximately 13.3% of the issued and outstanding voting shares of Jalger are beneficially owned, directly or indirectly, by Dr. Peller's six children (three of such six children are current directors of the Issuer).

8. The Issuer proposes to enter into one or more share purchase agreements (each, a "Purchase Agreement") with Dr. Peller and Jalger pursuant to which, conditional upon receipt of this Order, the Issuer intends to purchase up to 196,000 of the Subject Shares in early 2016 (the "Initial Purchase") and may from time to time thereafter during the 12 months following the date of this Order, purchase up to an additional 368,691 Subject Shares (each such purchase of Subject Shares, including the Initial Purchase, a "Subject Share Purchase"). The aggregate number of Subject Shares purchased pursuant to the Purchase Agreements will not exceed 5% of the issued and outstanding Class A Shares as at January 11, 2016, and the purchase price (the "Purchase Price") payable in connection with each Subject Share Purchase will not exceed the aggregate market price of the Class A Shares at the date of such Subject Share Purchase, determined in accordance with section 1.3 of OSC Rule 62-504 Take-Over Bids and Issuer Bids ("OSC Rule 62-504").

9. Other than the Purchase Price, no additional fee or other consideration will be paid in connection with any Subject Share Purchase.

10. If the Subject Shares were held directly by Dr. Peller and purchased by the Issuer from Dr. Peller, such purchase would be exempt from the Issuer Bid Requirements in reliance on section 101.1 of the Act since Dr. Peller is a former officer and employee of the Issuer and is currently a director of the Issuer.

11. All of the directors of the Issuer who are "independent" for the purposes of National Instrument 58-101 Disclosure of Corporate Governance Practices (the "Independent Directors") have determined that the purchase of the Subject Shares from Jalger is in the best interests of the Issuer and its shareholders and is a prudent use of the Issuer's surplus cash given its current circumstances. In making this determination, the Independent Directors considered, among other things:

(a) the modest trading volume of the Class A Shares on the TSX and the potentially adverse effect on the market price of the Class A Shares if Jalger were to attempt to sell some or all of the Subject Shares through the facilities of the TSX;

(b) the Issuer's planned capital expenditures and anticipated future cash requirements;

(c) the impact of the Subject Share Purchases, including the reduction of concentration of ownership of the Issuer currently held directly and indirectly by Dr. Peller; and

(d) a certificate of the Chief Financial Officer of the Issuer certifying that after each Subject Share Purchase, the Issuer will be in compliance with the solvency requirements set forth in section 34(2) of the CBCA, being that there are no reasonable grounds for believing that the Issuer is, or would after payment of the Purchase Price payable in connection with the applicable Subject Share Purchase be, unable to pay its liabilities as they become due, or the realizable value of the Issuer's assets would after the payment of the Purchase Price payable in connection with the applicable Subject Share Purchase be less than the aggregate of its liabilities and the stated capital of all classes.

12. The Independent Directors have no actual knowledge that any Subject Share Purchase will be prejudicial to the interests of any of the Issuer's shareholders.

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 the Subject Share Purchases, provided that:

(a) the Issuer issues and files a news release not less than seven days in advance of any Subject Share Purchase disclosing (i) its intention to make the Subject Share Purchase, (ii) the anticipated timing of such Subject Share Purchase, and (iii) that information regarding such Subject Share Purchase, including the number of Subject Shares purchased and the aggregate Purchase Price, will be available on the System for Electronic Document Analysis and Retrieval (SEDAR) following the completion of such Subject Share Purchase;

(b) the Issuer will report information regarding each Subject Share Purchase, including the number of Subject Shares purchased and the aggregate Purchase Price, on SEDAR before 5:00 p.m. (Toronto time) on the business day following such Subject Share Purchase;

(c) the number of Subject Shares purchased from Jalger pursuant to this Order, when aggregated with all other Class A Shares acquired by the Issuer within any period of 12 months in reliance on the employee, executive officer, director and consultant exemption set out in section 101.1 of the Act, shall not exceed 5% of the issued and outstanding Class A Shares at the beginning of such 12 month period;

(d) the Purchase Price per Subject Share paid in connection with each Subject Share Purchase will not exceed the market price of the Class A Shares at the date of such Subject Share Purchase, determined in accordance with section 1.3 of OSC Rule 62-504; and

(e) at the time each Purchase Agreement is entered into, and at the time of each Subject Share Purchase, neither the Issuer, Dr. Peller nor Jalger will be aware of any "material change" or "material fact" (each as defined in the Act) in respect of the Issuer or the Class A Shares that has not been generally disclosed.

DATED at Toronto, Ontario this 12th day of February, 2016.

"Judith Robertson"
Commissioner
Ontario Securities Commission
 
"Tim Moseley"
Commissioner
Ontario Securities Commission