MI 11-102 and NP 11-203 -- Filer closed an Acquisition that satisfied the profit or loss test under Part 8 of NI 51-102, necessitating the filing of a BAR. The Filer submitted that the Acquisition was not significant from a practical, commercial or financial perspective -- in addition to significance test results, issuer supplied other metrics -- the Filer was relieved from the obligation to file a BAR.
Applicable Legislative Provisions
National Instrument 51-102 Continuous Disclosure Obligations, ss. 8.2(1), 8.4(5), 13.
Citation: Re Shaw Communications Inc., 2016 ABASC 103
May 2, 2016
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 SHAW COMMUNICATIONS INC. (THE FILER)
The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision (the Exemption Sought) under the securities legislation of the Jurisdictions (the Legislation) to grant an exemption from the requirement under subsection 8.2(1) of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) to file a business acquisition report (BAR) in connection with the Acquisition (as defined below).
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 the Provinces of British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador; and
(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Terms defined in National Instrument 14-101 Definitions, MI 11-102 or NI 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, a corporation formed under the Business Corporations Act (Alberta) with its head office in Alberta, is a reporting issuer in each of the provinces of Canada. The Filer is not in default of securities legislation in any jurisdiction of Canada.
2. The Class B Non-Voting Participating Shares of the Filer are listed on Toronto Stock Exchange under the trading symbol SJR.B and, accordingly, the Filer is not a venture issuer.
The Acquisition and Mid-Bowline
3. Effective March 1, 2016, the Filer indirectly acquired (the Acquisition) all of the issued and outstanding equity of Mid-Bowline Group Corp. (Mid-Bowline) pursuant to an arrangement agreement made effective as of December 16, 2015, as amended.
Significance of the Acquisition
4. Pursuant to subsection 8.2(1) of NI 51-102, if a reporting issuer makes a significant acquisition it must file a BAR within 75 days after the acquisition date. The tests for determining whether an acquisition is a significant acquisition are set out in section 8.3 of NI 51-102 and are referred to as the asset test, the investment test and the profit or loss test. An acquisition by the Filer is a significant acquisition if any of the three foregoing tests yield a result that exceeds 20%.
5. The Acquisition is not a significant acquisition under
(a) the asset test in paragraph 8.3(2)(a) of NI 51-102 as the consolidated assets of Mid-Bowline represents approximately 8.1% of the Filer's consolidated assets as stated on its audited financial statement for the year ended August 31, 2015 (the Audited Financial Statements), or
(b) the investment test in paragraph 8.3(2)(b) of NI 51-102 as the Filer's consolidated investment in, and advances to, Mid-Bowline represents approximately 11.5% of the Filer's consolidated assets as stated on its Audited Financial Statements.
6. The Acquisition is a significant acquisition under the profit or loss test in paragraph 8.3(2)(c) of NI 51-102 as the consolidated specified profit or loss of Mid-Bowline represents approximately 45.9% of the Filer's consolidated specified profit or loss as stated on its Audited Financial Statements.
7. The application of the profit and loss test leads to an anomalous result due to a series of agreements entered into with a third party corporation (Third Party) by which the Third Party transferred certain licenses to Mid-Bowline's subsidiary, WIND Mobile Corp. (WIND), in exchange for nominal consideration and one spectrum license of significantly lesser value with Mid-Bowline recognizing (on a consolidated basis, before the Acquisition), a significant one-time gain of approximately $265 million, which reflects the significant excess of the estimated fair value of the licences received by WIND from the Third Party over the carrying value of that one licence that WIND transferred to the Third Party.
The Significance of the Acquisition from a Practical, Commercial, or Financial Perspective
8. Overall, the Filer is of the view that the Acquisition is not a "significant acquisition" to it from a practical, commercial or financial perspective, due to the results of the asset test and the investment test and other metrics put forward by the Filer, such as the number of subscribers of the Filer as compared to those of Mid-Bowline.
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.