Section 144 -- application for full revocation of cease trade order -- issuer cease traded due to failure to file with the Commission annual financial statements -- issuer has made a separate application to not be a reporting issuer in all of the jurisdictions in which it is currently a reporting issuer -- full revocation granted effective as of the date the issuer is determined to not be a reporting issuer.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 127, 144.
IN THE MATTER OF THE SECURITIES ACT, R.S.O. 1990, CHAPTER S.5, AS AMENDED (the Act) AND IN THE MATTER OF GUESTLOGIX INC.
ORDER (Section 144 of the Act)
WHEREAS the securities of GuestLogix Inc. (the Filer) are subject to a cease trade order issued by the Director on April 5, 2016 pursuant to subsection 127(1) of the Act (the Ontario CTO), directing that all trading in the securities of the Filer cease until further order by the Director;
AND WHEREAS pursuant to section 144 of the Act, the Ontario CTO was partially revoked on September 16, 2016 solely to permit trades in securities of the Filer in connection with a restructuring transaction (the Transaction) contemplated under a plan of compromise and arrangement (the Plan) pursuant to the Companies' Creditors Arrangement Act (Canada) (the CCAA);
AND WHEREAS the Filer has applied to the Ontario Securities Commission (the Commission) for an order pursuant to section 144 of the Act (the Application) for a full revocation of the Ontario CTO.
AND WHEREAS the Filer has represented to the Commission that:
1. The Filer was incorporated under the Business Corporations Act (Ontario) on August 1, 2007.
2. The Filer's head office and registered office is located at 111 Peter Street, Suite 302. Toronto, Ontario M5V 2H1.
3. The Filer is a reporting issuer in each of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland (collectively, the Reporting Jurisdictions).
4. In light of difficult financial circumstances, the Filer was unable to obtain additional financing to repay amounts owing on its loan obligations and there was no reasonable expectation that the Filer's financial condition would improve without a deleveraging of its capital structure. The Filer was, therefore, insolvent and determined that it was in the best interests of the Filer and its stakeholders to file for protection under the CCAA.
5. On February 9, 2016, the Filer was granted protection from its creditors under the CCAA pursuant to an initial order (as amended and restated, the Initial Order) granted by the Ontario Superior Court of Justice (Commercial List) (the Court). PricewaterhouseCoopers Inc. was appointed as CCAA monitor of the Filer pursuant to the Initial Order. All proceedings against the Filer were stayed pursuant to the Initial Order.
6. On March 18, 2016, the Filer's common shares and 7% extendible convertible unsecured subordinated debentures (Convertible Debentures) were delisted from trading on the Toronto Stock Exchange. As a result, no securities of the Filer are traded on a marketplace as defined in National Instrument 21-101 Marketplace Operation.
7. On June 30, 2016, the Filer entered into a transaction agreement (the Transaction Agreement) with GXI Acquisition Corp. (the Sponsor) providing for, inter alia, the acquisition of the Filer by the Sponsor through the subscription for 100% of the equity of the Filer in accordance with the terms and conditions of the Transaction Agreement under the Plan.
8. The Sponsor is at arms-length to the Filer. The Sponsor and its shareholders are not related parties of the Filer and its shareholders.
9. The Ontario CTO was issued due to the failure of the Filer to file its annual information form, audited annual financial statements, related management's discussion and analysis and certifications for the year ended December 31, 2015 (collectively, the Annual Filings).
10. The Filer is not in default of any of its obligations as a reporting issuer, other than the obligation to file the Annual Filings which were required to be filed on March 31, 2016 and the obligation to file interim unaudited financial statements, interim management's discussion and analysis and certification of interim filings for the interim periods ended March 31, 2016, June 30, 2016 and September 30, 2016 which were required to be filed on May 15, 2016, August 14, 2016 and November 14, 2016, respectively, all of which became due after the Filer filed for CCAA protection.
11. The Filer is also subject to a cease trade order (the Manitoba Cease Trade Order) dated April 21, 2016 from the Manitoba Securities Commission (the MSC) for failure to file audited annual financial statements, related management's discussion and analysis and certifications for the year ended December 31, 2015. The Filer has applied for and expects to be granted concurrently with this revocation order, full revocation of the Manitoba Cease Trade Order. Other than the Ontario CTO and the Manitoba Cease Trade Order, the Filer is not subject to any other cease trade orders.
12. On September 16, 2016, the Filer received partial revocation orders (collectively, the Partial Revocation Orders) from the Commission and the MSC, which issued the Manitoba Cease Trade Order, to enable the Filer to undertake and complete the following trades, steps and actions in connection with the Plan and the Transaction:
(a) the subscription by the Sponsor for newly created common shares in the capital of the Filer (the New Common Shares) for cash consideration and the issuance of the New Common Shares to the Sponsor in consideration of such payment under section 2.11(a) of National Instrument 45-106 Prospectus Exemptions;
(b) the consolidation of the issued and outstanding common shares (including the New Common Shares) on the basis of a consolidation ratio pursuant to the Plan and the cancellation of any fractional common shares immediately following the consolidation without any liability, payment or other compensation or any other right in respect thereof (the Common Share Consolidation);
(c) the compromise and extinguishment of all claims of the Filer's unsecured creditors, including holders of the Filer's Convertible Debentures, in exchange for a proportionate distribution of the remainder of the cash pool available under the Plan, calculated with reference to the amounts of their respective unsecured claims; and
(d) the cancellation of all other securities of the Filer, other than the New Common Shares remaining after the Common Share Consolidation, for no consideration and without any vote or approval by the holders of such equity securities.
13. The Filer has satisfied every condition of the Partial Revocation Orders.
14. On August 3, 2016, the Court granted a Meeting order, inter alia, accepting the Plan for filing and scheduling a meeting of the unsecured creditors of the Filer to consider and vote on the Plan (the Meeting).
15. On September 2, 2016, the Meeting was held and the unsecured creditors voted unanimously in favour of the Plan. The Filer obtained an order of the Court sanctioning and approving the Plan on September 12, 2016 (the Sanction Order).
16. The closing of the Transaction contemplated by the Plan has taken place in accordance with the Sanction Order and, effective September 21, 2016, the Filer became a wholly-owned subsidiary of the Sponsor and the only outstanding securities of the Filer are held by the Sponsor. The Filer has no other outstanding securities (including debt securities).
17. As a result of the completion of the Transaction, the Filer has fewer than 15 security holders in each of the jurisdictions in Canada and fewer than 51 security holders in total worldwide.
18. The Filer has applied for and expects to be granted concurrently with this full revocation order, a decision that the Filer has ceased to be a reporting issuer in each of the Reporting Jurisdictions. If that decision is granted, the Filer will not be a reporting issuer in any jurisdiction in Canada.
19. The Sponsor has consented to the Filer making this Application.
AND UPON considering the Application and the recommendation of the staff of the Commission;
AND UPON the Director being satisfied to do so would not be prejudicial to the public interest;
IT IS ORDERED, pursuant to section 144 of the Act, that the Ontario CTO is fully revoked as of the date on which the Filer ceases to be a reporting issuer under the Act.
DATED this 17th day of January, 2017.