Securities Law & Instruments

Headnote

Applicant deemed to have ceased to be offering its securities to the public under the Business Corporations Act (Ontario).

Applicable Legislative Provisions

Business Corporations Act, R.S.O. 1990, c. B.16, as am., s. 1(6).

IN THE MATTER OF THE BUSINESS CORPORATIONS ACT (ONTARIO), R.S.O. 1990, c. B.16, AS AMENDED (the OBCA) AND IN THE MATTER OF DUNDEE ACQUISITION LTD. (the Applicant)

ORDER (Subsection 1(6) of the OBCA)

UPON the application of the Applicant to the Ontario Securities Commission (the Commission) for an order pursuant to subsection 1(6) of the OBCA to be deemed to have ceased to be offering its securities to the public;

AND UPON the Applicant representing to the Commission that:

1. The Applicant is an "offering corporation" as defined in the OBCA, and has an authorized capital consisting of an unlimited number of Class A Restricted Voting Shares and Class B Shares.

2. The Applicant is a reporting issuer in all of the provinces and territories of Canada (collectively, the Jurisdictions).

3. The Applicant has its head office at 1 Adelaide Street East, 21st Floor, Toronto, Ontario, M5C 2V9.

4. The Applicant is a special purpose acquisition corporation (a SPAC) formed for the purpose of effecting an acquisition of one or more businesses or assets, by way of a merger, share exchange, asset acquisition, share purchase, reorganization, or any other similar business combination.

5. The Applicant was the first publicly-listed SPAC in Canada. The Applicant's initial public offering (IPO) of $100 million Class A Restricted Voting Units closed on April 21, 2015, which was followed by a closing of the underwriters' over-allotment option on May 20, 2015 for an additional $12.3 million Class A Restricted Voting Units. Each Class A Restricted Voting Unit consisted of one Class A Restricted Voting Share and one-half of a warrant. The gross proceeds from the distribution of the Class A Restricted Voting Units were deposited into an escrow account for the purpose of effecting the Applicant's "qualifying acquisition".

6. Under Toronto Stock Exchange Rules (TSX Rules) approved by the Commission, at least 90% of the proceeds from a SPAC's IPO must be set aside in an escrow account and invested in liquid and low risk securities. If a "qualifying acquisition" as contemplated by the TSX Rules is not completed within a permitted timeline, investors get their money back with interest. The founders of the SPAC -- a sponsoring entity and (if applicable) certain directors and officers or other persons -- provide seed financing to the SPAC. The seed financing covers underwriting fees and legal and other fees in connection with the IPO and qualifying acquisition. The founders are typically a small group of managers and financiers with the credibility and expertise necessary to raise the requisite funds and execute an appropriate qualifying acquisition. SPACs are designed to allow the public to co-invest with sophisticated managers and financiers, an opportunity that has traditionally been restricted to institutional investors and private equity investors.

7. Under the SPAC structure, prior to the meeting of shareholders held to approve the qualifying acquisition, holders of Class A Restricted Voting Shares can elect (subject to closing) to redeem all or a portion of their Class A Restricted Voting Shares in exchange for a cash payment equal to the redemption price for the Class A Restricted Voting Shares, irrespective of whether they vote for or against, or do not vote on, the resolution to approve the qualifying acquisition at the meeting. Holders of Class A Restricted Voting Shares have the right to keep their warrants whether or not they decide to redeem their Class A Restricted Voting Shares.

8. On August 25, 2016 the Applicant and CHC Student Housing Corp. announced that they had entered into an arrangement agreement (the Arrangement) to effect a business combination by way of a court approved plan of arrangement, which was to constitute the Applicant's qualifying acquisition.

9. On November 29, 2016, the Applicant filed a management information circular (the Circular) for its special meeting of shareholders (the Meeting) to be held on December 20, 2016, which appended a non-offering prospectus (the Prospectus) disclosing details about the proposed Arrangement as required by the TSX Rules.

10. On December 15, 2016, the Applicant announced that it was making certain modifications to the terms of the Arrangement, including raising of additional common equity concurrently with the closing of the Arrangement, and postponing the Meeting to January 27, 2017. The Applicant filed amendment no. 1 to the Circular on January 9, 2017 disclosing these changes and received a receipt for amendment no. 1 to the Prospectus on January 12, 2017.

11. On January 20, 2017, the Applicant announced that the founders of the Applicant agreed to reduce the value of their founders' shares by 75%, and on the same day filed amendment no. 2 to the Circular disclosing these changes.

12. The Arrangement was approved by the Applicant's shareholders at the Meeting on January 27, 2017. While the Arrangement was approved by the Applicant's shareholders, as a result of the Applicant's inability to meet the targeted minimum cash amount of $87.3 million in connection with the Arrangement due to higher than expected redemption deposits of Class A Restricted Voting Shares, upon completion of the voting in respect of resolutions to be considered at the Meeting, the Applicant adjourned the Meeting until further notice.

13. On March 31, 2017, the Applicant announced that the Arrangement relating to its proposed business combination with CHC Student Housing Corp. has been terminated.

14. Under the Applicant's articles of incorporation, as amended (the Articles), the Applicant had until April 21, 2017 to consummate a business combination, failing which all of the issued and outstanding Class A Restricted Voting Shares issued in its IPO would be automatically redeemed within 10 days following that date.

15. The Applicant was not in a position to complete a business combination by April 21, 2017.

16. On April 21, 2017, in accordance with its Articles, the Applicant automatically redeemed the Class A Restricted Voting Shares from the proceeds of the escrow account. The redemption amount per Class A Restricted Voting Share was, as provided under the Articles, approximately $10.04 per Class A Restricted Voting Share based on the value of the escrow account as of March 31, 2017. Payment of such amounts constituted the Applicant's final payment in respect of the liquidation of the escrow account that held the proceeds of the Applicant's IPO. The Applicant's warrants were also terminated in accordance with their terms on April 21, 2017.

17. Promptly following such redemption, all of the Applicant's Class A Restricted Voting Shares and warrants were delisted from the TSX.

18. As of the date hereof, all of the outstanding securities of the Applicant, including debt securities, are beneficially owned, directly or indirectly, by fewer than 15 securityholders in each of the jurisdictions of Canada and fewer than 51 securityholders in total worldwide.

19. No securities of the Applicant, including debt securities, are traded in Canada or another country on a marketplace as defined in National Instrument 21-101 -- Marketplace Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported.

20. On April 20, 2017, the Applicant made an application to the Ontario Securities Commission, as principal regulator on behalf of the securities regulatory authorities in the Jurisdictions, for a decision that the Applicant is not a reporting issuer in the Jurisdictions in accordance with the simplified procedure set out in National Policy 11-206 Process for Cease to be a Reporting Issuer Applications (the Order). The Order was granted on May 12, 2017.

21. The Applicant is not a reporting issuer in any jurisdiction of Canada.

22. The Applicant is not in default of securities legislation in the Jurisdictions.

23. The Applicant has no intention to seek public financing by way of an offering of securities.

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

IT IS HEREBY ORDERED by the Commission pursuant to subsection 1(6) of the OBCA that the Applicant be deemed to have ceased to be offering its securities to the public for the purpose of the OBCA.

DATED at Toronto on this 12th day of May, 2017.

"William J. Furlong"
Commissioner
Ontario Securities Commission
 
"Mark J. Sandler"
Commissioner
Ontario Securities Commission