Securities Law & Instruments

Headnote

Multilateral Instrument 11-102 Passport System National Policy 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 and financial 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

Securities Act, R.S.O. 1990, c. S.5, as am.

June 13, 2018

TRANSLATION

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 BORALEX INC. (the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (each a Decision Maker) has received an application (the Application) from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) granting relief pursuant to Part 13 of Regulation 51-102 respecting Continuous Disclosure Obligations (Regulation 51-102) from the requirement from the requirement in Part 8 of Regulation 51-102 to file a business acquisition report (BAR) in connection with the Filer's acquisition of Kallista Energy Investment SAS (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 each of the provinces of Canada other than Ontario; and

c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in Regulation 14-101 respecting Definitions and Regulation 11-102 have the same meaning if used in this decision, unless otherwise defined herein.

Representations

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 head office of the Filer is located at 36 rue Lajeunesse, Kingsey Falls, Québec J0A 1B0.

3. The Filer is a reporting issuer in all of the provinces of Canada and the Filer is not in default of securities legislation in any of the provinces of Canada.

4. The Filer's Class A common shares are listed for trading on the Toronto Stock Exchange (TSX) under the ticker symbol BLX.

5. On April 20, 2018, the Corporation announced that it had entered into a purchase agreement with Ardian Infrastructure to acquire all of the outstanding shares of Kallista Energy Investment SAS (the Acquired Business) for a purchase price of €129.4 million, subject to an adjustment mechanism, and the assumption of €94 million in project debt (the Acquisition).

6. The Acquired Business consists of 163 megawatts ("MW") of wind power projects in operation with a weighted average remaining life of 8 years under contract, a 10 MW ready-to-build project and a portfolio of projects totalling about 158 MW.

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" as the book value of the Acquired Business as of December 31, 2017 represented approximately 6.96% of the consolidated assets of the Filer as of December 31, 2017.

9. The Acquisition is not a "significant acquisition" under the "investment test" as the total consideration proposed to be paid for the Acquired Business represents approximately 4.98% of the consolidated assets of the Filer as of December 31, 2017.

10. The Acquisition would be a "significant acquisition" under the "profit or loss test", as the "specified profit or loss" (as calculated in accordance with Section 8.1 of Regulation 51-102) of the Acquired Business exceeds 20% of the "specified profit or loss" of the Filer. As such, the Acquisition would represent a "significant acquisition" requiring the filing of a BAR under the "profit or loss test" of Subsection 8.3(2)(c) of Regulation 51-102.

11. Even when applying the optional signification tests or the alternative applications available under Subsections 8.3(3), 8.3(4), 8.3(8) and 8.3(9) of Regulation 51-102, the Acquisition would still represent a "significant acquisition" requiring the filing of a BAR under the "profit or loss test".

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.

13. For the purposes of completing its quantitative analysis of the "asset test", "investment test" and "profit or loss test", the Filer utilized the Acquired Business' financial statements which were prepared in accordance with French generally accepted accounting principles and the Filer's financial statements which were prepared in accordance with International Financial Reporting Standards (IFRS). The Filer does not expect that the differences between French generally accepted accounting principles and IFRS would be significant to the quantitative analysis presented in the Application.

14. The Filer does not believe (nor did it believe at the time it entered into an agreement with respect to the Acquisition) that the Acquisition is significant to it from a commercial, business or financial perspective.

15. 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 insignificance of the Acquisition to the Filer. These additional financial and operational measures include revenues, net installed capacity (in MW) and net installed capacity for the wind power segment only (in MW) and the results of those measures are generally consistent with the results of the "asset test" and the "investment test".

16. The Filer is of the view that the "asset test", the "investment test" and these additional financial and operational measures more accurately reflect the significance of the Acquisition to the Filer from a commercial, business and financial perspective

Decision

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.

"Lucie J. Roy"
Senior Director
Autorite des Marches Financiers