Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Relief from the take-over bid requirements in Part 2 of NI 62-104 in connection with proposed normal course purchases of common shares – Filer acquired a large block of the issuer’s common shares in connection with the issuer’s Qualifying Transaction – Filer is seeking flexibility to purchase additional common shares in the market and to provide liquidity – Filer granted relief to acquire common shares in the normal course provided that such purchases satisfy the requirements of section 4.1 of NI 62-104, except that, for the purpose of calculating the 5% purchase limit, common shares acquired by the Filer pursuant to the issuer’s Qualifying Transaction will be excluded.
Applicable Legislative Provisions
National Instrument 62-104 Take-Over Bids, Part 2 and s. 6.1.
June 27, 2018
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
GLOBALIVE CAPITAL INC.
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the “Legislation”) for an exemption, pursuant to section 6.1 of National Instrument 62-104 Take-Over Bids and Issuer Bids (“NI 62-104”), from the requirements applicable to take-over bids in Part 2 of NI 62-104 in connection with certain normal course market purchases of common shares (“Common Shares”) of Globalive Technology Inc. (the “Issuer”) by the Filer (the “Exemption Sought”).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:
(a) the Ontario Securities Commission is the principal regulator for this application, and
(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (“MI 11-102”) is intended to be relied upon in Alberta and British Columbia (together with Ontario, the “Jurisdictions”).
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation incorporated under the laws of the Province of Ontario with a registered head office located at 48 Yonge Street, Suite 1200, Toronto, Ontario, M5E 1G6.
2. The Filer is not a reporting issuer or a registrant in any jurisdiction in Canada.
3. The Issuer is a corporation amalgamated under the laws of the Province of Ontario with its head office located at 48 Yonge Street, Suite 1200, Toronto, Ontario, M5E 1G6 and registered office located at East Tower, Bay Adelaide Centre, 22 Adelaide Street West #3400, Toronto, Ontario, M5H 4E3. The Issuer is a reporting issuer in the Jurisdictions.
4. The Issuer’s authorized share capital consists of an unlimited number of Common Shares without par value. As of June 8, 2018, 136,536,212 Common Shares were issued and outstanding.
5. The Common Shares are listed for trading on the TSX Venture Exchange (the “TSXV”). Based on the closing price of $0.97 for the Common Shares on the TSXV on June 22, 2018, the current market capitalization of the Issuer is approximately $132,440,126.
6. The Issuer completed its Qualifying Transaction (as defined in TSXV Policy 2.4) on June 8, 2018, pursuant to which it acquired all of the common shares (“GTP Shares”) of Globalive Technology Partners Inc. (“GTP”), by way of a three-cornered amalgamation. Pursuant to the Qualifying Transaction, each shareholder of GTP exchanged all of its GTP Shares for Common Shares on a one-for-one basis. GTP amalgamated with a subsidiary of the Issuer, and the amalgamated entity was immediately amalgamated with the Issuer.
7. GTP was a corporation incorporated under the laws of the Province of Ontario on December 7, 2017. The registered head office of GTP was located at East Tower, Bay Adelaide Centre, 22 Adelaide Street West #3400, Toronto, Ontario, M5H 4E3.
8. GTP was not a reporting issuer in any jurisdiction and none of GTP’s securities were listed for trading on any marketplace. Immediately prior to the closing of the Qualifying Transaction, there were 135,812,422 GTP Shares issued and outstanding.
9. The Issuer and GTP were acting at arm’s length in agreeing to, and completing, the Qualifying Transaction.
10. Immediately prior to the closing of the Qualifying Transaction, the Filer: (a) beneficially owned and controlled 56,403,402 GTP Shares, representing approximately 41.5% of the issued and outstanding GTP Shares; and (b) had voting control over, but not beneficial ownership of, 41,672,528 GTP Shares, representing approximately 30.7% of the issued and outstanding GTP Shares. In aggregate, prior to the closing of the Qualifying Transaction, the Filer had voting control over approximately 72.2% of the issued and outstanding GTP Shares.
11. Pursuant to the Qualifying Transaction, the Filer: (a) exchanged the 56,403,402 GTP Shares that it beneficially owned and controlled for 56,403,402 Common Shares, representing approximately 41.3% of the issued and outstanding Common Shares; and (b) obtained voting control over, but not beneficial ownership of, 41,672,528 Common Shares, representing approximately 30.5% of the issued and outstanding Common Shares. In aggregate, upon completion of the Qualifying Transaction, the Filer had voting control over approximately 71.8% of the issued and outstanding Common Shares.
12. The Filer has not acquired any Common Shares subsequent to the completion of the Qualifying Transaction.
13. As a result of the Common Shares having been acquired by the Filer pursuant the Qualifying Transaction, the Filer beneficially owns, and exercises control or direction over, more than 20% of the issued and outstanding Common Shares. As such, any additional acquisitions of Common Shares by the Filer would constitute a take-over bid under NI 62-104 requiring the Filer to comply with the formal take-over bid requirements in Part 2 of NI 62-104, unless an exemption from those requirements is available.
14. The Filer is unable to acquire additional Common Shares through normal course purchases in the market in reliance on the take-over bid exemption in section 4.1 of NI 62-104 (the “Normal Course Purchase Exemption”) until June 8, 2019, being the date which is 12 months after the date that the Filer acquired beneficial ownership of, and control or direction over, Common Shares pursuant to the Qualifying Transaction. The Filer would like the flexibility to acquire additional Common Shares by way of market purchases through the facilities of the TSXV prior to June 8, 2019.
15. Subject to applicable law, and depending on the prices at which the Common Shares are trading, the Filer intends to acquire Common Shares pursuant to normal course market purchases.
16. The interest of the Filer in being able to acquire Common Shares is not to increase its control position in the Issuer, but instead to preserve its ability to purchase Common Shares, depending on the prices at which Common Shares are trading, and to provide liquidity to the market.
17. The Filer does not have any current intention of making a take-over bid for all of the issued and outstanding Common Shares, or otherwise acquiring all of the issued and outstanding Common Shares by way of a plan of arrangement or other similar transaction.
18. The Filer will not purchase Common Shares at any time when it has knowledge of any material fact or material change about the Issuer which has not been generally disclosed.
19. The Issuer is aware that an application has been submitted for the Exemption Sought. Management of the Issuer and the Issuer’s independent directors support the Exemption Sought on the basis that normal course purchases of the Common Shares will provide additional liquidity in the market.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision. The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that the acquisitions of Common Shares by the Filer in the market comply with the Normal Course Purchase Exemption, except that, for the purpose of determining the number of Common Shares acquired by the Filer within the 12-month period preceding the date of any such purchase of Common Shares in the market, the Common Shares acquired by the Filer pursuant to the Qualifying Transaction shall be excluded in the calculation of acquisitions of Common Shares otherwise made by the Filer within the previous 12-month period.“Naizam Kanji”
Director, Office of Mergers & Acquisitions
Ontario Securities Commission