Just Energy Group Inc.

Decision

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief from the requirements applicable to issuer bids in Part 2 of NI 62-104 in connection with offer by issuer to repurchase convertible Eurobonds from certain bondholders -- no exemption from issuer bid requirements available to issuer -- repurchase offer being made to all identified Canadian bondholders -- each of the five identified Canadian bondholders is an accredited investors -- issuer reasonably believes there are no other Canadian bondholders -- Canadian bondholders will receive maximum consideration payable pursuant to repurchase offer made to certain other bondholders -- Eurobonds not initially distributed in Canada -- in order to participate in the offer each Canadian bondholder must provide a confirmation and consent in which it will, among other things, acknowledge that as a result of the relief being granted, the holder will not have the benefit of the protections provided by the Issuer Bid Requirements or the requirements relating to issuer bids provided by Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions.

Applicable Legislative Provisions

National Instrument 62-104 Take-Over Bids and Issuer Bids, Part 2 and s. 6.1.

February 11, 2019

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF JUST ENERGY GROUP INC. (the Filer)

DECISION

Background

The principal regulator in the Jurisdiction (the Decision Maker) has received an application (the Application) from the Filer for a decision under the securities legislation of the principal regulator (the Legislation), pursuant to section 6.1 of National Instrument 62-104 Take-Over Bids and Issuer Bids (NI 62-104), for relief from the issuer bid requirements set out in Part 2 of NI 62-104 (the Issuer Bid Requirements) in connection with an offer (the Eurobond Repurchase) to be made by the Filer to repurchase the 6.5% senior convertible bonds of the Filer due July 2019 (the Eurobonds) from certain holders (the Bondholders) of the Eurobonds (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:

(a) the Ontario Securities Commission is the principal regulator for the Application; and

(b) the Filer has provided notice that section 4.7(1)(c) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, the Northwest Territories, Nunavut and the Yukon Territory.

Interpretation

Terms defined in National Instrument 14-101 Definitions or MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation incorporated under the Canada Business Corporations Act. The head office of the Filer is located in Mississauga, Ontario.

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

3. On January 29, 2014, the Filer entered into a Trust Deed with U.S. Bank Trustees Limited, as trustee (USBTL), and Elavon Financial Services Limited, UK Branch, as share trustee-custodian, which provided for the issuance of US$150 million principal amount of Eurobonds (the Trust Deed).

4. The Eurobonds were initially placed solely in Europe and elsewhere outside of Canada in the form of a global bond, which was and remains registered in Europe solely in the name of USB Nominees (UK) Limited. To the knowledge of the Filer, no person that was located in Canada purchased Eurobonds pursuant to the initial placement thereof by the Filer.

5. The Eurobonds are listed on the Professional Securities Market of the London Stock Exchange (PSM) under the trading symbol "48IL". To the Filer's knowledge, there has never been a trade of the Eurobonds through the facilities of the PSM.

6. The Eurobonds bear interest at an annual rate of 6.5%, payable semi-annually in arrears in equal installments on January 29 and July 29 each year with a maturity date of July 29, 2019.

7. The Eurobonds are convertible into common shares of the Filer at any time from May 30, 2014 to July 7, 2019, at the option of the Bondholder. The current conversion rate is equal to US$9.3762 per common share, subject to customary anti-dilution adjustments (the Conversion Right).

8. The Filer's common shares are listed on the TSX and the NYSE under the trading symbol "JE".

9. As at January 7, 2019, there were 149,296,095 common shares of the Filer outstanding and the closing price per common share on the TSX was $4.66 per common share and the closing market price on the NYSE was USD$3.50.

10. In the event of an exercise of a Conversion Right, the Filer may, at its discretion, subject to applicable regulatory approval and provided that no event of default has occurred and is continuing, elect to satisfy its obligation to issue common shares by paying cash in an amount equal to the market value of the underlying common shares that would otherwise be received by the Bondholder upon such conversion.

11. The Filer does not have a general right to call the Eurobonds for redemption under the Trust Deed. However, the Filer is provided with the right to repurchase the Eurobonds in the market or otherwise under the terms of the Trust Deed.

12. On September 19, 2018, the Filer completed a tender offer to repurchase the Eurobonds from each of the holders of the Eurobonds (the Tender Offer). As a result of the Tender Offer, the current outstanding principal amount of the Eurobonds is US$104,400,000. To the Filer's knowledge, the vast majority of the principal amount of the outstanding Eurobonds are held by a limited number of institutional investors. The Tender Offer was made to Bondholders in Canada in reliance on an exemption from the Insider Bid Requirements granted by the Ontario Securities Commission, as principal regulator, on September 19, 2018.

13. Pursuant to the terms of the Eurobond Repurchase, the Filer intends to offer to repurchase Eurobonds from certain Bondholders located in Europe and the United States, as well as those Accredited Investor Bondholders (as defined below) located in the Canada, for consideration in the amount of a maximum of 101% of the principal amount of Eurobonds held plus any accrued and unpaid interest thereon. Notwithstanding the foregoing, the Filer will offer to repurchase the Eurobonds held by Bondholders located in Canada for the maximum consideration of 101% of the principal amount of Eurobonds held plus any accrued and unpaid interest. Each Canadian Bondholder that accepts the Filer's offer would enter into a bilateral Eurobond repurchase agreement with the Issuer.

14. The Eurobond Repurchase will be made to certain Bondholders in Europe and the United States in compliance with applicable securities laws of Europe and the United States, respectively.

15. Given that there has not been a trade of the Eurobonds through the PSM, in order to form a reasonable belief with regard to the beneficial ownership of the Eurobonds owned by Canadians, the Filer sought to determine whether there had been any institutional trades among investment dealers in the Eurobonds.

16. With the assistance of a Canadian investment dealer and based on information obtained via Bloomberg, the Filer (i) was able to ascertain that, as a result of trades through the over-the-counter market, five Canadian institutional investors (collectively, the Accredited Investor Bondholders) held an aggregate of approximately US$33,800,000 principal amount of Eurobonds, representing approximately 32% of the outstanding Eurobonds as at January 7, 2019, and (ii) reasonably believes that, other than the Accredited Investor Bondholders, residents of Canada did not own any Eurobonds.

17. Each of the Accredited Investor Bondholders is located in Canada (Ontario and British Columbia) and to the knowledge of the Filer each is an "accredited investor" as defined under the Legislation. The Filer believes that each of the Accredited Investor Bondholders is knowledgeable of the affairs of the Filer, considers itself able to evaluate the Eurobond Repurchase without the assistance of an issuer bid circular or a valuation of the Eurobonds, and that it is a sophisticated investor with significant knowledge of the Canadian securities markets and eurobond market.

18. As the Issuer would also like to make the Eurobond Repurchase offer to the Accredited Investor Bondholders and any other Bondholders who reside in Canada, the Eurobond Repurchase will constitute an issuer bid under the Legislation and will be subject to the Issuer Bid Requirements. No exemption from the Issuer Bid Requirements is available to the Filer.

19. The material relating to the Eurobond Repurchase will be prepared in English. The material relating to the Eurobond Repurchase that is delivered by or on behalf of the Filer to Bondholders, including the form of repurchase agreement, will be filed and delivered or otherwise provided to each Canadian Bondholder.

20. The Filer will provide a copy of this Decision to each Canadian Bondholder at the same time it provides any such Canadian Bondholder the material relating to the Eurobond Repurchase.

21. The form of repurchase agreement would contain provisions that are similar to those contained in the invitation term sheet used for the Tender Offer. Specifically, the form of repurchase agreement would set out the consideration to be paid for the repurchase of the Eurobonds, the mechanics and timing of settlement, and the requirement for Bondholders in Canada to sign the form of Confirmation and Consent (as defined below).

22. The Filer will provide each Canadian Bondholder with a Canadian Eurobond Holder Confirmation and Consent (the Confirmation and Consent) in the form of the Confirmation and Consent in Appendix A to this Decision, pursuant to which the respective Canadian Bondholder will, among other things, acknowledge that as a result of the Exemption Sought being granted, the holder will not have the benefit of the protections provided by the Issuer Bid Requirements or the requirements relating to issuer bids provided by Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions.

23. The Filer will announce repurchases of Eurobonds once 10% or more of the Eurobonds have been repurchased.

24. If any Bondholder contacts the Filer seeking to have their Eurobonds repurchased, the Filer will offer to repurchase the Eurobonds held by such Bondholder for a repurchase price of up to a maximum of 101% of the principal amount of the Eurobonds held plus accrued and unpaid interest thereon; provided that in respect of any Bondholder in Canada, the Filer will offer to repurchase its Eurobonds for the maximum repurchase price of 101% of the principal amount of Eurobonds held plus accrued and unpaid interest thereon.

Decision

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 prior to or concurrent with the Filer allowing any Bondholder located in Canada to participate in the Eurobond Repurchase, the Filer has received an executed Confirmation and Consent from such Bondholder.

"Naizam Kanji"
Director, Office of Mergers & Acquisitions
Ontario Securities Commission

 

APPENDIX A

CANADIAN EUROBOND HOLDER CONFIRMATION AND CONSENT

TO:

Just Energy Group Inc. (the "Company")

AND

TO:

Ontario Securities Commission ("OSC")

 

RE:

Application by the Company to the OSC, as principal regulator, for exemptive relief in connection with an offer to certain holders of the Eurobonds (as defined below) (the "Offer" or the "Eurobond Repurchase") made by the Company to repurchase its 6.5% senior unsecured convertible bonds maturing July 29, 2019 (the "Eurobonds")

The undersigned beneficial holder of Eurobonds (the "Holder") hereby acknowledges, confirms and agrees as follows:

1. it has been advised that the Offer has been made to certain holders of Eurobonds ("Bondholders"), including the Holder;

2. the holder has been offered the maximum repurchase price for the repurchase of its Eurobonds, being 101% of the principal amount of the Eurobonds held plus accrued and unpaid interest thereon;

3. it has been advised that the repurchase agreement and any other materials related to the Eurobond Repurchase that have been delivered to Bondholders located outside of Canada will be delivered to the Holder;

4. it has been advised that all materials related to the Eurobond Repurchase that have been delivered to Bondholders have been prepared in English and if a Bondholder is resident in Québec, the materials will be prepared in French;

5. it has been advised that as the Offer has been made to Canadian Bondholders, it constitutes an issuer bid as defined in National Instrument 62-104 Take-Over Bids and Issuer Bids ("NI 62-104") and is subject to the requirements of Part 2 of NI 62-104 (the "Issuer Bid Requirements");

6. it has been advised that as the Offer has been made to Canadian Bondholders, it also constitutes an issuer bid as defined in Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101") and would be subject to the requirements of Part 3 of MI 61-101 (the "MI 61-101 Requirements");

7. it has been advised that as no exemptions from the Issuer Bid Requirements are available to the Company, the Company applied to the OSC, as principal regulator, for relief from the Issuer Bid Requirements and MI 61-101 Requirements (the "Requested Relief") in connection with the Eurobond Repurchase;

8. it has been advised that the OSC granted the Requested Relief;

9. it hereby consents to the use of this Canadian Eurobond Holder Confirmation and Consent by the Company in connection with the Requested Relief;

10. it is an accredited investor as defined in section 73.3 of the Securities Act (Ontario);

11. it beneficially owns the principal amount of Eurobonds indicated below;

12. it hereby acknowledges that as a result of the Requested Relief being granted, the Holder does not have the benefit of the protections provided by: (i) the Issuer Bid Requirements; and (ii) the protections relating to issuer bids provided by the MI 61-101 Requirements, which among other things, require the Company to obtain a formal valuation for the Eurobonds and provide disclosure relating thereto;

13. it hereby acknowledges that it has received a copy of the decision document issued by the OSC granting the Requested Relief;

14. any person or company affected by a decision of the Director (as defined in the Securities Act (Ontario)), may, by notice in writing sent by registered mail to the OSC within thirty days after the mailing of the notice of the decision, request and be entitled to a hearing and review thereof by the OSC; and

15. it has had adequate time to review this Canadian Eurobond Holder Confirmation and Consent.

DATED at ____________, the _____ day of ____________, 2019.

______________________________

Name of beneficial Bondholder (please print)

by:

______________________________

Authorized Signature

______________________________

Official Capacity or Title (please print)

______________________________

(Please print name of individual whose signature appears above if different than the name of the Bondholder printed above.)

______________________________

Principal amount of Eurobonds of the Company beneficially owned

______________________________

Province/Territory where beneficial Bondholder is resident