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Hess Corporation – s. 1(10)(a)(ii)
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – application by a reporting issuer for an order that it is not a reporting issuer in Ontario – based on diligent inquiry, residents of Canada (i) do not directly or indirectly beneficially own more than 2% of each class or series of outstanding securities of the issuer worldwide, and (ii) do not directly or indirectly comprise more than 2% of the total number of securityholders of the issuer worldwide – issuer is subject to U.S. securities law requirements – issuer has provided notice through a press release that it has submitted an application to cease to be a reporting issuer in Ontario.
Applicable Legislative Provisions
Securities Act (Ontario), s. 1(10)(a)(ii).
IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5, AS AMENDED
(the Act)
AND
IN THE MATTER OF
HESS CORPORATION
(the Filer)
ORDER
(Subclause 1(10)(a)(ii))
UPON the Director having received an application from the Filer for an order under subclause 1(10)(a)(ii) of the Act that the Filer is not a reporting issuer in Ontario;
AND UPON considering the application and the recommendation of the staff of the Ontario Securities Commission (the Commission);
AND UPON the Filer representing to the Commission as follows:
1. The Filer is a company established under the laws of Delaware in 1920.
2. The Filer's head office is located at 1185 Avenue of the Americas, 40th Floor, New York, NY 10036 USA.
3. The Filer is an independent global energy company engaged in exploration, development, production, transportation, purchase and sale of crude oil, natural gas liquids, and natural gas with production operations located primarily in the United States (U.S.), Denmark, the Malaysia/Thailand Joint Development Area (JDA) and Malaysia.
4. The Filer does not have operations (other than a non-operating interest in an offshore well in the Maritimes), employees or offices in Canada.
5. As of November 8, 2018, the Filer's issued and outstanding securities consisted of:
(a) 294,748,800 shares of common stock (the Shares);
(b) 11,500,000 depositary shares, each representing 1/20th interest in a share of Series A 8% Cumulative Mandatory Convertible preferred stock (the Preferred Shares); and
(c) Fixed-rate public notes (collectively, the Notes and collectively with the Shares and the Preferred Shares, the Securities):
(i) US$300 million principal amount of 3.5% notes due 2024;
(ii) US$1 billion principal amount of 4.3% notes due 2027;
(iii) US$467 million principal amount of 7.875% notes due 2029;
(iv) US$632 million principal amount of 7.3% notes due 2031;(v) US$540 million principal amount of 7.125% notes due 2033;
(vi) US$750 million principal amount of 6.0% notes due 2040;
(vii) US$1.250 billion principal amount of 5.6% notes due 2041; and
(viii) US$500 million principal amount of 5.8% notes due 2047.
6. The Shares are listed on the New York Stock Exchange (the NYSE) under the symbol HES.
7. The Filer became a reporting issuer in Ontario as a result of the merger, completed on or about June 23, 1969, of Hess Oil & Chemical Corporation with and into Amerada Petroleum Corporation continuing under the name Amerada Hess Corporation.
8. The Notes are pari passu without any preference or additional rights between the Notes. The Notes were all sold pursuant to registered offerings in the United States. Certain of the Notes were sold on a private placement basis to sophisticated institutional investors in Canada pursuant to prospectus exemptions under applicable securities laws.
9. Canadian holders of Securities who purchased their Securities pursuant to a prospectus exemption under applicable securities laws will be able to rely on Section 2.8 of the Commission's Rule 72-503 to sell their securities outside of Canada following the issuance of this order.
10. The Filer's Shares were previously listed on the Montreal Stock Exchange and the Toronto Stock Exchange. The Shares were delisted from the Montreal Stock Exchange in 1994 and from the Toronto Stock Exchange in 1999 (the Delistings).
11. The Filer files continuous disclosure reports under the laws, rules and regulations of the United States and the NYSE and is in compliance with applicable requirements of the U.S. Securities Act of 1933, the U.S. Securities Exchange Act of 1934, the U.S. Sarbanes-Oxley Act of 2002 and the rules of the NYSE (collectively, the US Rules).
12. In the past 12 months, the Filer has not taken any steps that indicate there is a market for its securities in Canada, including conducting a prospectus offering in Canada, establishing or maintaining a listing on an exchange in Canada or having its securities traded on a marketplace or any other facility in Canada or bringing together buyers and sellers where trading data is publicly reported.
13. The Filer has no current intention to publicly distribute any securities in Canada, nor does it intend to seek financing by way of a public offering of its securities in Canada.
14. The Filer's Securities are not, and have not been since the Delistings, traded on a Canadian marketplace as defined in National Instrument 21-101 – Marketplace Operation and the Filer does not intend to have its securities listed, traded or quoted on such marketplace in Canada.
15. The Filer has provided advance notice to securityholders resident in Canada in a press release dated April 25, 2019 that it has applied to the Commission for a decision that it is not a reporting issuer in Ontario, and if that decision is made, the Filer will no longer be a reporting issuer in any jurisdiction in Canada.
16. The Filer qualifies as a SEC Foreign Issuer under National Instrument 71-102 – Continuous Disclosure and Other Exemptions Relating to Foreign Issuers (NI 71-102) and as such relies on and complies with the exemptions from Canadian continuous disclosure requirements afforded to SEC Foreign Issuers under Part 4 of NI 71-102.
17. The Filer qualifies as a foreign issuer (SEDAR) under National Instrument 13-101 System for Electronic Document Analysis and Retrieval (SEDAR) (NI 13-101) and has never elected to file a notice of election to become an electronic filer under NI 13-101 (the SEDAR Exemption).
18. The Filer has provided an undertaking to the Commission to deliver to its Canadian securityholders, all disclosure the Filer would be required to deliver to U.S. resident securityholders, in the same manner and at the same time as delivered to its U.S. resident securityholders under the US Rules.
19. The Filer is not a reporting issuer in any other jurisdiction in Canada other than Ontario and is not in default of securities legislation in Ontario.
20. The Filer has undertaken a good faith investigation to confirm the residency of the holders of its outstanding Securities. To determine the residency of the beneficial holders of the Securities, the Filer obtained geographic surveys from Broadridge Financial Solutions Inc. (Broadridge) and Mediant Communications Inc. (Mediant) as of November 8, 2018 (the Geographic Surveys). Broadridge and Mediant are intermediary service providers who act on behalf of bank and broker nominees providing back office support and coverage to virtually 100% of street holders combined. In addition, Hess requested that its transfer agent, Computershare Limited (Computershare), review Computershare's registered holders lists for the Shares and the Preferred Shares with a record date of November 8, 2018 (the Registered Holder Review).
21. Based on the Filer's review of the Geographic Surveys and the Registered Holder Review it has concluded that:
(a) Per the Geographic Surveys, 1,622 residents of Canada beneficially own an aggregate of 4,089,682 Shares (representing 1.28% of the holders of Shares holding 1.39% of the issued and outstanding Shares) and, per the Registered Holder Review, 13 residents of Canada beneficially own an aggregate of 6,181 Shares (representing 0.42% of the holders of Shares holding 0.002% of the issued and outstanding Shares);
(b) 11 residents of Canada beneficially own an aggregate of 52,531 Preferred Shares as per the Geographic Surveys (representing 0.21% of the holders of Preferred Shares holding 0.46% of the issued and outstanding Preferred Shares); and
(c) In aggregate, a total of 37 residents of Canada (representing 0.3697% of the 10,007 holders of Notes) hold $89,546,000 of the outstanding $5,438,293,000 principal of the Notes (1.6466% of the aggregate principal of the Notes).
22. Based on the above, the Filer represents that residents of Canada do not:
(a) directly or indirectly beneficially own more than 2% of each class or series of outstanding securities (including debt securities taken in the aggregate) of the Filer worldwide, and
(b) directly or indirectly comprise more than 2% of the total number of securityholders of the Filer worldwide.
AND UPON the Commission being satisfied that it would not be prejudicial to the public interest;
IT IS HEREBY ORDERED pursuant to subclause 1(10)(a)(ii) of the Act that, for the purposes of Ontario securities law, the Filer is not a reporting issuer.
DATED at Toronto, Ontario on this 16th day of May, 2019.
“Timothy Mosely”
Commissioner
Ontario Securities Commission
“Mary Anne De Monte-Whelan”
Commissioner
Ontario Securities Commission