Alan Hibben

Mithaq Canada Inc. applied to the Capital Markets Tribunal to cease trade a private placement by Aimia Inc., arguing it was an abusive defensive tactic designed to thwart Mithaq's take-over bid.

Mithaq also sought to set aside a decision of the Toronto Stock Exchange (TSX) that conditionally approved the private placement without requiring shareholder approval.

Aimia brought a cross-application to deny Mithaq the use of the 5% exemption for share purchases.

The Tribunal dismissed both applications.

It found that Aimia had a serious and immediate need for financing, and the private placement was negotiated largely before Mithaq's bid became imminent.

Although the private placement altered the bid dynamics, it was not clearly abusive.

The Tribunal also found no grounds to interfere with the TSX's decision, as the TSX did not err in principle and there was no compelling new evidence.

Finally, the Tribunal declined to alter the minimum tender condition or deny Mithaq the 5% exemption, finding no exceptional circumstances or lack of good faith.

The case involved a claim by Scotia Capital Inc. against Aphria Inc. for an "Independence Fee" under an engagement letter for financial advisory services in defending a hostile takeover bid, and a counterclaim by Aphria for defamation related to Scotia's discontinuation of analyst coverage.

The court found that Scotia successfully defended Aphria against the takeover bid, entitling it to the Independence Fee.

The court dismissed Aphria's defense arguments of lack of causality and repudiation.

The court also dismissed Aphria's counterclaim for defamation, finding no evidence that the discontinuation of coverage lowered Aphria's reputation or caused economic loss.