Court File and Parties
COURT FILE NO.: CV-23-697264-00CL DATE: 20230406 SUPERIOR COURT OF JUSTICE – ONTARIO (COMMERCIAL LIST)
IN THE MATTER OF AN APPLICATION UNDER SECTION 182 OF THE BUSINESS CORPORATIONS ACT (ONTARIO), R.S.O. 1990, C. B.16, AS AMENDED
AND IN THE MATTER OF RULES 14.05(2) and 14.05(3) OF THE RULES OF CIVIL PROCEDURE
AND IN THE MATTER OF A PROPOSED PLAN OF ARRANGEMENT OF MANITOU GOLD INC. INVOLVING ALAMOS GOLD INC.
BEFORE: Osborne J.
COUNSEL: W. Ross MacDougall, on behalf of the Applicant, Manitou Gold Inc. Gillian Dingle, on behalf of Alamos Gold Inc.
HEARD: April 6, 2023
Endorsement
JUSTICE OSBORNE:
Overview
1The Applicant, Manitou Gold Inc. (“Manitou” or the “Applicant”) has brought this Application pursuant to section 182 of the Ontario Business Corporations Act, R.S.C. 1990, c.B.16, as amended, for approval of a plan of arrangement (the “Arrangement”).
2Today, the Applicant brings this motion pursuant to s. 182(5) for advice and directions from this Court by way of an interim order (the “Interim Order”) which would direct the Applicant to hold a special meeting of holders of the common shares of the Applicant [the “Shares”] to consider and vote on a resolution to approve the Arrangement. Defined terms in this Endorsement have the meaning given to them in the motion materials.
3The Terms of the Arrangement are described in detail in the draft management Information Circular which is Exhibit ‘A” to the affidavit of Mr. Richard Murphy sworn April 3, 2023 and relied upon by the Applicant.
4As further described in the motion materials and in particular, the Circular, Alamos will acquire all of the Manitou Shares in consideration of such number of Alamos Shares per Manitou Share as is equal to the Exchange Ratio set out in the Plan of Arrangement. Unexercised Manitou options will be cancelled with the consent of the holders. Warrants shall be amended such that, in lieu of Manitou Shares issuable upon exercise, holders of warrants shall be entitled to acquire that number of Alamos Shares equal to the Exchange Ratio multiplied by the number of Manitou Shares subject to the warrant, at a proportionately adjusted exercise price.
5The relief sought today is unopposed.
Background
6The Applicant is an OBCA corporation, with its head office at Toronto. It is focused on the acquisition, exploration and development of mineral property interests in Ontario. The shares of the Applicant are listed and traded on the TSX Venture Exchange.
7Alamos is also an Ontario corporation which owns and operates two mines in Ontario, and one in Mexico. Its shares are listed and traded on the TSE and the NYSE.
8The proposed Arrangement follows on the receipt by Manitou of an unsolicited non-binding letter of intent from Alamos on November 25, 2022, which contemplated the acquisition by Alamos of all of the issued and outstanding shares of Manitou.
9The Board of the Applicant sought advice of legal counsel and its financial advisor. It established a Special Committee of non-interested directors and independent directors (per MI-61-101). The Special Committee sought and obtained a fairness opinion, following receipt of which and deliberation, the Special Committee voted unanimously to recommend to the Board entering into the Arrangement Agreement.
10Thereafter, the Board, with one non-disinterested director abstaining, unanimously authorized Manitou to proceed with the Arrangement and unanimously recommended that shareholders vote in favour of the Arrangement Resolution.
11There are support agreements in place with parties holding or controlling 14.3% of the total number of issued and outstanding shares (approximately).
12The proposed Interim Order primarily deals with notice and voting mechanics. It is in a form substantively consistent with the Model Interim Order of the Commercial List issued by this Honourable Court in respect of similar plans of arrangement.
13The special meeting is proposed for May 11, 2023.
Legal Framework
14In assessing whether to approve an Interim Order under section 182 of the OBCA, an applicant must demonstrate that it: 1) is acting in good faith in putting the proposed plan forward; and 2) satisfies the applicable statutory requirements, namely that:
a. the proposed arrangement constitutes an "arrangement" as defined under subsection 182 of the OBCA; b. it is not "insolvent" within the meaning of the OBCA; and c. it is not practicable for the applicant to effect a fundamental change in the nature of an arrangement under any other provision of the OBCA.
See: St. Lawrence & Hudson Railway, Re (1998), 82 A.C.W.S. (3d) 895 (Ont. Gen. Div. [Comm. List]) at para. 12; 8440522 Canada Inc., Re, 2013 ONSC 2509 at paras. 47-49.
15It is not incumbent upon the judge being asked to grant an interim order to carry out a detailed examination of the materials to be distributed to for its sufficiency. The Court does not approve or authorize the Information Circular (see Re First Marathon Inc., 1999 CarswellOnt 2295 (Ont. S.C.J. - Comm. List) at paragraphs 9 to 11; and Re 45133541 Canada Inc., 2009 QCCS 6440 at paras. 23-24 and 52). The Court at this stage is concerned with the approval and authorization of the mechanics for the notice and calling of the meeting for the shareholder vote and for shareholders to express their views and exercise their voting and dissent rights.
16Nor does the Court have to undertake a detailed fairness analysis at this stage. It is enough that it be satisfied that there is sufficient indication of fairness to warrant the matter proceeding to a vote and fairness hearing. The purpose of the interim order is “simply to set the wheels in motion for the application process relating to the arrangement.” (Re Canopy Rivers Inc., 2021 ONSC 355 at para. 2).
Analysis
17Having regard to the record before the Court, I am satisfied that the Applicant is acting in good faith and that the statutory requirements are satisfied at this stage. The Arrangement is an arrangement under the OBCA. Dissent rights are provided.
18The Director has confirmed in writing that it does not intend to appear on this Application and the Director’s letter is filed.
19I am satisfied that the steps proposed to be taken pursuant to the draft Interim Order are appropriate. They provide for notice and the exercise of rights by all Shareholders. The proposed meeting and voting mechanics would provide for sufficient and appropriate approval by Shareholders if so desired and, if not, to exercise dissent rights. The substantive issues, if any, with respect to the Arrangement and the overall fairness are not for today but rather are to be considered at the fairness hearing.
20Moreover, Shareholders will receive notice and have the opportunity to attend on the return of this Application to consider whether the proposed Arrangement is fair and reasonable and should be approved, should they wish to do so.
21The Applicant intends to rely on the approval by this Court of the substantive and procedural fairness of the Arrangement in connection with its request for an exemption from the requirements to register such securities under Section 3(a)(10) of the United States Securities Act of 1933, as amended.
22Having considered both the written and oral submissions of counsel, I am satisfied that it is appropriate for the requested Interim Order to be granted.
Disposition
23Order to go in the form signed by me today, with immediate effect and without the necessity of formal issuance and entry, although a formal order may be taken out by any interested party, if so required.
Osborne J.
Date: April 6, 2023