Headnote
Section 104(2)(c) - Issuer bid - relief from issuer bid requirements in sections 93 to 99.1 of the Act - "evergreen" relief from issuer bid requirements - issuer conducting a normal course issuer bid through the facilities of the NYSE - relief granted, provided that the bid is subject to a maximum aggregate limit mirroring the TSX NCIB rules
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c.S.5, as am., ss. 93 to 99.1 and 104(2)(c)
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 BROOKFIELD INFRASTRUCTURE PARTNERS L.P. (the Filer)
DECISION
Background
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 relief pursuant to section 104(2)(c) of the Securities Act (Ontario), such that the Filer’s purchases of its limited partnership units (the “Units”) through the facilities of the New York Stock Exchange (the “NYSE”) pursuant to a Unit repurchase program (the “Bid”), as described below, and any renewals of the Bid (“Future Bids”) be exempt from the requirements of sections 93 to 99.1 of the Securities Act (Ontario) (the “Issuer Bid Requirements”) (collectively the “Exemption Sought”).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(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 to exempt the Bid and any Future Bids from the equivalent provisions of the local jurisdiction in each of British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, the Northwest Territories, Yukon and the Nunavut Territory (the “Passport Jurisdictions”).
Interpretation
Defined terms contained in National Instrument 14-101 − Definitions and 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:
The Filer is a Bermuda exempted limited partnership that was established on May 21, 2007. The Filer is organized pursuant to an amended and restated limited partnership agreement made as of December 4, 2007, as amended on June 13, 2008.
The principal office of the Filer is located at 7 Reid Street, 4th Floor, Hamilton HM 11, Bermuda and its registered office is Cannon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.
The affairs of the Filer are carried on by Brookfield Infrastructure Partners Limited (the “General Partner”). The General Partner is an exempted company existing under the laws of Bermuda and an indirect wholly-owned subsidiary of Brookfield Asset Management Inc. (“Brookfield”). The Filer entered into a management agreement with Brookfield related entities (collectively, the “Manager”) to provide the Filer with management and other services.
The principal activity of the Filer is to hold limited partnership interests in Brookfield Infrastructure L.P. (the “Infrastructure Partnership”), a Bermuda exempted limited partnership. It currently holds approximately 60% of the limited partnership interests in the Infrastructure Partnership.
The Filer has been a reporting issuer in all provinces and territories of Canada since December 21, 2007 and the Filer is not in default of any requirements of the Legislation or the applicable securities legislation of any of the Passport Jurisdictions.
The Filer is an SEC foreign issuer in accordance with National Instrument 71-102 – Continuous Disclosure and Other Exemptions Relating to Foreign Issuers.
The Filer is a registrant with the Securities and Exchange Commission in the United States (“SEC”) and is subject to the requirements of the United States Securities Exchange Act of 1934 (the “1934 Act”).
The Units are listed and posted for trading on the NYSE under the trading symbol “BIP”. Units are not listed on the Toronto Stock Exchange or any exchange recognized as a “designated exchange” for purposes of section 101.2 of the Securities Act (Ontario).
Based on information provided by The Bank of New York (“BNY”), the Filer’s registrar and transfer agent, as at November 28, 2008, the Filer had 23,311,671 Units issued and outstanding. In addition, affiliates of Brookfield hold 15,112,744 redemption-exchange units (“Redemption-Exchange Units) in the Infrastructure Partnership, representing approximately 39% of the limited partnership interests in the Infrastructure Partnership. At any time after January 31, 2010, those affiliates of Brookfield will have the right to require the Infrastructure Partnership to redeem all or a portion of the Redemption-Exchange Units for cash. The Filer will have a right of first refusal entitling it, at its sole discretion, to elect to acquire all of the Redemption-Exchange Units presented for redemption in exchange for Units, on a one for one basis (subject to customary adjustments). Based on the number of Units currently issued and outstanding, affiliates of Brookfield would receive an aggregate limited partnership interest in the Filer equal to approximately 39% if it exercised its redemption right in full and the Filer exercised its right of first refusal.
Based on information provided by Broadridge Investor Communication Solutions, as at December 1, 2008, 7,478,265 Units were beneficially owned in aggregate by 34,459 holders in Canada. The breakdown of such holdings among the provinces and territories is as follows: 394,341 Units were beneficially owned in aggregate by 4,058 holders in Alberta; 461,177 Units were beneficially owned in aggregate by 5,338 holders in British Columbia; 64,609 Units were beneficially owned in aggregate by 891 holders in Manitoba; 52,632 Units were beneficially owned in aggregate by 362 holders in New Brunswick; 5,395 Units were beneficially owned in aggregate by 134 holders in Newfoundland; 876 Units were beneficially owned in aggregate by 30 holders in Northwest Territories; 59,502 Units were beneficially owned in aggregate by 816 holders in Nova Scotia; 5,983,256 Units were beneficially owned in aggregate by 17,933 holders in Ontario; 4,200 Units were beneficially owned in aggregate by 69 holders in Prince Edward Island; 420,279 Units were beneficially owned in aggregate by 4,263 holders in Quebec; 31,158 Units were beneficially owned in aggregate by 544 holders in Saskatchewan; 708 Units were beneficially owned in aggregate by 16 holders in Yukon. For the remaining 132 Units beneficially owned in aggregate by 5 holders in Canada, the province or territory is unknown. Based on information provided by BNY, as at November 28, 2008, there were 3,310 registered holders of Units in Canada holding in aggregate 283,768 Units.
As announced in a press release dated November 4, 2008, the Filer has implemented the Bid, pursuant to which it is authorized to repurchase up to $25 million of its Units, subject to the receipt of regulatory approval for the repurchase of more than 1,167,043 Units in the aggregate. Under the Bid, repurchases are authorized to commence on November 10, 2008 and the Bid will terminate on November 9, 2009, or earlier should the Filer complete its repurchases prior to such date.
The Filer intends to repurchase its Units pursuant to the Bid and any Future Bids through the facilities of the NYSE.
Over any 12-month period, commencing on November 10, 2008 or the authorized date on which repurchases may commence under any Future Bid (the “Bid Commencement Date”), the number of Units repurchased by the Filer under the Bid or any Future Bid will not exceed the greater of (i) 10% of the public float on the Bid Commencement Date, or (ii) 5% of the issued and outstanding Units on the Bid Commencement Date. For these purposes, the term “public float” has the meaning given to it in the normal course issuer bid rules of the Toronto Stock Exchange. (The limitation referred to in this paragraph is referred to below as the “Limit on Repurchases”.)
The Bid and any Future Bids will be completed in compliance with the 1934 Act, and the rules of the SEC made pursuant thereto, including Rule 10b-18 (collectively, the “Applicable U.S. Securities Laws”). Except as otherwise permitted under Applicable U.S. Securities Laws, purchases made through the NYSE will be made through only one broker in any one day, will not be made at the opening of the market or within either 10 minutes or one half hour of the close (depending on the Units’ average daily trading volume value and public float value), will not be made at prices higher than the highest published independent bid or last reported independent sale price on the NYSE (whichever is higher), and will be in an amount that does not exceed, in any one day, 25% of the average daily trading volume over the past four weeks. NYSE rules also require that the NYSE be notified within 10 days of the end of a quarter of repurchases of shares by listed companies and promptly of any repurchases in excess of the market price. As of the date hereof, repurchases up to the Limit on Repurchases are permitted under Applicable U.S. Securities Laws and the rules of the NYSE.
The Filer cannot rely on the “designated exchange” exemption from the Issuer Bid Requirements in the Legislation because the NYSE is not recognized as a “designated exchange” for the purpose of this exemption.
The Filer cannot rely on the “other published markets” exemption from the Issuer Bid Requirements in the Legislation because the Filer is proposing to purchase more than 5% of the issued and outstanding Units within a 12 month period.
The Filer cannot rely on the “foreign issuer” exemption from the Issuer Bid Requirements in the Legislation because Canadians beneficially own more than 10% of the Filer’s outstanding Units.
The Filer cannot rely on the “de minimis” exemption from the Issuer Bid Requirements because there are more than 50 beneficial holders of Units in Ontario. Based on the information provided by Broadridge Investor Communication Solutions noted above, the Filer may be able to rely on the "de minimis" exemption from the Issuer Bid Requirements in certain Passport Jurisdictions (assuming there are no registered holders in such Passport Jurisdictions). The number of holders and Units held in such Passport Jurisdictions could change during the term of the Bid or any Future Bid. As a result, there can be no assurance that the Filer would be able to qualify for the "de minimis" exemption in those jurisdictions from time to time during the term of the Bid or any Future Bid.
No other exemptions exist under the Legislation that would otherwise permit the Filer to make purchases through the NYSE where the purchases exceed 5% of the issued and outstanding Units within a 12 month period.
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:
(a) the Bid and any Future Bids are made in compliance with the requirements of Applicable U.S. Securities Laws; and
(b) the Filer will not, over a 12-month period commencing on any Bid Commencement Date, repurchase an amount of Units exceeding the Limit on Repurchases.
“Wendell S. Wigle” “Margot C. Howard”
Name: Wendell S. Wigle Name: Margot C. Howard
Title: Commissioner Title: Commissioner
Ontario Securities Commission Ontario Securities Commission