Headnote National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions - Relief from including certain financial statements in a filer's business acquisition report (BAR) - Filer acquired real estate business, including through acquiring shares of certain holding companies - Filer's BAR required to include financial statements of certain holding companies and pro forma financial statements in respect of acquisition of certain holding companies - Filer's BAR will include financial statements of the real estate business and pro forma financial statements giving effect to the acquisition of the business Applicable Legislative Provisions National Instrument 51-102 Continuous Disclosure Obligations, Part 8
January 29, 2012
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 360 VOX CORPORATION (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 (the “Legislation”) for relief under Section 13.1 of National Instrument 51-102 Continuous Disclosure Obligations (“51-102”) from the requirement to include the following financial statements in a business acquisition report (“BAR”) to be filed by the Filer pursuant to Part 8 of NI 51-102 in connection with the acquisition of the group of real estate businesses in Canada known as Sotheby’s International Realty Canada, Sotheby’s International Realty Quebec and Blueprint Global Marketing, which was completed on November 15, 2012 (the “Acquisition”):
(a) for each of 0891528 B.C. Ltd. (“McCredie Holdco”), Hunter 2006 Holdings Inc. (“Hunter Holdco”), 0894803 B.C. Ltd. (“Laver Holdco”) and 7227680 Canada Inc. (“7227680 Holdco” and, collectively with McCredie Holdco, Hunter Holdco and Laver Holdco, the “Acquired Holdcos”), an audited income statement, an audited statement of retained earnings and an audited cash flow statement for the year ended December 31, 2011, and an audited balance sheet as at the end of such period, including notes to such financial statements; and
(b) for each of McCredie Holdco, Hunter Holdco, Laver Holdco, and 7227680 Holdco, an income statement, an statement of retained earnings and an cash flow statement for the year ended December 31, 2010 and a balance sheet as at the end of such period, including notes to such financial statements;
(c) for each of the McCredie Holdco, Hunter Holdco, Laver Holdco, and 7227680 Holdco, unaudited interim financial statements for the nine-month period ended September 30, 2012 and 2011;
(d) for the Filer, the following pro forma financial statements, with associated compilation reports, presented separately after giving effect to the acquisition of each of McCredie Holdco, Hunter Holdco, Laver Holdco and 7227680 Holdco:
(i) a pro forma balance sheet as at September 30, 2012,
(ii) a pro forma income statement for the nine-month period ender September 30, 2012,
(iii) a pro forma income statement for the year ended December 31, 2011 and
(iv) pro forma earnings per share based upon the pro forma income statements referred to in this paragraph (c),
(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 on in Alberta, British Columbia, and Saskatchewan.
Interpretation
Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are otherwise defined in this decision.
Representations
This decision is based on the following facts represented by the Filer:
The Filer is a corporation existing under the laws of the Province of Ontario.
The Filer's head office is located at 2001, rue University – Bureau 400, Montreal, Quebec and its registered office is located at 200 Bay Street, Royal Bank Plaza, South Tower, Suite 3800, Toronto, Ontario, M5J 2Z4.
The Filer is a reporting issuer in each of Ontario, British Columbia, Alberta and Saskatchewan and is not in default of its obligations as a reporting issuer under the securities laws of any of the foregoing jurisdictions.
The common shares of the Filer are listed and posted for trading on the TSX Venture Exchange under the symbol "VOX".
The Filer's financial year end is December 31.
The Filer completed the Acquisition on November 15, 2012.
The Filer completed the Acquisition by acquiring, directly or indirectly, all of the issued and outstanding shares of Mt. Ventoux Holdings Inc. (“Mt. Ventoux”), including through the acquisition of each of McCredie Holdco, Laver Holdco and Hunter Holdco, which together provided the Filer with a 100% direct and indirect ownership of Mt. Ventoux. Concurrently, the Filer completed the acquisition of 7227680 Holdco, which provided the Filer with a 100% direct and indirect ownership of Gestram Real Estate Services Inc. (“Gestram”). The determination to complete the Acquisition by such share acquisitions was due to the pre-transaction existing structure and income tax considerations which dictated that the corporate structure be left intact until following the closing of the Acquisition.
At the time of the Acquisition: (i) each of McCredie Holdco and Hunter Holdco owned approximately 27.5% of the issued and outstanding shares of Mt. Ventoux and Laver Holdco owned approximately 20% of the issued and outstanding shares of Mt. Ventoux (collectively, the “Mt. Ventoux Shares”), and the remaining issued and outstanding shares of Mt. Ventoux were held by other non-corporate sellers; and (ii) 7227680 Holdco owned approximately 24.5% of the issued and outstanding shares of Gestram (the “Gestram Shares”) and the remaining issued and outstanding shares of Gestram were held by Max Wright Real Estate Corporation (“Max Wright”), a wholly owned subsidiary of Mt. Ventoux.
Throughout the period from incorporation and at the time of the Acquisition, each Acquired Holdco:
(a) did not have any revenues other than its share of earnings of Mt. Ventoux or Gestram, as the case may be, and sundry items;
(b) did not have any assets other than the Mt. Ventoux Shares or the Gestram Shares, as the case may be, cash and taxes recoverable;
(c) did not have any expenses except those nominal expenses associated with general administrative matters of minimal significance;
(d) did not have any liabilities;
(e) did not conduct any operations or business other than the ownership of the Mt. Ventoux Shares or the Gestram Shares, as the case may be; and
(f) functioned solely as a corporate holding company.
The financial statements of each Acquired Holdco have not been audited or reviewed by an auditor.
Throughout the period from incorporation and at the time of the Acquisition, Mt. Ventoux was the operating entity which, either directly or indirectly (including through Gestram and Max Wright), conducted all of the business which was acquired by the Filer pursuant to the Acquisition.
Upon completion of the Acquisition: (i) the Filer held 100% of McCredie Holdco directly, 100% of Hunter Holdco directly, 100% of Laver Holdco directly and 100% of Mt. Ventoux directly and indirectly; and (ii) 100% of 7227680 Holdco directly and 100% of Gestram directly and indirectly.
Since the completion of the Acquisition, the Filer has completed certain corporate restructurings such that each of the Acquired Holdcos was, through a series of steps, amalgamated with the Filer and with Mt. Ventoux. The Filer has also transferred its entire interest in Gestram to Max Wright, such that Max Wright holds 100% of Gestram directly.
The Acquisition constitutes a "significant acquisition" for the Filer for the purposes of NI 51-102, and therefore the Filer must file a BAR no later than January 29, 2013.
Under NI 51-102, the BAR must include the following financial statements:
(a) for Mt. Ventoux, McCredie Holdco, Hunter Holdco, Laver Holdco and 7227680 Holdco, the audited consolidated financial statements for the year ended December 31, 2011 and the unaudited consolidated financial statements for the year ended December 31, 2010;
(b) for Mt. Ventoux, McCredie Holdco, Hunter Holdco, Laver Holdco and 7227680 Holdco, the unaudited interim consolidated financial statements for the nine-month period ended September 30, 2012 and 2011; and
(c) for the Filer, the following pro forma financial statements, with associated compilation reports, presented separately after giving effect to each of the Acquisition, the acquisition of McCredie Holdco, the acquisition of Hunter Holdco and the acquisition of Laver Holdco:
(i) the balance sheet as at September 30, 2012;
(ii) the income statement for the nine-month period ended September 30, 2012;
(iii) the income statement for the year ended December 31, 2011; and
(iv) the earnings per share based upon the income statements referred to in this paragraph 15(c).
- The only financial statements that are of relevance for investors are the consolidated financial statements of Mt. Ventoux and the Filer's pro forma financial statements after giving effect to the Acquisition, all of which the Filer will include in the BAR, and not the individual financial statements for any of the Acquired Holdcos, as referred to in paragraphs 15(a) and (b) above, or the Filer’s pro forma financial statements after giving effect to the acquisition of each of McCredie Holdco, Hunter Holdco and Laver Holdco, as referred to in paragraph 15(c) above. Such financial statements of Mr. Ventoux and the Filer’s pro forma financial statements after giving effect to the Acquistion will provide investors with all necessary disclosure regarding the Filer and the Acquisition
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 the BAR includes the financial statements of Mt. Ventoux for the periods referenced in clauses (a) and (b) of paragraph 15 above, and the pro forma financial statements of the Filer after giving effect to the Acquisition referenced in clause (c) of paragraphs 15 above.
Sonny Randhawa
Manager, Corporation Finance
Ontario Securities Commission