Ontario Commission des 22nd Floor 22e étage Securities valeurs mobilières 20 Queen Street West 20, rue queen ouest Commission de l’Ontario Toronto ON M5H 3S8 Toronto ON M5H 3S8
May 25, 2017
In the Matter of
The Securities Legislation of Ontario
(the Jurisdiction)
and
In the Matter of
The Process for Cease to be a Reporting Issuer Applications
and
In the Matter of
Golden Credit Card Trust
(the Filer)
ORDER
BACKGROUND
The principal regulator in the Jurisdiction has received an application from the Filer for an order under the securities legislation of the Jurisdiction (the Legislation) that the Filer has ceased to be a reporting issuer in all the jurisdictions of Canada in which it is a reporting issuer (the Order Sought).
Under the Process for Cease to be a Reporting Issuer Applications (for a passport application):
(a) the Ontario Securities Commission (OSC) is the principal regulator for this application; and
(b) the Filer has provided notice that subsection 4C.5(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador, the Yukon Territory, Northwest Territories and Nunavut (collectively with Ontario, the Jurisdictions).
INTERPRETATION
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this order, unless otherwise defined herein.
REPRESENTATIONS
This order is based on the following facts represented by the Filer:
The Filer was originally established under a declaration of trust on March 31, 1999, which declaration of trust has been supplemented by a supplemental declaration of trust made as of April 22, 2008 and a second supplemental declaration of trust made as of September 29, 2011 (collectively, the Declaration of Trust). The Declaration of Trust is governed by the laws of the Province of Ontario. Computershare Trust Company of Canada is the trustee (in such capacity, the Issuer Trustee) of the Filer and is a trust company established under the laws of Canada and is licensed to carry on business as a trustee in all provinces and territories of Canada. The head office of the Issuer Trustee is c/o Computershare Trust Company of Canada at 100 University Avenue, 11th Floor, Corporate Trust Department, Toronto, Ontario M5J 2Y1;
The Filer is a special purpose entity that purchases from Royal Bank of Canada, from time to time, undivided co-ownership interests in a revolving pool of credit card receivables and issues credit card receivables backed notes to fund such purchases;
The Filer is not in default of securities legislation in any of the Jurisdictions except for the failure to file its annual financial statements and its management’s discussion and analysis in respect of such statements for the year ended December 31, 2016, as required under National Instrument 51-102 Continuous Disclosure Obligations and certification of the foregoing filings as required under National Instrument 52-109 - Certification of Disclosure in Issuers' Annual and Interim Filings (collectively, the Filings), all of which became due on May 1, 2017;
The Filer has no issued and outstanding common shares;
As of April 27, 2017, the Filer has fourteen classes of debt securities (collectively, the Notes) outstanding, being:
(i) Credit Card Receivables Backed Senior and Subordinated Notes, Series 2012-4
By an offering memorandum dated July 18, 2012, the Filer issued in the United States U.S. $500,000,000 1.39% credit card receivables backed senior notes, series 2012-4, and by way of private placement in Canada, the Filer concurrently issued CDN$23,795,812 3.80% credit card receivables backed subordinated notes, series 2012-4, each with an expected final payment date of July 17, 2017;
(ii) Credit Card Receivables Backed Senior and Subordinated Notes, Series 2012-6
By an offering memorandum dated September 25, 2012, the Filer issued in the United States U.S. $500,000,000 credit card receivables backed senior floating rate notes, series 2012-6, and by way of private placement in Canada, the Filer concurrently issued CDN$23,096,073 3.794% credit card receivables backed subordinated notes, series 2012-6, each with an expected final payment date of September 15, 2017;
(iii) Credit Card Receivables Backed Senior and Subordinated Notes, Series 2014-2
By an offering memorandum dated March 26, 2014, the Filer issued in the United States U.S. $550,000,000 credit card receivables backed senior floating rate notes, series 2014-2, and by way of private placement in Canada, the Filer concurrently issued CDN$29,194,634 3.459% credit card receivables backed subordinated notes, series 2014-2, each with an expected final payment date of March 15, 2019;
(iv) Credit Card Receivables Backed Series Enhancement Notes
By an offering memorandum dated November 14, 2014, the Filer issued in Canada CDN$151,000,000 2.134% credit card receivables backed series enhancement notes, with an expected final payment date of March 15, 2019;
(v) Credit Card Receivables Backed Class A, Class B and Class C Notes, Series 2015-1
By an offering memorandum dated February 26, 2015, the Filer issued in the United States U.S. $525,000,000 credit card receivables backed class A floating rate notes, series 2015-1, and by way of private placement in Canada, the Filer concurrently issued CDN$31,619,599 1.586% credit card receivables backed class B notes, series 2015-1 and CDN$14,053,155 1.836% credit card receivables backed class C notes, series 2015-1, each with an expected final payment date of February 15, 2018;
(vi) Credit Card Receivables Backed Class A, Class B and Class C Notes, Series 2015-2
By an offering memorandum dated April 22, 2015, the Filer issued in the United States U.S. $500,000,000 2.02% credit card receivables backed class A notes, series 2015-2, and by way of private placement in Canada, the Filer concurrently issued CDN$29,420,856 2.249% credit card receivables backed class B notes, series 2015-2 and CDN$13,075,936 2.499% credit card receivables backed class C notes, series 2015-2, each with an expected final payment date of April 15, 2020;
(vii) Credit Card Receivables Backed Class A, Class B and Class C Notes, Series 2015-3
By an offering memorandum dated July 23, 2015, the Filer issued in the United States U.S.$850,000,000 credit card receivables backed class A floating rate notes, series 2015-3, and by way of private placement in Canada, the Filer concurrently issued CDN$53,337,273 2.01% credit card receivables backed class B notes, series 2015-3 and CDN$23,705,454 2.36% credit card receivables backed class C notes, series 2015-3, each with an expected final payment date of July 17, 2017;
(viii) Credit Card Receivables Backed Class A, Class B and Class C Notes, Series 2016-1
By an offering memorandum dated January 19, 2016, the Filer issued in the United States U.S.$625,000,000 credit card receivables backed class A floating rate notes, series 2016-1, and by way of private placement in Canada, the Filer concurrently issued CDN$43,766,711 2.003% credit card receivables backed class B notes, series 2016-1 and CDN$19,451,872 2.403% credit card receivables backed class C notes, series 2016-1, each with an expected final payment date of January 16, 2018;
(ix) Credit Card Receivables Backed Class A, Class B and Class C Notes, Series 2016-3
By an offering memorandum dated April 25, 2016, the Filer issued in the United States U.S. $400,000,000 credit card receivables backed class A floating rate notes, series 2016-3, and by way of private placement in Canada, the Filer concurrently issued CDN$24,401,069 2.931% credit card receivables backed class B notes, series 2016-3 and CDN$10,844,920 3.631% credit card receivables backed class C notes, series 2016-3, each with an expected final payment date of April 15, 2021; and
(x) Credit Card Receivables Backed Class A, Class B and Class C Notes, Series 2016-4
By an offering memorandum dated April 25, 2016, the Filer issued in the United States U.S. $400,000,000 credit card receivables backed class A floating rate notes, series 2016-4, and by way of private placement in Canada, the Filer concurrently issued CDN$24,401,069 3.173% credit card receivables backed class B notes, series 2016-4 and CDN$10,844,920 3.873% credit card receivables backed class C notes, series 2016-4, each with an expected final payment date of April 18, 2022.
(xi) Credit Card Receivables Backed Class A, Class B and Class C Notes, Series 2016-5
By an offering memorandum dated September 13, 2016, the Filer issued in the United States U.S. $700,000,000 1.60% credit card receivables backed class A notes, series 2016-5, and by way of private placement in Canada, the Filer concurrently issued CDN$44,386,363 2.185% credit card receivables backed class B notes, series 2016-5 and CDN$19,727,273 2.785% credit card receivables backed class C notes, series 2016-5, each with an expected final payment date of September 16, 2019.
(xii) Credit Card Receivables Backed Class A, Class B and Class C Notes, Series 2017-1
By an offering memorandum dated February 13, 2017, the Filer issued in the United States U.S. $1,000,000,000 credit card receivables backed class A floating rate notes, series 2017-1, and by way of private placement in Canada, the Trust concurrently issued CDN$62,927,808 2.191% credit card receivables backed class B notes, series 2017-1 and CDN$27,967,914 2.691% credit card receivables backed class C notes, series 2017-1, each with an expected final payment date of February 19, 2019.
(xiii) Credit Card Receivables Backed Class A, Class B and Class C Notes, Series 2017-2
By an offering memorandum dated April 17, 2017, the Filer issued in the United States U.S. $600,000,000 1.98% credit card receivables backed class A notes, series 2017-2, and by way of private placement in Canada, the Trust concurrently issued CDN$38,449,733 1.844% credit card receivables backed class B notes, series 2017-2 and CDN$17,088,770 1.994% credit card receivables backed class C notes, series 2017-2, each with an expected final payment date of April 15, 2020.
(xiv) Credit Card Receivables Backed Class A, Class B and Class C Notes, Series 2017-3
By a term sheet dated April 18, 2017, the Filer issued in Canada CDN$15,000,000.00 credit card receivables backed class C notes, series 2017-3, and by way of private placement in Canada, the Filer concurrently issued CDN$701,250,000 1.191% credit card receivables backed class A notes, series 2017-3 and CDN$33,750,000 1.441% credit card receivables backed class B notes, series 2017-3, each with an expected final payment date of September 17, 2018.
Only two series of Notes (Series Enhancement Notes and Series 2017-3) were issued primarily in Canada, and both such series of Notes were issued on a private placement basis to Canadian “accredited investors”;
The Notes were issued pursuant to a trust indenture made as of July 9, 1999, as supplemented by a supplemental trust indenture made as of April 22, 2008 and a second supplemental trust indenture made as of January 26, 2017 (the Indenture) between the Filer and CIBC Mellon Trust Company as indenture trustee (the Indenture Trustee);
The Notes are not convertible or exchangeable into common shares. The Notes were initially issued on a private placement basis, primarily in the United States pursuant to exemptions from the registration requirements of the United States Securities Act of 1933, with a relatively small portion sold in Canada to “accredited investors” pursuant to applicable exemptions from applicable Canadian securities legislation. The Notes have not been listed for trading on any stock exchange or marketplace;
All series of credit card receivables backed notes previously issued by way of prospectus by the Filer in Canada have been paid in full, with the last such series having matured on May 16, 2016;
On January 26, 2017, the Filer and the Indenture Trustee amended the Indenture with respect to the delivery of financial statements (the Amendment). As required pursuant to the Indenture, the rating agencies rating the Notes (the Rating Agencies) provided confirmation that the Amendment would not result in a reduction or withdrawal of the ratings of the Notes in effect immediately before the implementation of the Amendment, and the Filer confirmed to the Indenture Trustee that it was of the opinion that the Amendment would not individually or in the aggregate materially adversely affect the interest of the holders of the Notes. The Amendment did not require the consent of the holders of the Notes;
Prior to the implementation of the Amendment, section 6.01(l) of the Indenture required that the Filer provide the Indenture Trustee, each of the Rating Agencies and any regulatory authority with which the following are required to be filed, within one hundred and forty (140) days after the end of each fiscal year, audited financial statements of the Filer for the fiscal year including the statements of income, and changes in financial position of the Filer, and within 45 days after the end of each fiscal quarter, other than the fiscal quarter of the Filer ending on the fiscal year end of the Filer, unaudited financial statements of the Filer for such fiscal quarter of the Filer, including the balance sheet and statements of income and changes in financial position of the Filer. The implementation of the Amendment had the effect of eliminating the contractual obligation of the Filer to provide periodic financial or other reports to the Indenture Trustee and the Rating Agencies and, in the event that the Filer ceased to be a reporting issuer, to any regulatory authority. As a result, the Indenture does not require ongoing reporting to the Indenture Trustee or to holders of Notes once the Filer is no longer subject to reporting requirements under applicable Canadian securities legislation;
The Notes are issued in book-entry form and are represented by global certificates registered in a nominee name of The Depositary Trust Company (DTC), in the case of Notes issued in the United States (the DTC Notes), and CDS Clearing and Depository Services Inc. (CDS), in the case of Notes issued in Canada (the CDS Notes), with beneficial interests therein recorded in records maintained by DTC or CDS, as the case may be, and their respective participants as financial intermediaries that hold securities on behalf of their clients. In accordance with industry practice and custom, the Filer has obtained from Broadridge Financial Solutions Inc. (Broadridge) a geographic survey of beneficial holders of Notes as of December 23, 2016 (the Geographic Report), which provides information as to the number of noteholders and Notes held in each jurisdiction of Canada and in the United States and other foreign jurisdictions. Broadridge advises that its reported information is based on securityholder addresses of record identified in the files provided to it by the financial intermediaries holding Notes. The Geographic Report does not cover CDS Notes that were purchased and have been retained by Royal Bank of Canada and does not cover any CDS Notes or DTC Notes that are held by broker/dealers in inventory or any Notes issued after the date of the Geographic Report. The Geographic Report does include other series of credit card receivables backed notes of the Filer that matured after the date of the Geographic Report;
The Geographic Report covers approximately 91% of the outstanding principal amount of DTC Notes for a total of US$6,331,806,000 and reports a total of 450 beneficial holders residing in the following jurisdictions:
(a) 431 in the United States holding US$5,420,251,000 principal amount of DTC Notes; and
(b) 19 in jurisdictions outside of the United States (including Canada) holding US$911,555,000 principal amount of DTC Notes.
Broadridge has confirmed that its searches are unable to report on 100% of the geographic ownership of the DTC Notes. The Filer reasonably inquired with the Indenture Trustee as to the holders of the Notes not covered by the Geographic Report, and was informed by the Indenture Trustee that the unreported noteholders are likely objecting beneficial holders who do not want their name, mailing address or amount of DTC Notes held by them disclosed;
Broadridge has confirmed that with respect to beneficial holders of DTC Notes residing in jurisdictions outside of the United States, none of the beneficial holders resides in Canada;
The Geographic Report covers 100% of the outstanding principal amount of CDS Notes for a total of CAD$91,276,594 and reports a total of 14 beneficial holders residing in the following jurisdictions:
(a) 10 in Ontario holding CAD$25,506,553 principal amount of CDS Notes; and
(b) 4 in the United States holding CAD$65,770,041 principal amount of CDS Notes.
There were no beneficial holders reported residing in any province or territory of Canada other than Ontario.
The Canadian holders of the CDS Notes and DTC Notes represent approximately 0.3% of the Canadian dollar equivalent aggregate principal amount of CDS Notes and DTC Notes reported and approximately 2.2% of the number of beneficial investors reported for the CDS Notes and DTC Notes;
The Filer is not eligible to use the simplified procedure under National Policy 11-206 Process for Cease to be a Reporting Issuer Applications as it has more than 50 securityholders (being the holders of the Notes) and is in default for failure to file the Filings;
The only securities issued by the Filer are the Notes. The Notes entitle the holders only to the payment of principal and interest, and do not entitle the holders to receive or to convert into other common shares (or any other equity securities), or to otherwise participate in the distribution of the assets of the Filer upon a liquidation or winding up;
The Notes are rated by the Rating Agencies based primarily on the credit underlying the credit card receivables in which the Filer purchases co-ownership interests, the level of enhancement provided by the reserve account established for each series of co-ownership interest and, in the case of the Class A Notes, the subordination of the payments on the Class B Notes and the Class C Notes to the prior payment of amounts payable on the Class A Notes and, in the case of the Class B Notes, the subordination of the payments on the Class C Notes to the prior payment of amounts payable on the Class B Notes, rather than by any independent assessment of the condition and performance, financial or otherwise, of the Filer. The Filer has confirmed that the Notes will continue to be rated by at least one recognized rating agency upon the cessation by the Filer of its reporting under Canadian securities laws for the foreseeable future;
There is no obligation or covenant in the Indenture, the Notes or any offering memorandum or term sheet delivered in connection with the Notes (Offering Documents) for the Filer to maintain its status as a reporting issuer or the equivalent in any jurisdiction of Canada or to file financial statements or any other continuous disclosure documentation on SEDAR. No financial statements or any other continuous disclosure documentation was included or incorporated by reference in any Offering Document. The investors to whom the Notes were placed were sophisticated investors who had the opportunity to negotiate for such disclosure or filing obligations under the Indenture, the Notes or the Offering Documents as they saw fit. No continuous disclosure of financial statements, management discussion and analysis or annual information forms is required under the United States securities laws under which the DTC Notes were issued in the United States and no continuous disclosure of such materials would have been required in Canada in connection with securities issued under the prospectus exemptions under which the Notes were issued;
The Filer will continue to make investor monthly portfolio report summaries and credit card portfolio data available to investors.
The Filer issued a news release on March 30, 2017 announcing that it has applied to the OSC, as principal regulator, for a decision that it has ceased to be a reporting issuer in all jurisdictions of Canada and, if that decision is granted, the Filer will no longer be a reporting issuer in any jurisdiction of Canada;
No securities of the Filer, including debt securities, are listed, traded or quoted in Canada or another country on a marketplace (as defined in National Instrument 21-101 Marketplace Operation) or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported. The Filer has no current intention to distribute any securities by way of a public offering of securities in Canada; and
Upon granting of the Order Sought, the Filer will not be a reporting issuer or the equivalent in any jurisdiction of Canada.
ORDER
The principal regulator is satisfied that the order meets the test set out in the Legislation for the principal regulator to make the order.
The decision of the principal regulator under the Legislation is that the Order Sought is granted.
“Grant Vingoe” “Monica Kowal”
Ontario Securities Commission Ontario Securities Commission