Algonquin Power & Utilities Corp. (Re), 2024 CanLII 11518

Ontario Commission des 22^nd 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

February 20, 2024

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

ALGONQUIN POWER & UTILITIES CORP.

(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) granting the Filer exemptive relief (the Exemptive Relief) from the following disclosure and filing requirements to the extent (and only to the extent) such requirements are applicable to Participating Securityholders (as defined herein) as selling securityholders (collectively, the Selling Securityholder Requirements) in a Remarketing (as defined herein):

(a) the requirement under paragraph 4.2(a)(vi) of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101) to file, at the time of filing the New Base Shelf (as defined herein), a submission to jurisdiction and appointment of agent for service of process of each Participating Securityholder, if the person or company is incorporated or organized under a foreign jurisdiction and does not have an office in Canada or is an individual who resides outside of Canada; and

(b) the disclosure requirements applicable in the event of participation by one or more selling securityholders in a distribution pursuant to a Remarketing Prospectus Supplement (as defined herein) as set out in:

o subsection 1.6(1) of Form 44-101F1 Short Form Prospectus (Form 44-101F1);

o subsection 1.6(6) of Form 44-101F1;

o subsection 1.6(7) of Form 44-101F1;

o section 1.11 of Form 44-101F1;

o section 4.1 of Form 44-101F1;

o item 8 of Form 44-101F1; and

o section 14.1(1) of Form 44-101F1 and National Instrument 33-105 Underwriting Conflicts (NI 33-105).

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)(c) of Multilateral Instrument 11-102 - Passport System (MI 11-102) is intended to be relied upon in all of the provinces and territories of Canada other than the Jurisdiction (together with the Jurisdiction, the Canadian Jurisdictions).

Interpretation

Terms defined 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 representations by the Filer:

1. The Filer’s previously issued 1.18% remarketable senior notes due 2026 (the Notes) were originally offered to the public in each of the provinces of Canada and in the United States (U.S.) as a component of the Filer’s offering of 23,000,000 equity units (including the over-allotment option) (the Equity Units) pursuant to a prospectus supplement dated June 17, 2021 (the 2021 Prospectus Supplement) to a short form base shelf prospectus dated April 3, 2020 (the 2020 Shelf Prospectus).

2. Each Equity Unit has a stated amount of $50 and consists of (i) a purchase contract (a Purchase Contract) to purchase common shares of the Filer, and (ii) a 1/20, or 5%, undivided beneficial ownership interest in the Notes.

3. The Equity Units trade on the New York Stock Exchange.

4. The Notes were issued in registered form in the name of The Bank of New York Mellon Trust Company, N.A. (the Collateral Agent) and were immediately upon issuance pledged to the Filer to secure the payment obligation under the related Purchase Contracts.

5. The exercise price of the Purchase Contract payable to the Filer on a future mandatory settlement date is expected to be paid on behalf of the holders of Equity Units (each, a Unitholder) through the resale of the Notes by way of one or more remarketings (each, a Remarketing and together referred to herein as the Remarketings).

6. Remarketings will either take place (i) during the period of one or more days selected by the Filer during which the Filer elects to conduct an optional remarketing (which period may begin on or after March 13, 2024 and ends at any time before May 30, 2024), or (ii) in the event that there has not been a successful optional remarketing, during the final remarketing period from June 7, 2024 to June 13, 2024. These periods are set out in the purchase contract and pledge agreement dated June 23, 2021 between the Filer and the Collateral Agent and were disclosed in the 2021 Prospectus Supplement.

7. The Filer intends to (i) prepare and file a short form base shelf prospectus (the New Base Shelf) in March 2024 in accordance with the multijurisdictional disclosure system, and (ii) subsequently file one or more prospectus supplements to the New Base Shelf for the purpose of one or more Remarketings (each, a Remarketing Prospectus Supplement and each, together with the New Base Shelf, a Remarketing Prospectus).

8. The Filer expects that any Remarketing will be conducted primarily in the U.S. where (i) practice is for similar remarketings to be characterized as primary offerings by the issuer (not as sales by selling securityholders), and (ii) the Filer has been advised that a prospectus will be required in order for the Notes to be remarketed to retail investors.

9. A beneficial interest in the Notes held by a Unitholder will, by default, be included in any Remarketing unless the Unitholder opts out of the Remarketing.

10. The goal of the remarketing agent(s) and the Filer in any Remarketing will be to reset the interest rate on the Notes to the lowest possible rate acceptable to both investors and the Filer such that the full aggregate principal amount of Notes is resold for an amount at least equal to:

(1) in the case of a final remarketing, at least 100% of the principal amount of the remarketed Notes, and

(2) in the case of an optional remarketing, 100% of the price to purchase U.S. treasury securities that mature on or prior June 15, 2024 (the Purchase Contract Settlement Date) in an aggregate amount at maturity equal to (i) the principal amount of the pledged Notes being remarketed, and (ii) the aggregate interest payment (assuming no reset of the interest rate) that would have been paid to the holders of such pledged Notes on the Purchase Contract Settlement Date (plus, if any Separate Notes (as defined herein) are being remarketed, the “Separate Notes Purchase Price”, being the amount in cash equal to the product of (1) the remarketing price per US$1,000 in Notes, and (2) the number of Separate Notes having a principal amount of US$1,000 included in such remarketing).

11. A Unitholder may separate their beneficial ownership interests in Notes (any such Note is referred to herein as a Separate Note) from the related Purchase Contract by:

A. creating Treasury Units (as defined in the 2021 Prospectus Supplement), which involves substituting U.S. treasury securities for the related undivided beneficial ownership interest in Notes held by the Collateral Agent; or

B. settling the related Purchase Contracts early.

12. As at February 16, 2024, no Separate Notes have been created and the Filer does not expect any Separate Notes to be created prior to any Remarketing.

13. To the extent any Separate Notes are created, they will not, by default, be included in any Remarketing unless the holder of such Separate Notes opts into the Remarketing by delivering the Separate Notes along with an election notice to the Collateral Agent at any time prior to 4:00 p.m. two business days prior to the applicable remarketing period (any such holder, a Participating Separate Noteholder and together with any Unitholder(s) participating in a Remarketing, the Participating Securityholders).

14. The Filer is of the view that the Participating Securityholders may technically qualify as a “selling securityholders” for the purposes of the Selling Securityholder Requirements but also that there are a number of (i) practical impediments to complying with the Selling Securityholder Requirements, and (ii) bases on which to distinguish the involvement of the Participating Securityholders from that of a typical selling securityholder.

15. In contrast to a typical scenario where the Selling Securityholder Requirements apply to a single person or company or limited group of persons or companies who are known to the issuer and play an active role in the offering, the Equity Units are widely held and the Filer will have only limited visibility as to the identities of the Participating Securityholders and even less ability to compel the cooperation necessary to meet the Selling Securityholder Requirements. Participating Securityholders will be passive participants in any Remarketing who will not be involved in the decision to file a Remarketing Prospectus (in lieu of conducting a Remarketing by way of private placement) nor in the preparation thereof and will have no influence over the Remarketing or the terms thereof beyond their ability to opt-in or opt-out, as applicable.

16. The sole registered holder of the Equity Units is the Depository Trust Company (DTC) and a report generated by Broadridge, dated as of February 1, 2024 with a record date of January 26, 2024, indicated that of the 23,000,000 Equity Units, (i) 5,567,034 (representing 24.2% of the Equity Units) are held in 5,821 accounts of non-objecting beneficial holders across 37 different DTC participants and (ii) 17,432,966 (representing 75.8% of the Equity Units) are held in accounts either of objecting beneficial owners or with brokers not currently in contact with Broadridge (which the Filer understands represents approximately 5% of DTC participants). In light of these facts, the Filer believes that any attempt to comply with the Selling Securityholder Requirements would be impractical.

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.

“Marie-France Bourret”

Marie-France Bourret

Manager, Corporate Finance

Ontario Securities Commission

OSC File#: 2023/0631