Court File and Parties
COURT FILE NO.: CV-22-683503-00CL DATE: 20220811 SUPERIOR COURT OF JUSTICE – ONTARIO (COMMERCIAL LIST)
IN THE MATTER OF AN APPLICATION UNDER SECTION 182 OF THE BUSINESS CORPORATIONS ACT, R.S.O. 1990, C. B.16, AS AMENDED AND IN THE MATTER OF RULE 14.05(2) OF THE RULES OF CIVIL PROCEDURE AND IN THE MATTER OF A PROPOSED ARRANGEMENT OF LIFEWORKS INC., INVOLVING TELUS CORPORATION
RE: LifeWorks Inc., Applicant AND: Telus Corporation, Respondent
BEFORE: Osborne J.
COUNSEL: Craig Lockwood, Lauren Harper and Marleigh Dick, for the Applicant Stephen Lapierre and Zev Smith, for the Respondent
HEARD: August 11, 2022
Endorsement
1LifeWorks Inc. (“LifeWorks”) has brought this application pursuant to section 182 of the Business Corporations Act, R.S.O. 1990, c.B.16, as amended, (the “OBCA”) for approval of a plan of arrangement (the “Arrangement”).
2On July 6, 2022, I granted an interim order authorizing the Applicant to hold a special meeting of shareholders to consider and vote on a special resolution to approve the Arrangement (the “Interim Order”).
3I am satisfied on the basis of the materials filed by the Applicant in support of the relief sought today that notice as given was appropriate and in accordance with the Interim Order. The meeting documents were sent on July 11, 2022 to each registered shareholder as at the Record Date and to the Ontario Securities Commission. On July 13, 2022, non-registered shareholders, the directors and auditors of the company also received the materials, as did the holders of DSUs, RSUs, Income Fund LTIP Units and PSUs.
4The meeting was held on August 4, 2022, in accordance with the terms of the Interim Order as well as the bylaws of the company. Quorum was established.
5Approval required two thirds of the votes cast by the shareholders represented in person and/or by proxy. At the meeting of August 4, that approval was granted overwhelmingly: fully 75.83% of the outstanding shares were voted, and of those, 99.93% voted in favour of the resolution approving the Arrangement.
6The evidence today discloses that no shareholders exercised any dissent rights. Moreover, no shareholder, or for that matter any affected party, has filed a Notice of Appearance.
7In short, those parties principally affected by the relief sought today have overwhelmingly approved the Arrangement and none has indicated any objection or challenge.
8LifeWorks is an OBCA corporation. TELUS is a BC corporation. The shares of LifeWorks are listed and trade on the TSE. TELUS shares also trade on the TSE and on the NYSE.
9The Arrangement would, if approved, provide for the acquisition by TELUS Corporation of all of the issued and outstanding common shares of LifeWorks for consideration as is fully described in the draft Information Circular included within the Applicant’s Motion Record and as was before the Court on the motion for the Interim Order.
10In short, shareholders can elect to receive consideration in cash, TELUS shares, or a combination of both. The Arrangement also provides for cash consideration in accordance with the terms of the Arrangement for deferred share units, restricted share units, income fund LTIP units and performance share units. As a result, proceeding by way of the Arrangement allows the various necessary steps to occur in a controlled and sequenced manner and in respect of all of the securities referred to above.
11LifeWorks intends to rely on the fairness hearing in this proceeding and the final order approving the Arrangement sought today for an exemption pursuant to section 3(a)(10) of the United States Securities Act of 1933, as amended.
12The Applicant relies upon two affidavits of Robert Couteau sworn July 4 and August 8, 2022 respectively, as well as the terms of the Interim Order.
Analysis and Consideration of Factors
13The terms of the Arrangement have not been amended since the date of the Interim Order in are described in the Endorsement I issued on that date.
14Section 182 of the OBCA gives the Court the power to make any order it thinks appropriate in connection with an application for advice and directions in connection with an arrangement, including an order approving the arrangement pursuant to section 182(5)(f).
15In making such an order, the Court must be satisfied that: a) the statutory procedures and any court-ordered requirements have been met; b) the application has been put forward in good faith; and c) the arrangement is fair and reasonable. (See Re Magna International Inc., 2010 ONSC 4123 at paras 99-105, aff’d. 2010 ONSC 4685 at paras. 31-41, BCE Inc. v. 1976 Debentureholders, 2008 SCC 69 at para. 137, and Steel Canada Inc. (Re), 2014 ONSC 4285 at para. 85).
16I will address each of these requirements in turn, although in so doing I note that all of these requirements were considered and found to have been satisfied when the Interim Order was granted and there has been no material change since that time that would lead to a different conclusion for the purposes of the final approval order sought today.
17The Arrangement of LifeWorks is an “Arrangement” within the meaning of section 182 of the OBCA (i.e., ss.182(1)(f): an exchange of securities of a corporation for property, money or other securities of the corporation or property, money or other securities of another body corporate). As noted above, LifeWorks is an Ontario corporation governed by the OBCA.
18The statutory procedures and any court-ordered requirements have been met. In particular here, the terms of the Interim Order have been complied with. Copies of the materials were provided in accordance with the terms of the Interim Order.
19The Meeting itself was called, held and conducted in accordance with the requirements of the Interim Order. As noted above, the Arrangement was approved overwhelmingly by Lifeworks’ Shareholders.
20The Arrangement is put forward in good faith. There is no evidence otherwise.
21In my view, the Arrangement is fair and reasonable. There is clearly a valid business purpose.
22The factors identified by the Supreme Court of Canada that may be relevant to the test for the assessment of the fairness and reasonableness of a proposed arrangement include: a) the vote by security holders on the arrangement; b) the impact on the rights of those security holders; c) the approval of the arrangement by the corporation’s directors and the presence of a fairness opinion; and d) the access of shareholders to dissent and appraisal remedies. (see BCE at paras. 138-143 and 150-152).
23Each of these factors is satisfied here by LifeWorks. The Arrangement was approved not just by the requisite majority of Shareholders present in person or by proxy at the Meeting, but overwhelmingly. As observed by Blair, J. in Re St. Lawrence & Hudson Railway Co., 1998 O.J. 3934 at para. 27, what better litmus test then, for assessing whether [a shareholder] might reasonably approve of the plan, than the votes of those whose interests are actually at stake. Such votes are not conclusive, but are an important indicator of fairness, as are the lack of dissent or objection.
24The Supreme Court of Canada has recognized that although no single factor is conclusive, the outcome of the shareholder vote is an "important indicator of whether a plan is fair reasonable", which can be given "considerable weight", particularly if the margin is large. (See BCE at paras. 141 and 150). The Shareholder vote in this case is a strong indication of the fairness and reasonableness of the Arrangement.
25The approval of the Directors, both as a full Board and the Special Committee, was clear.
26Moreover, the Board and Special Committee received written fairness opinions from each of BMO and Goldman Sachs stating that, subject to the assumptions, limitations and qualifications of those opinions, the consideration provided for in the Arrangement was fair, from a financial point of view, to the Shareholders (other than TELUS and its affiliates).
27As noted above, Registered Shareholders had rights of dissent and appraisal pursuant to the OBCA, the terms of the Arrangement and my Interim Order. As noted above, no shareholder exercised any such rights nor has anyone delivered a notice of appearance.
28In the aggregate, all of these factors suggest that the rights of interested parties have been fairly and reasonably balanced. Additional comfort can be drawn from the fact that the form of order sought here is consistent with the Model Order of this Court.
29Having considered all of the foregoing factors, the Court is satisfied that the Arrangement is fair and reasonable and is in the best interests of the Registered Shareholders of LifeWorks.
Approval Granted
30The Final Approval Order is granted, approving the Arrangement pursuant to section 182(5) of the OBCA. Order to go as signed by me today, which is effective from today’s date and is enforceable without the necessity of issuing and entering.
Osborne, J.
Date: August 11, 2022