Celestica Inc.

Decision

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Take-over Bids -- Exemption from the Extension Take Up requirements in section 98.3(4) of the Securities Act (Ontario) -- Dutch auction -- An issuer conducting an issuer bid under a modified Dutch auction procedure requires relief from the requirement to take up and pay for securities if all terms and conditions are met and the issuer bid is under-subscribed. The issuer is disclosing the maximum number of shares it will acquire under the bid, and the minimum and maximum amount it will pay for shares tendered; as a result, the potential for confusion is minimal -- the issuer will comply with the U.S. regime in connection with the Offer.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 98.3(4), 104(2)(c).

OSC Rule 62-504, s. 4.2(2).

November 20, 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

CELESTICA INC.

(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) that, in connection with the proposed purchase by the Filer of a portion of its outstanding subordinate voting shares (the Shares) pursuant to an issuer bid (the Offer), the Filer be exempt from the requirement in the Legislation to not extend the Offer if all the terms and conditions of the Offer have been complied with or waived unless the Filer first takes up all Shares validly deposited and not withdrawn under the Offer (the Exemption Sought).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 in British Columbia, Alberta, Manitoba, Saskatchewan, Québec, Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island, the Northwest Territories, Nunavut and the Yukon Territory (together with Ontario, the Reporting Issuer 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 facts represented by the Filer:

1. The Filer is a corporation existing under the Business Corporations Act (Ontario) and a reporting issuer in each of the Reporting Issuer Jurisdictions. The Filer's head office is located in the Province of Ontario. To its knowledge, the Filer is not in default of any requirement of the securities legislation in the Reporting Issuer Jurisdictions.

2. The authorized share capital of the Filer consists of an unlimited number of Shares, an unlimited number of multiple voting shares (Multiple Voting Shares) and an unlimited number of preferred shares (Preferred Shares). As of October 25, 2012, 186,205,220 Shares, 18,946,368 Multiple Voting Shares and no Preferred Shares were issued and outstanding.

3. The Shares are listed and posted for trading on the Toronto Stock Exchange (TSX) and listed and traded on the New York Stock Exchange (NYSE) under the symbol 'CLS'.

4. On October 22, 2012, the last full trading day prior to the date of the announcement of the approval by the board of directors of the Filer for the Filer to conduct the Offer, the closing price of the Shares on the TSX was C$7.08 per Share and on the NYSE was US$7.13 per Share.

5. The Filer has made the Offer by way of a modified Dutch auction procedure as follows:

a. the Circular specifies that the maximum aggregate purchase price of the Shares the Filer will purchase under the Offer is US$175,000,000 (the Specified Dollar Amount);

b. the Circular specifies that the Filer is prepared to purchase the Shares at a price per Share not less than US$7.00 and not more than US$8.00 (the Price Range);

c. the Filer will fund the purchase of Shares for cancellation pursuant to the Offer, together with the fees and expenses of the Offer, from available cash on hand and from cash drawn on the Filer's existing revolving credit facility;

d. each holder of Shares (collectively, the Shareholders) wishing to tender to the Offer has the right either to:

i. specify the lowest price within the Price Range (an Auction Price) at which that Shareholder is willing to sell its tendered Shares (an Auction Tender), or

ii. elect to have tendered shares purchased by the Filer at the purchase price (Purchase Price) determined by the Filer (a Purchase Price Tender);

e. Shareholders may make multiple Auction Tenders but not in respect of the same Shares (i.e. Shareholders may tender different Shares at different prices but cannot tender the same Shares at more than one price);

f. Shareholders may make both an Auction Tender and a Purchase Price Tender; however, they may not be in respect of the same Shares;

g. Shareholders who desire to tender Shares under an Auction Tender at different prices or who desire to tender certain Shares under an Auction Tender and other Shares under a Purchase Price Tender must complete a separate Letter of Transmittal for each tendered lot of Shares;

h. in both the case of Auction Tenders and Purchase Price Tenders, Shareholders may tender less than all of their Shares;

i. Shareholders who tender Shares without making a valid Auction Tender or Purchase Price Tender will be deemed to have made a Purchase Price Tender;

j. any Shareholder who beneficially owns fewer than 100 Shares and tenders all of such Shareholder's Shares pursuant to an Auction Tender at a price at or below the Purchase Price, or pursuant to a Purchase Price Tender, will be considered to have made an "Odd-Lot Tender";

k. for the purposes of determining the Purchase Price, Shares tendered pursuant to a Purchase Price Tender will be considered to have been tendered at the lowest price in the Price Range;

l. the Purchase Price will be the lowest price per Share within the Price Range that enables the Filer to purchase the maximum number of Shares properly tendered and not withdrawn pursuant to the Offer having an aggregate purchase price not exceeding the Specified Dollar Amount;

m. the Purchase Price and the aggregate number of Shares that the Filer will purchase under the Offer will not be determined until after the Offer expires, provided that the aggregate amount that the Filer will pay for Shares under the Offer will not exceed the Specified Dollar Amount;

n. Shares tendered by a Shareholder pursuant to an Auction Tender will not be purchased by the Filer if the price specified by the Shareholder is greater than the Purchase Price;

o. if the aggregate purchase price for Shares validly tendered and not withdrawn pursuant to Purchase Price Tenders and Auction Tenders at a price equal to or less than the Purchase Price is greater than the Specified Dollar Amount, the Filer will purchase such deposited Shares on a pro rata basis according to the number of Shares deposited or deemed to have been deposited by the depositing Shareholders, except that Shares tendered pursuant to Odd-Lot Tenders will not be subject to proration;

p. all Shares purchased by the Filer pursuant to the Offer (including Shares tendered at Auction Prices at or below the Purchase Price) will be purchased at the Purchase Price; Shareholders will receive the Purchase Price in cash; all Auction Tenders and Purchase Price Tenders will be subject to adjustment to avoid the purchase of fractional Shares; all payments to Shareholders will be subject to deduction of applicable withholding taxes; and

q. certificates for all Shares not purchased under the Offer (including Shares tendered pursuant to an Auction Tender at prices greater than the Purchase Price and Shares not purchased because of pro-ration), or properly withdrawn before the expiry of the Offer, will be returned (in the case of certificates representing Shares all of which are not purchased) or replaced with new certificates representing the balance of Shares not purchased (in the case of certificates representing Shares of which less than all are purchased), promptly after the expiry of the Offer or the date of withdrawal of the Shares, without expense to the Shareholder.

6. the Offer is subject to Rule 13e-4 (Rule 13e-4) adopted under the United States Securities Exchange Act of 1934, as amended (the Exchange Act). A majority of the Filer's Shares are owned of record by residents of the United States. Pursuant to Rule 13e-4, the Filer will file with the Securities Exchange Commission a Tender Offer Statement on Schedule TO.

7. Assuming the Offer is fully subscribed:

a. if the Purchase Price is determined to be US$7.00 (being the minimum Purchase Price under the Offer), the maximum number of Shares that may be purchased by the Filer is 25,000,000, representing approximately 13.43% of the Filer's outstanding Shares as at October 25, 2012, and

b. if the Purchase Price is determined to be US$8.00 (being the maximum Purchase Price under the Offer), the maximum number of Shares that may be purchased by the Filer is 21,875,000, representing approximately 11.75% of the Filer's outstanding Shares as at October 25, 2012.

8. All information about the number of Shares tendered and the prices at which the Shares are tendered will be required to be kept confidential by the depositary and the Filer until the Purchase Price has been determined after expiry of the Offer.

9. Shareholders who do not tender to the Offer will continue to hold the number of Shares owned before the Offer and their proportionate Share ownership will increase following completion of the Offer subject to the Filer's right to issue additional Shares and other equity securities in the future.

10. The Filer may elect to extend the bid in circumstances where the Offer is undersubscribed. Under the Legislation, an issuer may not extend an issuer bid if all the terms and conditions of the issuer bid have been complied with or waived unless the issuer first takes up all the securities validly deposited and not withdrawn under the issuer bid (the Extension Take Up Requirement). Rule 13e-4 requires an issuer to pay for all equity securities deposited under an issuer bid promptly after the expiry of a tender offer and, as a consequence, prohibits an issuer from taking up securities prior to the expiry of an issuer bid.

11. The Filer intends to rely on the exemption from the formal valuation requirements applicable to issuer bids under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (MI 61-101) set out in subsection 3.4(b) of MI 61-101 (the Liquid Market Exemption).

12. The Filer has determined that there will be a liquid market in the Shares because:

a. there is a published market for the Shares, namely the TSX and the NYSE;

b. during the 12-month period before the date the Offer was announced:

i. the number of issued and outstanding Shares was at all times at least 5,000,000, excluding Shares beneficially owned, directly or indirectly, or over which control or direction was exercised, by related parties and Shares that were not freely tradeable;

ii. the aggregate trading volume of the Shares on the TSX, being the published market on which the Shares are principally traded, was at least 1,000,000 Shares;

iii. there were at least 1,000 trades in Shares on the TSX;

iv. the aggregate trading value based on the price of the trades referred to in clause (iii) was at least C$15,000,000; and

c. the market value of the Shares on the TSX, as determined in accordance with applicable rules, was at least C$75,000,000 for September 2012, being the calendar month preceding the calendar month in which the Offer was publicly announced.

13. Based on the facts set forth in paragraph 12 and the maximum number of Shares that may be purchased under the Offer, assuming an aggregate purchase price equal to the Specified Dollar Amount, the Filer has determined that there is a liquid market for the Shares and that it is reasonable to conclude that, following the completion of the Offer, there will be a market for holders of Shares who do not tender to the Offer that is not materially less liquid than the market that existed at the time the Offer was announced.

14. The Circular:

a. discloses the mechanics for the take-up of and payment for Shares as described in paragraph 5 above;

b. explains that, by tendering Shares at the lowest price in the Price Range under an Auction Tender or by tendering Shares under a Purchase Price Tender, a Shareholder can reasonably expect that the Shares so tendered will be purchased at the Purchase Price, subject to proration and other terms of the Offer as specified in paragraph 5 above;

c. discloses that the Filer has filed for an exemption from the Extension Take Up Requirement;

d. discloses the facts supporting the Filer's reliance on the Liquid Market Exemption; and

e. except to the extent exemptive relief is granted pursuant to this Decision, contains the disclosure prescribed by the Legislation for issuer bids.

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. Shares validly deposited under the Offer and not withdrawn are taken up and paid for, or dealt with, in the manner described in paragraph 5 above;

b. the Filer is eligible to rely on the Liquid Market Exemption and complies with the representations in paragraph 12 above; and

c. the Filer complies with the requirements of Rule 13e-4 in respect of the conduct of the Offer.

"James D. Carnwath"
Ontario Securities Commission
Commissioner
 
"Sarah B. Kavanagh"
Ontario Securities Commission
Commissioner