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CIBC World Markets Inc. et al. - MRRS Decision
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - Issuers are each a "related issuer" in respect of theFiler - Filer exempt from the requirement in the Legislation that an independent underwriter underwrite a portion of thedistribution equal to the largest portion being underwritten by a non-independent underwriter.
Applicable Ontario Regulations
Regulation made under the Securities Act, R.R.O. 1990, Reg. 1015, as am., ss. 219(1), 224(1)(b), 233, Part XIII.
Applicable Ontario Rules
Proposed Multi-Jurisdictional Instrument 33-105 Underwriting Conflicts (1998), 21 OSCB 781.
IN THE MATTER OF THE SECURITIES LEGISLATION OF
BRITISH COLUMBIA, ALBERTA, ONTARIO,
QUEBEC AND NEWFOUNDLAND
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
CIBC WORLD MARKETS INC.,
AND
WEBHELP INC. AND WEBHELP CANADA INC.
MRRS DECISION DOCUMENT
WHEREAS the securities regulatory authority or regulator (the "Decision Maker") in each of British Columbia,Alberta, Ontario, Quebec and Newfoundland (the "Jurisdictions") has received an application from CIBC World MarketsInc. (the "Filer") for a decision, pursuant to the securities legislation of the Jurisdictions (the "Legislation"), that therequirement (the "Independent Underwriter Requirement") contained in the Legislation which restricts a registrant fromacting as an underwriter in connection with a distribution of securities of an issuer made by means of prospectus, wherethe issuer is a related issuer (or the equivalent) of the registrant unless a portion of the distribution at least equal to thatportion underwritten by non-independent underwriters is underwritten by an independent underwriter, shall not apply tothe Filer in respect of a proposed distribution (the "Offering") of common shares (the "Common Shares") of Webhelp Inc.("Webhelp") and exchangeable shares (the "Exchangeable Shares") of Webhelp Canada Inc. ("Webhelp Canada"),pursuant to a prospectus (the "Prospectus");
AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the"System"), the Ontario Securities Commission is the principal regulator for this application;
AND WHEREAS the Filer has represented to the Decision Makers that:
1. Webhelp was incorporated under the laws of the State of Delaware on May 27, 1999, under the name Blue SkyVentures, Inc. On December 2, 1999, the name of Webhelp was changed to Webhelp.com Inc. On October20, 2000, the name of Webhelp was changed to Webhelp Inc. Webhelp is currently not a reporting issuerunder the Act.
2. Webhelp Canada was incorporated under the laws of the Province of Ontario on November 19, 1999. WebhelpCanada is a wholly owned subsidiary of Webhelp and is currently not a reporting issuer under the Act.
3. The head office of the Filer is located in Toronto, Ontario.
4. On March 22, 2000, Webhelp filed a registration statement on Form F-1 (the "Registration Statement") with theUnited States Securities and Exchange Commission, and on March 28, 2000, Webhelp filed a preliminaryprospectus qualifying the Common Shares with the securities regulatory authority in each of the provinces ofCanada. The preliminary prospectus was withdrawn on June 17, 2000. The Registration Statement wasamended on August 31, 2000. An updated preliminary prospectus qualifying the Common Shares was filedwith the securities regulatory authority in each of the provinces of Canada on September 22, 2000. At the timeof the initial filings, Webhelp had contemplated an initial public offering of common shares in Canada and theUnited States. It is now contemplated that there will be an offering in Canada of both Common Shares byWebhelp and Exchangeable Shares by Webhelp Canada (collectively, the "Offered Shares"). The CommonShares may also be offered in the United States on a private placement basis.
5. Webhelp and Webhelp Canada filed a preliminary prospectus ("the Preliminary Prospectus") qualifying thedistribution of the Offered Shares with the securities regulatory authority in each of the provinces of Canadaon October 24, 2000, and will file the Prospectus as soon as possible thereafter.
6. There is currently no public market for the Offered Shares. An application has been made to list the OfferedShares for trading on the Toronto Stock Exchange.
7. The Filer along with RBC Dominion Securities Inc. ("RBC DS") and Yorkton Securities Inc. ("Yorkton")(collectively, the "Underwriters") are proposing to act as underwriters in connection with the offering.
8. The approximate proportionate share of the Offering underwritten by each of the Underwriters is expected tobe as follows:
Underwriter Name Proportionate Share of the Offering
The Filer 50%
RBC DS 35%
Yorkton 15%
9. An affiliate of the Filer (the "Affiliate"), CIBC World Markets Corp., acquired an aggregate of 3,671,329 sharesof Webhelp Series B preferred stock in December 1999, at a purchase price of $8.17 per share, for anaggregate purchase price of approximately $30,000,000. On October 24, 2000, the Affiliate acquired anadditional 611,888 shares of Series B preferred stock. The Series B preferred stock is voting and there are4,283,217 shares issued and outstanding, of which the Affiliate owns 100%. Each share of Series B preferredstock is convertible into 1.241 shares of Common Stock and the shares of Series B preferred stock held by theAffiliate will automatically be converted into an aggregate of 5,316,642 shares of Common Stock uponcompletion of the Offering.
10. On October 24, 2000, the Affiliate was issued a warrant to purchase shares of Common Stock. The warrantentitles the Affiliate to purchase Common Stock at the initial public offering price for a period of five years aftercompletion of the Offering. The Affiliate will be entitled to purchase additional shares of Common Stock onlyto the extent that the value of Webhelp before giving effect to the Offering is below $155.5 million.
11. Accordingly, Webhelp and Webhelp Canada may each be considered to be a "related issuer" of the Filer withinthe meaning of the Legislation.
12. Neither Webhelp nor Webhelp Canada is a "related issuer" nor a "connected issuer", as each term is definedin the Legislation in respect of RBC DS and Yorkton. RBC DS and Yorkton (the "Independent Underwriters")are both independent underwriters as defined in draft Multi-Jurisdictional Instrument 33-105 UnderwritingConflicts (the "Proposed Instrument").
13. Because Webhelp and Webhelp Canada may be considered related issuers of the Filer, the underwritingsyndicate may not comply with the proportional requirements of the Legislation.
14. The nature and details of the relationship between Webhelp, Webhelp Canada, the Filer, the Affiliate and theIndependent Underwriters will be described in each of the Preliminary Prospectus and the Prospectus, and theProspectus will contain the information required by Appendix C to the Proposed Instrument.
15. The decision to issue the Offered Securities, including the determination of the terms of the distribution, weremade through negotiations among Webhelp, Webhelp Canada and the Underwriters without the involvementof the Affiliate.
16. The Filer is registered under the Act in the categories of "broker" and "investment dealer".
17. The Filer will not benefit in any manner from the Offering other than the payment of its fees in connectiontherewith.
18. RBC DS will underwrite at least 20 percent of the dollar value of the Offering and the Independent Underwriterswill participate in the due diligence relating to the Offering and in the structuring and pricing of the Offering.The Prospectus will identify the Independent Underwriters and will disclose the role of the IndependentUnderwriters in the structuring and pricing of the Offering and in the due diligence activities performed by theUnderwriters.
19. The certificate in each of the Preliminary Prospectus and the Prospectus will be signed by the Underwriters,including each of the Independent Underwriters.
AND WHEREAS pursuant to the System this MRRS Decision Document evidences the decision of eachDecision Maker (the "Decision");
AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that providesthe Decision Maker with the jurisdiction to make the Decision has been met;
THE DECISION of the Decision Makers, under the Legislation, is that the Independent UnderwriterRequirement shall not apply to the Filer in connection with the Offering provided:
(i) RBC DS and Yorkton participate in the offering as stated in paragraph 18 above;
(ii) the Prospectus contains the disclosure stated in paragraph 18 above; and
(iii) the relationship between the Webhelp, Webhelp Canada and the Filer is disclosed in the Prospectus.
December 13, 2000.
"John A. Geller" "Robert W. Davis"