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Skylon Advisors Inc. - s. 147
Headnote
Section 147 of the Act - issueris exempt from the payment of the fee otherwise payable undersection 7.3 of Rule 45-501 in connection with a dual structuretransaction where prospectus fees have already been paid.
Statutes Cited
Securities Act, R.S.O. 1990,c. S.5, as am., s. 147.
Regulations Cited
Regulation made under the SecuritiesAct, R.R.O. 1990, Reg. 1015, as am., subsection 18(2) of ScheduleI.
Rules Cited
Ontario Securities CommissionRule 45-501 - Exempt Distributions, s. 7.3.
IN THE MATTER OF
THE SECURITIES ACT
R.S.O. 1990, CHAPTER S.5,as amended (the "Act")
AND
IN THE MATTER OF
SKYLON ADVISORS INC.
ORDER
(Section 147)
UPON the application(the "Application") of Skylon High Yield Trust (the"High Yield Trust") to the Ontario Securities Commission(the "Commission") for an order pursuant to section147 of the Act exempting the High Yield Trust from the paymentof certain fees otherwise payable under section 7.3 of CommissionRule 45-501 - Exempt Distributions ("Rule 45-501")in connection with the issuance of High Yield Trust units withan aggregate principal amount of $125,000,000 by the High YieldTrust to the Counterparties (as defined below);
AND UPON consideringthe Application and the recommendation of the staff of the Commission;
AND UPON the Trust havingrepresented to the Commission as follows:
1. Skylon Advisors Inc. (the"Manager") is a corporation incorporated under thelaws of the Province of Ontario on September 19, 2001. Theregistered office of the Manager is located in Toronto, Ontario;
2. The Manager acts as themanager and trustee of Skylon Capital Yield Trust (the "CapitalYield Trust") and the High Yield Trust;
3. The Capital Yield Trustis an investment trust established under the laws of the Provinceof Ontario pursuant to a trust agreement made as of March27, 2002;
4. The Capital Yield Trustis authorized to issue an unlimited number of redeemable,transferable units of one class and series (the "CapitalYield Units"), each of which represents an equal, undividedbeneficial interest in the net assets of the Capital YieldTrust;
5. The Capital Yield Trustfiled a final prospectus dated March 27, 2002 (the "CapitalYield Prospectus"), relating to an offering of the CapitalYield Units (the "Offering") with all of the provincialsecurities regulatory authorities. A final receipt for thisprospectus was issued on March 28, 2002.
6. The Capital Yield Trustis a reporting issuer in each of the provinces of Canada andis not in default of any requirements of Canadian securitieslegislation;
7. The initial public offeringof the Capital Yield Trust was completed on April 18, 2002,at which time 5,000,000 Capital Yield Units were issued. Inconnection with that offering, an additional 420,000 CapitalYield Units were issued upon the exercise of an over-allotmentoption.
8. The Capital Yield Trusthas invested its assets in a portfolio of common shares ofCanadian public companies (the "Common Share Portfolio")to provide the Capital Yield Trust with the means to meetits investment objectives. The Capital Yield Trust has enteredinto forward purchase and sale agreements (collectively, the"Forward Agreement") with TD Global Finance ("TDGF"),a member of the TD Bank Financial Group, and Royal Bank ofCanada ("RBC") (TDGF and RBC collectively referredto as the "Counterparties"). Under the Forward Agreementthe Counterparties have agreed to pay to the Capital YieldTrust on or about the termination date of the Capital YieldTrust as the purchase price for the Common Share Portfolioan amount equal to 100% of the redemption proceeds of a correspondingnumber of units of the High Yield Trust;
9. The High Yield Trust isan investment trust established under the laws of Ontariopursuant to a trust agreement made as of April 11, 2002;
10. A final non-offering prospectusdated April 11, 2002 (the "High Yield Prospectus"),was filed with la Commission des valeurs mobilièresdu Québec ("CVMQ") to enable the High YieldTrust to become a reporting issuer under the SecuritiesAct (Québec) (the "Québec Act").A receipt for the High Yield Prospectus, dated April 11, 2002,was issued by the CVMQ;
11. The High Yield Trust isa reporting issuer in the Province of Québec and isnot in default of any requirements of the Québec Actor the Regulations to the Québec Act;
12. The High Yield Trust wasestablished for the purpose of acquiring a portfolio consistingprimarily of high yield debt securities including corporatebonds and bank loans (the "High Yield Portfolio").The return to holders of Capital Yield Units and the CapitalYield Trust will be dependent upon the return of the HighYield Trust and the High Yield Portfolio by virtue of theForward Agreement;
13. To provide the High YieldTrust with the funds to purchase the High Yield Portfolio,on April 23, 2002, the High Yield Trust issued units to theCounterparties for an aggregate subscription price of $117,437,513.76.On May 23, 2002, the High Yield Trust issued additional unitsto the Counterparties upon the exercise of an over-allotmentoption for an aggregate subscription price of $9,599,997.01.The total aggregate subscription price of these issuancesis $127,037,510.77. The issuances were made in reliance onthe prospectus and registration exemptions under section 2.3of Rule 45-501;
14. In connection with thisdistribution, the High Yield Trust has filed a Form 45-501F1and is awaiting the outcome of this application to submitthe related fees required under section 7.3 of Rule 45-501;
15. Pursuant to subsection18(2) of Schedule 1 of Ontario Regulation 1015, the CapitalYield Trust has paid fees totalling $27,685.26 to the Commissionin connection with the filing of the preliminary prospectusof the Capital Yield Trust and the Capital Yield Prospectusqualifying the distribution of the Capital Yield Units;
16. If the relief sought isnot granted, the High Yield Trust will be required to paythe amount of $20,326.00 in fees to the Commission in respectof the distribution of the units of the High Yield Trust tothe Counterparties;
AND UPON the Commissionbeing satisfied that to do so would not be prejudicial to thepublic interest;
IT IS ORDERED, pursuantto section 147 of the Act, that the High Yield Trust is exemptfrom the requirement to pay the fees applicable to the filingof a Form 45-501F1 under section 7.3 of Rule 45-501 in connectionwith the issuance of the units of the High Yield Trust by theHigh Yield Trust to the Counterparties.
July 9, 2002.
"Paul M. Moore" "R.W. Korthals"