Mutual Reliance Review System for ExemptiveRelief Applications - Dutch auction issuer bid - With respectto securities tendered at or below the clearing price - Offerorexempt from the requirement in the legislation to take up andpay for securities proportionately according to the number ofsecurities deposited by each securityholder, the associateddisclosure requirement, and the valuation requirement on thebasis that there is a liquid market for the securities.
Ontario Statutes Cited
Securities Act, R.S.O. 1990, c. S.5, as am,ss. 95(7) and 104(2)(c).
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,
MANITOBA, ONTARIO, QUEBEC, NOVA SCOTIA,
NEWFOUNDLAND & LABRADOR
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
DUNDEE REALTY CORPORATION
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,Quebec, Nova Scotia, Newfoundland and Labrador (the "Jurisdictions")has received an application (the "Application") fromDundee Realty Corporation ("Dundee") for a decisionunder the securities legislation of the Jurisdictions (the "Legislation")that, in connection with the proposed purchase by Dundee ofa portion of its outstanding common shares (the "Shares")pursuant to an issuer bid (the "Offer"), Dundee beexempt from the requirements in the Legislation to:
(i) take-up and pay for securities proportionatelyaccording to the number of securities deposited and not withdrawnby each securityholder (the "Proportionate Take-up andPayment Requirement");
(ii) provide disclosure in the issuer bid circular(the "Circular") of such proportionate take-up andpayment (the "Associated Disclosure Requirement");and
(iii) obtain a valuation of the Shares and provide disclosurein the Circular of such valuation, or a summary thereof (the"Valuation Requirement").
AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this Application;
AND WHEREAS Dundee has represented tothe Decision Makers that:
1. Dundee is a reporting issuer or the equivalentin each of the Jurisdictions.
2. Dundee is not in default of any requirementof the Legislation and is not on the list of defaulting reportingissuers maintained pursuant to such Legislation, where applicable.
3. The authorized capital of Dundee includesan unlimited number of Shares, of which approximately 16,687,408were issued and outstanding as of August 7, 2002.
4. The Shares are listed and posted for tradingon The Toronto Stock Exchange (the "TSX"). On August7, 2002, the closing price of the Shares on the TSX was $15.65per Share. Based upon such closing price, the Shares had anaggregate market value of approximately $261,157,935 on suchdate.
5. To the knowledge of management of Dundee,the only person or company that owns, directly or indirectly,or exercises control or direction over, more than 10% of theoutstanding Shares is Dundee Bancorp Inc. ("Bancorp"),which owns approximately 6,909,245 Shares, representing approximately41.4% of the outstanding Shares. Bancorp has advised Dundeethat Bancorp does not intend to tender any Shares to the Offer.
6. Pursuant to the Offer, Dundee proposes toacquire 1,500,000 Shares, representing approximately 9% of theoutstanding Shares.
7. The Offer will be made pursuant to a modifiedDutch auction procedure (the "Procedure") as follows:
(a) the Circular will specify that the aggregatenumber of Shares (the "Specified Number") that Dundeeintends to purchase under the Offer will be 1,500,000;
(b) the Circular will also specify that therange of prices (the "Range") within which Dundeeis prepared to purchase Shares under the Offer is from $15.50to $17.00 per Share;
(c) holders of Shares (collectively, the "Shareholders")wishing to tender to the Offer will have the right to either:(i) specify the lowest price within the Range at which the Shareholderis willing to sell some or all of their Shares (an "AuctionTender"); or (ii) elect to be deemed to have tendered someor all of their Shares at the Clearing Price determined in accordancewith subparagraph 7(e) below (a "Purchase Price Tender");
(d) all Shares tendered by Shareholders whofail to specify any tender price for such tendered Shares andfail to indicate that they have tendered such Shares pursuantto a Purchase Price Tender will be considered to have been tenderedpursuant to a Purchase Price Tender;
(e) the purchase price (the "Clearing Price")of the Shares tendered to the Offer will be the lowest pricethat will enable Dundee to purchase the Specified Number andwill be determined based upon the number of Shares tenderedand not withdrawn pursuant to an Auction Tender at each pricewithin the Range and tendered and not withdrawn pursuant toa Purchase Price Tender, with each Purchase Price Tender beingconsidered a tender at the lowest price within the Range forthe purpose of calculating the Clearing Price;
(f) the aggregate amount that Dundee will expendpursuant to the Offer will not be ascertained until the ClearingPrice is determined;
(g) all Shares tendered and not withdrawn ator below the Clearing Price pursuant to an Auction Tender andall Shares tendered and not withdrawn pursuant to a PurchasePrice Tender will be taken up and paid for at the Clearing Price,subject to pro ration if the aggregate number of Shares tenderedand not withdrawn at or below the Clearing Price pursuant toAuction Tenders and the number of Shares tendered and not withdrawnpursuant to Purchase Price Tenders exceeds the Specified Number;
(h) all Shares tendered and not withdrawn atprices above the Clearing Price will be returned to the tenderingShareholders;
(i) in the event more than the Specified Numberof Shares are tendered at or below the Clearing Price (an "Over-Subscription"),the Shares to be purchased by Dundee will be pro rated fromthe Shares so tendered;
(j) all Shares tendered and not withdrawn byShareholders who specify a tender price for such tendered Sharesthat falls outside the Range will be considered to have beenimproperly tendered, will be excluded from the determinationof the Clearing Price, will not be purchased by Dundee and willbe returned to the tendering Shareholders;
(k) tendering Shareholders who make either anAuction Tender or a Purchase Price Tender but fail to specifythe number of Shares that they may wish to tender to the Offerwill be considered to have tendered all Shares held by suchShareholder; and
(l) if the aggregate number of Shares validlytendered, or deemed to have been tendered, to the Offer at orbelow the Clearing Price and not withdrawn is less than or equalto the Specified Number, Dundee will purchase all Shares sodeposited.
8. Prior to the expiry of the Offer, all informationregarding the number of Shares tendered and the prices at whichsuch Shares are tendered will be kept confidential, and thedepository under the Offer will be directed by Dundee to maintainsuch confidentiality until the Clearing Price is determined.
9. Since the Offer is for less than all theShares, if the number of Shares tendered to the Offer at orbelow the Clearing Price and not withdrawn exceeds the SpecifiedNumber, the Proportionate Take-Up and Payment Requirement wouldrequire Dundee to take-up and pay for deposited Shares proportionately,according to the number of Shares deposited by each Shareholder.In addition, the Associated Disclosure Requirement would requiredisclosure in the Circular that Dundee would, if Shares tenderedto the Offer and not withdrawn exceeded the Specified Number,take-up such Shares proportionately according to the numberof Shares tendered and not withdrawn by each Shareholder.
10. During the 12 months ended July 31, 2002:
(a) the number of outstanding Shares was atall times at least 5,000,000, excluding Shares that either werebeneficially owned, directly or indirectly, or over which controlor direction was exercised, by related parties to Dundee orwere not freely tradeable;
(b) the aggregate trading volume of the Shareson the TSX was at least 1,000,000, Shares;
(c) there were at least 1,000 trades in Shareson the TSX; and
(d) the aggregate trading value based on theprice of the trades referred to in paragraph (c) above was atleast $15,000,000.
11. The market value of the Shares on the TSXwas at least $75,000,000 for the month of July 2002.
12. As a result of the information containedin paragraphs 10 and 11 above and because it is reasonable toconclude that, following completion of the Offer, there willbe a market for the beneficial owners of Shares who do not tenderto the Offer that is not materially less liquid than the marketthat exists at the time the Offer is made, Dundee intends torely upon the exemptions from the Valuation Requirement containedin Sections 3.4(3) of Ontario Securities Commission Rule 61-501and Quebec Local Policy Statement Q-27 (the "Presumptionof Liquid Market Exemptions").
13. The Circular will:
(a) disclose the mechanics for the take-up andpayment for, or return of, Shares as described in paragraph7 above;
(b) explain that, by tendering Shares at thelowest price in the Range or pursuant to a Purchase Price Tender,a Shareholder can reasonably expect that Shares so tenderedwill be purchased at the Clearing Price, subject to pro rationas described in paragraph 7 above;
(c) describe the effect that the Offer, if successful,will have on the direct or indirect voting interest of Bancorp;
(d) disclose the facts supporting Dundee's relianceon the Presumption of Liquid Market Exemptions, calculated withreference to the date of the announcement of the Offer; and
(e) except to the extent exemptive relief isgranted by this decision, contain the disclosure prescribedby the Legislation for issuer bids.
AND WHEREAS under the System this MRRSDecision Document evidences the decision of each Decision Maker(collectively, the "Decision");
AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;
THE DECISION of the Decision Makers underthe Legislation is that, in connection with the Offer, Dundeeis exempt from the Proportionate Take-up and Payment Requirement,the Associated Disclosure Requirement, and the Valuation Requirement,provided that Shares tendered to the Offer and not withdrawnare taken up and paid for, or returned to the Shareholders,in accordance with the Procedure.
September 4, 2002.
"Robert W. Korthals" "Robert L. Shirriff"