Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- filer is seeking relief from the requirements to include in a business acquisition report certain financial statements required in respect of an acquisition made by the filer constituting a "significant acquisition" -- the missing financial statements relate to holding companies that are immaterial to the acquisition or to the filer -- required financial statements cannot be prepared under U.S. GAAP -- alternative business acquisition report financial disclosure will provide investors with all information material to their understanding of the acquisition. Relief granted subject to alternative business acquisition report financial disclosure being provided.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations, ss. 8.4, 13.1.

April 21, 2014

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 CHEMTRADE LOGISTICS INCOME FUND (the "Filer")

DECISION

Background

The principal regulator in the Jurisdiction ("Principal Regulator") has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the "Legislation") for an exemption under Part 13 of National Instrument 51-102 Continuous Disclosure Obligations ("NI 51-102") from the requirements to include in a business acquisition report ("BAR") certain financial statements required under Part 8 of NI 51-102 in respect of an acquisition made by the Filer constituting a "significant acquisition" for the purpose of NI 51-102, provided that the Filer include in the BAR alternative financial information (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;

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 by the Filer in each of the provinces and territories of Canada other than Ontario.

Interpretation

Terms defined in NI 51-102 have the same meaning in this decision as in NI 51-102. Certain other defined terms have the meanings given to them below under "Representations".

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a limited purpose trust existing under the laws of the Province of Ontario and has its head office in Toronto, Ontario.

2. The Filer is a reporting issuer in all Jurisdictions and, to its knowledge, is not in default of its obligations under the securities legislation of any of these jurisdictions.

3. The trust units of the Filer are listed and posted for trading on the Toronto Stock Exchange under symbol "CHE.UN".

4. The financial year end of the Filer is December 31.

5. On December 4, 2013, the Filer announced that it had entered into an agreement to acquire (the "Acquisition") General Chemical Holding Company ("General Chemical"), by way of a merger between a wholly-owned subsidiary of the Filer and ASP GT Holding Corp. ("ASP"), the indirect parent of General Chemical.

6. Prior to the closing of the Acquisition, ASP's direct wholly-owned subsidiary, GenTek Inc. ("GenTek") held a 98.4% direct interest in General Chemical and a 98% direct interest in GenTek Technologies Marketing Inc. ("GTMI"). General Chemical and its subsidiaries collectively operated ASP's chemical business while GTMI and its subsidiaries collectively operated ASP's automotive business.

7. Prior to the closing of the Acquisition, ASP and GenTek did not have any independent operations outside of their ownership of General Chemical and GTMI. ASP filed tax returns with its subsidiaries on a consolidated basis, and tax liabilities were allocated among the companies in the group according to the terms of a tax sharing agreement (which was terminated prior to the closing of the Acquisition). In accordance with the terms of the Acquisition, cash and pre-acquisition tax refunds and liabilities of ASP and GTMI were generally for the account of the shareholders of ASP. Cash flows of ASP and GTMI related to the tax sharing agreement, dividends received from their subsidiaries and dividends paid to their shareholders.

8. Immediately prior to the closing of the Acquisition, GenTek implemented an internal reorganization (the "Reorganization") to spin out GTMI. As a result, at the time of the closing of the Acquisition, ASP and GTMI did not have material operations, assets or liabilities other than their interests in General Chemical.

9. The Acquisition was completed on January 23, 2014.

10. To finance a portion of the Acquisition, the Filer filed a final short form prospectus (the "Prospectus") dated January 16, 2014 in respect of a "bought deal" public offering (the "Offering") of subscription receipts, each representing the right to receive one trust unit of the Filer without further action or payment of additional consideration on the satisfaction of certain conditions.

11. The Offering was completed on January 23, 2014.

12. The Filer, being aware of the financial disclosure requirements under National Instrument 44-101 -- Short Form Prospectus Distributions ("NI 44-101") in respect of a significant proposed acquisition, held discussions with ASP and their respective auditors regarding the type of financial disclosure required in order to satisfy such requirements.

13. The Filer requested that ASP provide carve-out historical financial statements for ASP reflecting the Reorganization for ASP's financial years ended December 31, 2012 and 2011 and the nine month periods ended September 30, 2013 and 2012 (collectively, the "Historical Carve-Out Financial Statements"), all as contemplated by Part 10 of Form 44-101F1 (and, by extension, Part 8 of NI 51-102 and Section 8.6 of 51-102CP).

14. ASP prepared its financial statements in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). ASP determined that the Historical Carve-Out Financial Statements would not be in accordance with U.S. GAAP, and its auditor concurred with ASP. U.S. GAAP requires a legal entity to use a consolidated basis of presentation for its financial statements. In that presentation, all majority-owned subsidiaries -- all entities in which a parent has a controlling financial interest -- are required to be included. There is no basis of presentation that allows for a legal entity to "carve-out" a business that is currently owned and controlled and exclude it from a set of consolidated financial statements. The Filer's auditor concurred with the foregoing.

15. Prior to filing a preliminary short form prospectus in respect of the Offering, the Filer submitted an application under Part 8 of NI 44-101 from the requirement in Part 10 of Form 44-101F1 (and, by extension, Part 8 of NI 51-102) to include consolidated carve-out financial statements of ASP excluding GMTI in the short form prospectus. In lieu of such financial statements, the Filer proposed to include the following financial statements and information:

(a) consolidated financial statements of General Chemical, including: (i) audited consolidated statements of operations, balance sheets, statements of cash flows and statements of changes in equity of General Chemical for the years ended December 31, 2012 and 2011, together with the notes thereto and the independent auditors report thereon, and (ii) unaudited consolidated statements of operations, statements of comprehensive income, balance sheets, statements of cash flows and statements of changes in equity of General Chemical for the nine month periods ended September 30, 2013 and 2012, together with the notes thereto;

(b) a summary of the operations, assets and liabilities of ASP and GenTek as at September 30, 2013, December 31, 2012 and December 31, 2011, presented on a "parent-only" basis and excluding the ownership of their subsidiaries and intercompany balances; and

(c) pro forma consolidated financial statements of the Filer giving effect to the Acquisition, together with the notes thereto, including:

(i) pro forma statement of financial position as at September 30, 2013, that gives effect, as if it had taken place as at the date of the pro forma statement of financial position, to the Acquisition;

(ii) pro forma statement of earnings that gives effect to the Acquisition for the nine month period ended September 30, 2013, as if the Acquisition had taken place at the beginning of the financial year; and

(iii) pro forma statement of earnings that gives effect to the Acquisition for the year ended December 31, 2012, as if the Acquisition had taken place at the beginning of the financial year,

(collectively, the "Alternative Prospectus Financial Disclosure").

16. On January 17, 2014, the Principal Regulator issued a receipt (the "Final Receipt") in respect of the Prospectus. The Final Receipt evidenced the granting by the Principal Regulator of the above-mentioned exemptive relief requested by the Filer. The Prospectus included the Alternative Prospectus Financial Disclosure.

17. The Acquisition is a "significant acquisition" as contemplated by Part 8 of NI 51-102. Accordingly, the Filer is required to file a BAR in respect of the Acquisition.

18. Pursuant to Section 8.4 of NI 51-102 and Item 3 of Form 51-102F4, absent the Exemption Sought, the Filer would be required to include in its BAR for the Acquisition the following financial statements:

(a) consolidated financial statements of ASP, including consolidated statements of operations, statements of comprehensive income, balance sheets, statements of cash flows and statements of changes in equity of ASP for the years ended December 31, 2013 and December 31, 2012, together with the notes thereto;

(b) the independent auditors report on the consolidated financial statements of ASP, including audited consolidated statements of operations, statements of comprehensive income, balance sheets, statements of cash flows and statements of changes in equity of ASP for the year ended December 31, 2013, together with the notes thereto; and

(c) pro forma consolidated financial statements of the Filer giving effect to the Acquisition, together with the notes thereto, including:

(i) pro forma statement of financial position as at December 31, 2013, that gives effect, as if it had taken place as at the date of the pro forma statement of financial position, to the Acquisition; and

(ii) pro forma income statement that gives effect to the Acquisition for the year ended December 31, 2013, as if the Acquisition had taken place at the beginning of the financial year,

(collectively, the "BAR Carve-Out Financial Statements").

19. In lieu of the foregoing financial statements, the Filer proposes to include the following financial statements and information in the BAR:

(a) consolidated financial statements of General Chemical, including consolidated statements of operations, statements of comprehensive income, balance sheets, statements of cash flows and statements of changes in equity of General Chemical for the years ended December 31, 2013 and December 31, 2012, together with the notes thereto;

(b) independent auditors report on the consolidated financial statements of General Chemical, including audited consolidated statements of operations, statements of comprehensive income, balance sheets, statements of cash flows and statements of changes in equity of General Chemical for the year ended December 31, 2013, together with the notes thereto;

(c) a summary of the operations, assets and liabilities of ASP and GenTek as at December 31, 2013 and December 31, 2012, presented on a "parent-only" basis and excluding the ownership of their subsidiaries and intercompany balances; and

(d) pro forma consolidated financial statements of the Filer giving effect to the Acquisition, together with the notes thereto, including:

(i) a pro forma statement of financial position as at December 31, 2013 that gives effect to the Acquisition as if it had taken place as at December 31, 2013; and

(ii) a pro forma statement of earnings for the year ended December 31 that gives effect the Acquisition as if it had taken place at the beginning of the financial year,

(collectively, the "Proposed BAR Financial Disclosure").

20. Pursuant to section 3.11 of National Instrument 52-107 -- Acceptable Accounting Principles and Auditing Standards ("NI 52-107"), the acquisition statements to be included in the BAR may be prepared in accordance with U.S. GAAP, which is the basis upon which ASP and its subsidiaries prepare their financial statements.

21. The BAR Carve-Out Financial Statements cannot be prepared in accordance with U.S. GAAP.

22. The Proposed BAR Financial Disclosure will provide investors with specific financial information about the business acquired by the Filer and provide substantially the same financial information as would be provided if the BAR Carve-Out Financial Statements were included in the BAR.

23. The Principal Regulator granted substantially similar relief in connection with the Offering by permitting the Filer to include the Alternative Prospectus Financial Disclosure in the Prospectus as described above.

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 is that the Exemption Sought is granted provided that the BAR includes (or incorporates by reference) the Proposed BAR Financial Disclosure.

"Shannon O'Hearn"
Manager, Corporate Finance