Aimia Inc.

Decision


Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Issuer bid -- Modified Dutch auction -- Application for relief from the requirement to take up and pay for shares on a pro rata basis and the related disclosure requirements for the issuer bid circular (section 2.26 of National Instrument 62-104 Take-Over Bids and Issuer Bids and item 8 of Form 62-104F2) -- Application for relief from the requirement to take up all securities deposited under the issuer bid and not withdrawn if all the terms and conditions of the Offer have been complied with or waived unless the issuer first takes up all shares deposited under the Offer and not withdrawn (subsection 2.32(4) of National Instrument 62-104 Take-Over Bids and Issuer Bids) -- Requested relief granted, subject to conditions.

Applicable Legislative Provisions

National Instrument 62-104 Take-Over Bids and Issuer Bids, ss. 2.26, 2.32(4) and 6.1 and item 8 of Form 62-104F2.

TRANSLATION

April 4, 2019

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
QUÉBEC AND ONTARIO
(the Jurisdictions)

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
AIMIA INC.
(the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for, in connection with the proposed purchase by the Filer of a portion of its outstanding common shares (the Common Shares) pursuant to an issuer bid (the Offer), an exemption from the following requirements in the Legislation (the Exemption Sought):

(a) the proportionate take up requirements in Section 2.26 of Regulation 62-104 respecting Take-Over Bids and lssuer Bids (Chapter V-1.1, r.35) (Regulation 62-104) (the Proportionate Take Up Requirement);

(b) the requirements in Item 8 of Form 62-104F2 to Regulation 62-104 to provide disclosure of the proportionate take up and payment in the issuer bid circular (the Circular) (the Proportionate Take Up Disclosure Requirement); and

(c) the requirements in Section 2.32 of Regulation 62-104 that an issuer bid not be extended if all the terms and conditions of the issuer bid have been complied with or waived unless the Filer first takes up all securities deposited under the issuer bid and not withdrawn (the Extension Take Up Requirement).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Autorité des marchés financiers is the principal regulator for this application;

(b) the Filer has provided notice that subsection 4.7(1) of Regulation 11-102 respecting Passport System (Chapter V-1.1, r.1) (Regulation 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, the Northwest Territories, Yukon and Nunavut; and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in Regulation 14-101 respecting Definitions (Chapter V-1.1, r.3) and Regulation 11-102 have the same meaning if used in this decision, unless otherwise defined herein.

Representations

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

1. The head office and registered office of the Filer is located at 525 Viger Avenue West, Suite 1000, Montréal, Quebec H3A 0B2.

2. The Filer is a reporting issuer in each of the jurisdictions of Canada and the Common Shares are listed for trading on the Toronto Stock Exchange (the TSX) under the symbol "AIM". The Filer is not in default of any requirement of the securities legislation in the jurisdictions of Canada.

3. The Filer's authorized share capital consists of (i) an unlimited number of Common Shares issuable in series and (ii) an unlimited number of preferred shares issuable in series. As of March 20, 2019, there were 152,307,196 Common Shares, 3,953,365 Cumulative Rate Reset Preferred Shares, Series 1, 2,946,635 Cumulative Floating Rate Preferred Shares, Series 2 and 6,000,000 Cumulative Rate Reset Preferred Shares, Series 3 issued and outstanding.

4. On March 20, 2019, the closing price of the Common Shares on the TSX was $3.73. On the basis of this closing price, on such date the Common Shares had an aggregate market value of approximately $568.11 million (on a non-diluted basis).

5. As at March 20, 2019, according to publicly available information, Mittleman Investment Management, LLC (MIM) directly and indirectly owned or exercised control or direction over 27,875,447 Common Shares, representing approximately 18.30% of the issued and outstanding Common Shares.

6. The Filer intends to make the Offer pursuant to which it would offer to purchase that number of Common Shares having an aggregate maximum purchase price of up to $150 million (the Specified Maximum Dollar Amount).

7. Prior to making the Offer, the board of directors of the Filer will have determined that the making of the Offer is in the best interests of the Filer.

8. The purchase price per Common Share will be determined by the Filer through a modified Dutch auction procedure in the manner described below within a range (the Price Range) to be determined by the Filer.

9. The Specified Maximum Dollar Amount has been determined and was announced by the Filer in a press release issued on March 28, 2019. The Price Range will be determined prior to commencement of the Offer. Both the Specified Maximum Dollar Amount and the Price Range will be specified in the Circular.

10. The Filer will fund the purchase of Common Shares pursuant to the Offer, together with the fees and expenses of the Offer, using available cash on hand. The Offer will not be conditional upon the receipt of financing.

11. A holder of Common Shares (a Common Shareholder, and collectively, the Common Shareholders) wishing to tender to the Offer will be able to do so in one of three ways:

(a) by making an auction tender pursuant to which it agrees to sell to the Filer, at a specified price per Common Share within the Price Range (an Auction Price), a specified number of Common Shares (an Auction Tender);

(b) by making a Purchase Price Tender pursuant to which it agrees to sell a number of Common Shares to the Filer at the Purchase Price (as defined below) (a Purchase Price Tender); or

(c) by making a Proportionate Tender pursuant to which it agrees to sell to the Filer that number of Common Shares owned by it that will result in it maintaining its proportionate Common Share ownership following the completion of the Offer at the Purchase Price (a Proportionate Tender).

12. Common Shareholders may deposit some of their Common Shares pursuant to an Auction Tender and deposit different Common Shares pursuant to a Purchase Price Tender. Common Shareholders who tender shares in an Auction Tender and/or a Purchase Price Tender cannot tender shares in a Proportionate Tender. Common Shareholders may not deposit the same Common Shares pursuant to more than one method of tender or pursuant to an Auction Tender at more than one price. Common Shareholders who tender shares in a Proportionate Tender may not tender shares in an Auction Tender or a Purchase Price Tender.

13. Any Common Shareholder who owns fewer than 100 Common Shares and tenders all of such Common Shareholder's Common Shares pursuant to an Auction Tender at or below the Purchase Price or pursuant to a Purchase Price Tender will be considered to have made an Odd Lot Tender.

14. The Filer will determine the purchase price payable per Common Share (the Purchase Price) based on the Auction Prices and the number of Common Shares specified in valid Auction Tenders and Purchase Price Tenders (considered for purposes of determining the Purchase Price to have been tendered at the minimum price per Common Share offered). The Purchase Price will be the lowest price that enables the Filer to purchase that number of Common Shares tendered pursuant to valid Auction Tenders and Purchase Price Tenders having an aggregate purchase price not to exceed an amount (the Auction Tender Limit Amount) equal to (i) the Specified Maximum Dollar Amount less (ii) the product of (A) the Specified Maximum Dollar Amount and (B) a fraction, the numerator of which is the aggregate number of Common Shares owned by Common Shareholders making valid Proportionate Tenders, and the denominator of which is the aggregate number of Common Shares outstanding at the time of expiry of the Offer.

15. If the aggregate purchase price for Common Shares validly tendered pursuant to Auction Tenders at Auction Prices (at or below the Purchase Price) and Purchase Price Tenders is less than or equal to the Auction Tender Limit Amount, the Filer will purchase, at the Purchase Price, all Common Shares so deposited pursuant to Auction Tenders at or below the Purchase Price and Purchase Price Tenders.

16. If the aggregate purchase price for Common Shares validly tendered pursuant to Auction Tenders at Auction Prices (at or below the Purchase Price) and Purchase Price Tenders is greater than the Auction Tender Limit Amount, the Filer will purchase a portion of the Common Shares so deposited pursuant to Auction Tenders (at or below the Purchase Price) and Purchase Price Tenders, determined as follows: (i) the Filer will purchase all such Common Shares tendered by Common Shareholders pursuant to Odd Lot Tenders; and (ii) the Filer will purchase on a pro rata basis that portion of such Common Shares having an aggregate purchase price, based on the Purchase Price, equal to (A) the Auction Tender Limit Amount, less (B) the aggregate amount paid by the Filer for Common Shares tendered pursuant to Odd Lot Tenders, in each of the cases set forth in clauses (i) and (ii) of this paragraph, at the Purchase Price.

17. The Filer will purchase at the Purchase Price that portion of the Common Shares owned by Common Shareholders making valid Proportionate Tenders that results in each tendering Common Shareholder maintaining its proportionate Common Share ownership following completion of the Offer (the Proportionate Take Up).

18. The number of Common Shares that the Filer will purchase pursuant to the Offer and the aggregate purchase price will vary depending on whether the aggregate purchase price payable in respect of Common Shares required to be purchased pursuant to Auction Tenders (at or below the Purchase Price) and Purchase Price Tenders (the Aggregate Tender Purchase Amount) is equal to or less than the Auction Tender Limit Amount. If the Aggregate Tender Purchase Amount is equal to the Auction Tender Limit Amount, the Filer will purchase Common Shares pursuant to the Offer for an aggregate purchase price equal to the Specified Maximum Dollar Amount; if the Aggregate Tender Purchase Amount is less than the Auction Tender Limit Amount, the Filer will purchase proportionately fewer Common Shares in the aggregate, with a proportionately lower aggregate purchase price.

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

20. All Common Shares tendered to the Offer and not taken up will be returned to the appropriate Common Shareholders.

21. Until expiry of the Offer, all information about the number of Common Shares tendered and the prices at which the Common Shares are tendered will be required to be kept confidential by the depositary and the Filer until the Purchase Price has been determined.

22. Common Shareholders who do not accept the Offer will continue to hold the number of Common Shares owned before the Offer and their proportionate Common Share ownership will increase following completion of the Offer.

23. The Filer may elect to extend the bid without first taking up all the Common Shares deposited and not withdrawn under the Offer if the aggregate purchase price for Common Shares validly tendered pursuant to Auction Tenders and Purchase Price Tenders is less than the Auction Tender Limit Amount. Under the Extension Take Up Requirement, 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 deposited and not withdrawn under the issuer bid.

24. The Filer intends to rely on the exemption from the formal valuation requirements applicable to issuer bids under Regulation 61-101 respecting Protection of Minority Security Holders in Special Transactions (Chapter V-1.1, r.33) (Regulation 61-101) set out in subsection 3.4(b) of Regulation 61-101 (the Liquid Market Exemption).

25. There will be a "liquid market" for the Common Shares, as such term is defined in Regulation 61-101, as of the date of the making of the Offer because the test in paragraph 1.2(1)(a) of Regulation 61-101 will be satisfied. ln addition, an opinion will be voluntarily sought by the Filer confirming that a liquid market exists for the Common Shares as of the date of the making of the Offer and such opinion will be included in the Circular (the Liquidity Opinion).

26. Based on the maximum number of Common Shares that may be purchased under the Offer, as of the date of the Offer, it will be reasonable to conclude (and the Liquidity Opinion will provide that it will be reasonable to conclude) that, following the completion of the Offer in accordance with its terms, there will be a market for holders of the Common Shares who do not tender to the Offer that is not materially less "liquid", as such term is defined in Regulation 61-101, than the market that existed at the time of the making of the Offer.

27. The Filer will disclose in the Circular relating to the Offer the following information:

(a) the mechanics for the take up of and payment for Common Shares as described herein;

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

(c) that the Filer has obtained an exemption from the Proportionate Take Up Requirement, the Proportionate Take Up Disclosure Requirement and the Extension Take Up Requirement;

(d) the manner in which an extension of the Offer will be communicated to Common Shareholders;

(e) that Common Shares deposited pursuant to the Offer may be withdrawn at any time prior to the expiry of the Offer;

(f) if known after reasonable inquiry, the name of every person named in item 11 of Form 62-104F2 who has accepted or intends to accept the Offer and the number of Common Shares in respect of which the person has accepted or intends to accept the Offer;

(g) the facts supporting the Filer's reliance on the Liquid Market Exemption and the Liquidity Opinion; and

(h) except to the extent exemptive relief is granted further to this application, the disclosure prescribed by applicable securities laws for issuer bids.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is the Exemption Sought is granted, provided that:

(a) the Filer takes up Common Shares deposited pursuant to the Offer and not withdrawn and pays for such Common Shares, in each case, in the manner described above; and

(b) the Filer is eligible to rely on the Liquid Market Exemption.

"Hugo Lacroix"
Superintendent, Securities Markets
Autorité des marchés financiers