Date: October 22, 2007
In the Matter of
the Securities Legislation of British Columbia,
Alberta, Saskatchewan, Manitoba, Ontario,
Nova Scotia, Newfoundland and Labrador and
New Brunswick (the “Jurisdictions”)
― and ―
In the Matter of
the Mutual Reliance Review System
for Exemptive Relief Applications
― and ―
In the Matter of
Prism Medical Ltd. (the “Filer”)
MRRS DECISION DOCUMENT
Background
The local securities regulatory authority or regulator (the “Decision Maker”) in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the “Legislation”) that, in connection with the proposed purchase by the Filer of a portion of its outstanding common shares (“Shares”) pursuant to an issuer bid (the “Offer”), the Filer be exempt from the requirements in the Legislation (the “Requested Relief”):
(a) to take up and pay for securities proportionately according to the number of securities deposited by each securityholder; and
(b) to provide disclosure in the issuer bid circular (the “Circular”) of such proportionate take-up and payment; and
(c) to state the number of securities sought under the Offer (the “Number of Securities Requirement”).
Under the Mutual Reliance Review System for Exemptive Relief Applications:
(a) the Ontario Securities Commission is the principal regulator for this application; and
(b) this MRRS decision document evidences the decision of each Decision Maker.
Interpretation
Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are defined in this decision.
“Shareholders” means, collectively, holders of Shares; and
“TSXV” means TSX Venture Exchange.
Representations
This decision is based on the following facts represented by the Filer:
2. The Filer is a reporting issuer in each of the Jurisdictions. It is not in default of any requirement of the Legislation and is not on the list of defaulting reporting issuers maintained pursuant to such Legislation, where applicable.
3. The Filer was incorporated under the Business Corporations Act (Ontario) by articles of incorporation dated February 15, 1996.
4. The authorized capital of the Filer consists of an unlimited number of Shares, of which approximately 6 million were issued and outstanding as at September 24, 2007.
5. The Shares are listed and posted for trading on the TSXV.
6. To the best of the Filer’s knowledge, the only Shareholders that hold more than 10% of the Shares are Mr. L. Lamont Gordon (as to approximately 14%) and Mr. Clive Ecroyd, an officer and director of the Filer (as to approximately 10%). In addition, Yellow Point Equity Partners Limited Partnership holds $5,450,000 principal amount of the Filer’s subordinated convertible debentures which are convertible into Shares representing approximately 18.4% of the Shares on a fully-diluted basis.
7. As at September 13, 2007, the last day on which Shares were traded on the TSXV before the Offer was announced, the closing price of the Shares on the TSXV was $2.90 and on such date the outstanding Shares had an aggregate market value of approximately $17,400,000, based on such closing price.
(a) the Circular specifies that the maximum amount that the Filer will spend pursuant to the Offer is $4,000,000 (the “Specified Amount”);
(b) the Circular specifies the range of prices within which the Filer is prepared to purchase such Shares (the “Price Range”);
(c) each Shareholder wishing to tender to the Offer has the right either to:
(i) specify the lowest price within the Price Range at which such Shareholder is willing to sell its tendered Shares (an “Auction Tender”); or
(ii) not specify a price but elect to be deemed to have tendered the Shares purchased at the Purchase Price (determined according to subparagraph 8(e) below) (a “Purchase Price Tender”);
(d) the aggregate dollar amount the Filer will spend pursuant to the Offer will remain variable until the Purchase Price is determined and the prorating is calculated in accordance with the procedures outlined on subparagraph 8(h) below;
(f) all Shares tendered at prices above the Purchase Price will be returned to the appropriate Shareholders;
(g) all Shares tendered at or below the Purchase Price will be taken up and paid for at the Purchase Price, subject to pro ration as described under subparagraph (h) below;
(j) by the time any extended bid period is over, the Offer may be over-subscribed, in which case the Filer intends to pro-rate only among the tendered Shares received during the extension and after the original expiration date.
10. Since the Offer is for less than all the Shares, if the number of Shares tendered to the Offer exceeds the Specified Amount worth of Shares, the Legislation would require the Filer to take up and pay for deposited Shares proportionately, according to the number of Shares deposited by each Shareholder. In addition, the Legislation would require the Filer to disclose in the Circular that the Filer would, if Shares tendered to the Offer exceeded the Specified Amount worth of Shares, take up such Shares proportionately according to the number of Shares tendered by each Shareholder. The Filer cannot comply with the Number of Securities Requirement because it cannot specify the number of Shares it will acquire pursuant to the procedure described in paragraph 8 above.
11. The Circular:
(a) discloses the mechanics for the take-up of and payment for, or the return of, Shares as described in paragraph 8 above;
(b) explains that, by tendering Shares at the lowest price in the Price Range or under a Purchase Price Tender, a Shareholder can reasonably expect that the Shares so tendered will be purchased at the Purchase Price, subject to proration as described in paragraph 8 above; and
(c) except to the extent exemptive relief is granted by the Decision Makers, contains the disclosure prescribed by the Legislation for issuer bids.
Decision
Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the Decision has been met.
The decision of the Decision Makers under the Legislation is that the Requested Relief is granted provided that Shares deposited under the Offer and not withdrawn are taken up and paid for, or returned to Shareholders, in the manner described in representation 8.
“Harold P. Hands” Commissioner Ontario Securities Commission |
“Suresh Thakrar” Commissioner Ontario Securities Commission |