Andlauer Healthcare Group Inc.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief from provisions in section 8.4 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) permitting the filer exclude pro forma financial statements in the business acquisition report pursuant to section 13.1 of NI 51-102.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am.
February 25, 2020
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 ANDLAUER HEALTHCARE GROUP INC. (the Filer)
The principal regulator in the Jurisdiction has received an application from the Filer (the Application) for a decision under the securities legislation of the Jurisdiction (the Legislation) for relief pursuant to Part 13 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) from certain requirements in Item 3 of Form 51-102F4 and Part 8 of NI 51-102 in respect of a business acquisition report (the BAR) required to be filed by the Filer in connection with the completion of the acquisition (the Acquisition) by the Filer from Andlauer Management Group Inc. (AMG) of 14 entities that collectively operated the healthcare supply chain management business now operated by the Filer (the AHG Entities), so that the BAR is not required to include pro forma financial statements in respect of the Acquisition ( 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 the Application; and
(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 in each of British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Nunavut, the Northwest Territories and Yukon Territory.
Defined terms contained in National Instrument 14-101 Definitions and MI 11-102 have the same meaning in this decision unless they are defined in this decision.
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation incorporated under the laws of the Province of Ontario on November 12, 2019 and operates a healthcare supply chain management business.
2. The Filer's head office is located in Vaughan, Ontario.
3. The Filer is a reporting issuer in each of the provinces and territories of Canada and is not in default of its reporting issuer obligations under the securities legislation of any of the jurisdictions of Canada.
4. The Filer's subordinate voting shares are listed and posted for trading on the Toronto Stock Exchange under the symbol "AND".
5. The Filer did not prepare or maintain stand-alone or pro forma financial statements with respect to each of the AHG Entities. In connection with the closing of the Filer's initial public offering (IPO), the final long-form prospectus of the Filer dated December 4, 2019 (the Prospectus) included condensed and combined historical financial information relating to the AHG Entities and the Filer.
6. On December 11, 2019, the Filer acquired the AHG Entities from AMG. Immediately prior to the Acquisition, each of the AHG Entities was directly or indirectly wholly-owned or controlled by AMG.
7. Following the Acquisition, the Filer will present its financial information together with that of the AHG Entities on a combined basis, in accordance with the Filer's continuous disclosure obligations under NI 51-102.
8. The Filer proposes to include (or incorporate by reference) the following financial statements in the BAR (collectively, the Proposed Financial Statements), all of which were included in the Prospectus and prepared in accordance with IFRS:
(a) Audited annual combined financial statements of the AHG Entities as at December 31, 2018, 2017, 2016 and as at January 1, 2016 and for the fiscal years ended December 31, 2018, December 31, 2017 and December 31, 2016, including:
(i) Combined Balance sheets as at December 31, 2018, December 31, 2017, December 31, 2016 and January 1, 2016;
(ii) Combined Statements of Income and Comprehensive Income for the years ended December 31, 2018, December 31, 2017 and December 31, 2016;
(iii) Combined Statements of Changes in Equity for the years ended December 31, 2018, December 31, 2017 and December 31, 2016; and
(iv) Combined Statements of Cash Flow for the years ended December 31, 2018, December 31, 2017 and December 31, 2016.
(b) Unaudited interim condensed combined financial statements of the AHG Entities as at September 30, 2019 and for the three and nine-month periods ended September 30, 2019 and September 30, 2018, including:
(i) Interim Condensed Combined Balance Sheets as at September 30, 2019 and December 31, 2018;
(ii) Interim Condensed Combined Statements of Income and Comprehensive Income for the three and nine month periods ended September 30, 2019 and September 30, 2018;
(iii) Interim Condensed Combined Statements of Changes in Equity for the nine month periods ended September 30, 2019 and September 30, 2018; and
(iv) Interim Condensed Combined Statements of Cash Flow for the nine month periods ended September 30, 2019 and September 30, 2018.
(c) Balance Sheet of the Filer as at November 12, 2019.
(d) Notes to the Proposed Financial Statements.
9. The Filer submits that granting the Exemption Sought would not be detrimental to the public interest for the following reasons:
(a) Omission of Pro Forma Financial Statements
The Filer was incorporated solely for the purposes of completing the IPO, and had no independent business operations prior to the Acquisition, as depicted on its balance sheet as at November 12, 2019, included in the Prospectus. The Filer conducts its business entirely through the AHG Entities, whose financial position and performance is fully described on a combined basis in the Proposed Financial Statements. Accordingly, the Proposed Financial Statements offer a complete picture of the impact of the Acquisition on the Filer's financial position and financial performance. Any pro forma statements prepared in connection with the BAR would not differ materially from the Proposed Financial Statements.
(b) Other Submissions
The financial information the Filer intends to provide in the BAR is the same as that provided in the Prospectus. When the Filer files its financial statements for the year ended December 31, 2019 (which is expected to occur in mid-March), such financial statements will cover the full fiscal 2019 year, combining the results of the AHG Entities with those of the Filer. Full 2018 results will also be presented for comparative purposes. As a result, there will be no "gap" in the public disclosure, since the Prospectus included results for the AHG Entities through to September 30, 2019.
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 under the Legislation is that the Exemption Sought is granted, provided that the BAR for the Acquisition includes (or incorporates by reference) the Proposed Financial Statements as set out in paragraph 8.