Parkland Corporation et al.
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- issuer granted relief from the requirement to include prospectus-level disclosure, including financial statements in an information circular, for an entity for which securities are being distributed in connection with a restructuring transaction.
Applicable Legislative Provisions
National Instrument 51-102 Continuous Disclosure Obligations, s. 13.1.
Form 51-102F5 Information Circular, s. 14.2.
Citation: Re Parkland Corporation, 2025 ABASC 79
May 26, 2025
IN THE MATTER OF
THE SECURITIES LEGISLATION
OF ALBERTA AND ONTARIO
(the Jurisdictions)
AND
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF
PARKLAND CORPORATION
(Parkland),
NUSTAR GP HOLDINGS, LLC
(SunocoCorp)
AND
SUNOCO LP
(Sunoco, and collectively with Parkland and Sunoco Corp, the Filers)
DECISION
Background
The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filers for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting the Filers from the requirement under the Legislation to provide certain prospectus-level disclosure in respect of SunocoCorp pursuant to Section 14.2 of Form NI 51-102F5 Information Circular (Form 51-102F5) in the management information circular (the Circular) to be sent to current holders (Shareholders) of common shares in the capital of Parkland (the Common Shares) in connection with an annual general and special meeting of the Shareholders expected to be held on June 24, 2025 to consider, among other things, the indirect acquisition by Sunoco of all of the issued and outstanding Common Shares pursuant to a plan of arrangement (the Arrangement) involving the Filers and 2709716 Alberta Ltd. (the Purchaser). In particular, the Filers seek an exemption permitting the Circular to
(a) omit historical financial statements, related management's discussion and analysis (MD&A) and similar disclosure with respect to SunocoCorp; and
(b) treat Parkland and Sunoco as the combined entity for purposes of the required pro forma financial statements and omit pro forma financial statements of SunocoCorp
(the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Alberta 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 in British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut; and
(c) this 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 National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
Representations
This decision is based on the following facts represented by the Filers:
Parkland
1. Parkland is a corporation existing under the Business Corporations Act (Alberta) (ABCA) with its head office in Calgary, Alberta.
2. Parkland is a reporting issuer in each of the provinces and territories of Canada, and is not in default of the securities legislation of any of those jurisdictions.
3. Parkland's Common Shares are listed on the Toronto Stock Exchange under the symbol "PKI".
Sunoco
4. Sunoco is a Delaware master limited partnership with its head office in Dallas, Texas.
5. Sunoco's common units are listed on the New York Stock Exchange (NYSE) under the symbol "SUN".
6. Sunoco files continuous disclosure documents in accordance with the requirements of the SEC, including annual and quarterly reports on Forms 10-K and 10-Q respectively. Accordingly, Sunoco has an extensive public disclosure record that will form the basis for the prospectus-level disclosure concerning Sunoco in the Circular.
7. Sunoco is an "SEC issuer" within the meaning of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102), and an "SEC foreign issuer" within the meaning of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107).
8. As a result, Sunoco will be entitled to rely on section 3.9 of NI 52-107, which provides that a foreign issuer's financial statements referred to in paragraph 2.1(2) of NI 52-107 (including in a management information circular) may be prepared in accordance with U.S. GAAP, if the issuer is an SEC foreign issuer.
SunocoCorp
9. SunocoCorp is a Delaware limited liability company and a wholly-owned subsidiary of Sunoco. It is a private holding company that does not carry on business and is not subject to independent continuous disclosure requirements in any jurisdiction.
10. The sole assets and liabilities of SunocoCorp consist of (a) limited liability company interests in NuStar GP LLC (NuStar GP), (b) limited partnership interests in Riverwalk Logistics, L.P. (Riverwalk), and (c) the common shares of the Purchaser.
11. As a wholly-owned subsidiary, SunocoCorp does not prepare standalone annual financial statements and is instead consolidated into the financial statements of Sunoco.
Purchaser
12. The Purchaser is a newly formed corporation incorporated under the ABCA. Its purpose is to effect the Arrangement. The sole shareholder of the Purchaser is SunocoCorp.
The Arrangement
13. Pursuant to the terms of the arrangement agreement dated May 4, 2025 among the Filers and the Purchaser (as amended, restated, replaced or supplemented from time to time, the Arrangement Agreement), the Shareholders will receive 0.295 common units representing limited liability company interests of SunocoCorp (the SunocoCorp Units) and C$19.80 for each Common Share. Shareholders can elect, in the alternative, to receive C$44.00 per Common Share in cash or 0.536 SunocoCorp Units for each Common Share, subject to proration to ensure that the aggregate consideration payable in connection with the transaction does not exceed C$19.80 in cash per Common Share outstanding as of immediately before closing and 0.295 SunocoCorp Units per Common Share outstanding as of immediately before closing.
14. As part of a mandatory pre-closing reorganization (the Reorganization), among other things:
(a) SunocoCorp's name will be changed from "NuStar GP Holdings, LLC" to "SunocoCorp LLC" or such other name as determined by SunocoCorp;
(b) Riverwalk will convert from a Delaware limited partnership to a Delaware limited liability company;
(c) SunocoCorp will form a new U.S. limited liability company (SunocoCorp Midco) and subscribe for limited liability company interests in SunocoCorp Midco in exchange for all the equity of the Purchaser;
(d) NuStar GP and SunocoCorp will distribute all of the equity of their subsidiaries (other than, in the case of SunocoCorp, the equity of NuStar GP) to Sunoco;
(e) SunocoCorp will sell all of the equity of NuStar GP to Energy Transfer LP, the indirect owner of the general partner of Sunoco.
(f) Sunoco will sell SunocoCorp to NuStar GP; and
(g) SunocoCorp will transfer its SunocoCorp Midco shares to Sunoco Retail LLC as a capital contribution.
The Reorganization will result in Sunoco indirectly holding all the shares of the Purchaser and SunocoCorp holding no assets immediately prior to the Arrangement.
15. Subsequently, as part of, or in connection with, the Arrangement,
(a) SunocoCorp Units will be delivered to the former shareholders of Parkland and be publicly listed on the NYSE; and
(b) SunocoCorp will hold a new class of common units of Sunoco representing limited partnership interests in Sunoco (the Sunoco Class D Common Units) that are economically equivalent to Sunoco's publicly-traded common units on the basis of one Sunoco common unit for each outstanding SunocoCorp Unit, subject to a dividend equivalence requirement whereby each time Sunoco pays a distribution on Sunoco's publicly-traded common units for a period of two years following closing of the Arrangement, SunocoCorp will declare and pay on the SunocoCorp Units a distribution equal to 100% of the distributions paid by Sunoco on each such common unit, and Sunoco will ensure that SunocoCorp has sufficient cash available necessary to pay such distributions when due.
16. Following the completion of the Arrangement, SunocoCorp's assets will be its interest in Sunoco (the Sunoco Class D Common Units), and therefore the value of SunocoCorp's equity will be directly tied to the value of Sunoco's business (i.e., following the closing, the performance of the combined business of Sunoco and the Filer, and the resulting amount of any dividends/distributions made by Sunoco during a two-year equivalency period).
17. The Arrangement constitutes a "restructuring transaction" under NI 51-102. Accordingly, prospectus-level disclosure regarding SunocoCorp is required under Item 14.2 of NI 51-102.
The Circular
18. Section 14.2 of Form 51-102F5 requires the Circular to include prospectus-level disclosure for SunocoCorp, including audited annual financial statements, unaudited interim financial statements, related MD&A, and pro forma financial statements for the combined entity (i.e., SunocoCorp and Parkland).
19. Parkland and Sunoco will include prospectus-level disclosure regarding Sunoco in the Circular, including historical financial statements and pro forma financial statements for the combined entity (i.e., Sunoco and Parkland). The Circular will also contain extensive disclosure with respect to SunocoCorp and Sunoco on a go-forward basis, including risk factors.
20. With respect to financial information specifically, Parkland and Sunoco will include in the Circular:
(a) audited annual financial statements of Sunoco for the most two most recently completed financial years (i.e., the years ended December 31, 2024 and December 31, 2023), including:
(i) a statement of comprehensive income, a statement of changes in equity and a statement of cash flow for each of the two most recently completed financial years;
(ii) a statement of financial position as at the end of the two most recently completed financial years; and
(iii) notes to the annual financial statements;
(b) a comparative interim financial report of Sunoco for the most recently completed interim period (i.e., the three months ended March 31, 2025), including:
(i) a statement of financial position as at the end of the interim period and a statement of financial position as at the end of the immediately preceding financial year;
(ii) a statement of comprehensive income, a statement of changes in equity and a statement of cash flows, all for the year-to-date interim period, and comparative financial information for the corresponding interim period in the immediately preceding financial year; and
(iii) notes to the interim financial report;
(c) financial statements with respect to NuStar Energy L.P. (NuStar), which Sunoco acquired on May 3, 2024, including:
(i) an audited statement of comprehensive income, a statement of changes in equity and a statement of cash flows of NuStar for the most recently completed financial year ended on or before the acquisition date (i.e., for the year ended December 31, 2023) and the financial year immediately preceding the most recently completed financial year (i.e., the year ended December 31, 2022);
(ii) an audited statement of financial position of NuStar as at the end of each of the periods specified above;
(iii) notes to the financial statements in (i) and (ii); and
(iv) financial statements of NuStar for the most recently completed interim period or other period that started the day after the date of the statement of financial position in (ii) above and ended, (A) in the case of an interim period, before the acquisition date; or (B) in the case of a period other than an interim period, after the interim period referred to in (A) and on or before the acquisition date;
(d) pro forma financial statements, including:
(i) a pro forma consolidated statement of financial position of Sunoco as at the date of the most recent statement of financial position included in the Circular (i.e., March 31, 2025), that gives effect to the Arrangement as if it had taken place as at the date of the pro forma statement of financial position;
(ii) a pro forma consolidated income statement of Sunoco that gives effect to the NuStar transaction, the Arrangement, and the sale by Sunoco of convenience stores located in West Texas, New Mexico and Oklahoma as if all had occurred at the beginning of the most recently completed financial year (i.e., January 1, 2024) for each of the following periods: (A) the most recently completed financial year included in the Circular (i.e., December 31, 2024); and (B) interim period ended immediately before the date of the Circular (i.e. March 31, 2025); and
(iii) pro forma earnings per share based on the pro forma financial statements referred to in (i) and (ii) above; and
(e) MD&A for each of the audited financial statements of Sunoco (i.e., for the years ended December 31, 2024 and December 31, 2023) and interim financial reports of Sunoco (i.e., for the three months ended March 31, 2025) included in the Circular.
Exemption Sought
21. Including full prospectus-level disclosure in respect of SunocoCorp will not assist the Shareholders with their assessment of the Arrangement since, following the transactions contemplated by the Arrangement Agreement, SunocoCorp will have no assets or liabilities other than (a) the Sunoco Class D Common Units and (b) as otherwise set out in the Arrangement Agreement.
22. Including the disclosure detailed in paragraphs 19 and 20 above in the Circular will provide Shareholders with all of the material information with respect to SunocoCorp and Sunoco on a go-forward basis required to assess the Arrangement, and will ensure that Shareholders understand that following the completion of the Arrangement SunocoCorp will not have any assets or liabilities other than as set out above.
Decision
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Makers to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted, provided that the Circular includes the disclosure set forth in paragraphs 19 and 20.
"Timothy Robson"
Manager, Legal, Corporate Finance
Alberta Securities Commission
OSC File #: 2025/0313