TriSummit Utilities Inc.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Application for relief from the restriction on the issuance of convertible securities pursuant to the qualification criteria of Section 2.3 of National Instrument 44-101 Short Form Prospectus Distributions and Section 2.3 of National Instrument 44-102 Shelf Distributions -- Unlisted Filer seeking to issue preferred shares or debt securities which are convertible into other securities of the Filer -- Securities issuable upon conversion would possess a designated rating as defined in National Instrument 44-101 Short Form Prospectus Distributions and Section 2.3 of National Instrument 44-102 Shelf Distributions -- Relief granted subject to conditions.
Applicable Legislative Provisions
National Instrument 44-101 Short Form Prospectus Distributions, s. 2.3.
National Instrument 44-102 Shelf Distributions, s. 2.3.
Citation: Re TriSummit Utilities Inc., 2021 ABASC 74
May 17, 2021
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 TRISUMMIT UTILITIES INC. (the Filer)
The securities regulatory authority or regulator in each of the Jurisdictions (each a Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting the Filer from the restriction of the qualification criteria set forth in each of Section 2.3 of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101) and Section 2.3 of National Instrument 44-102 Shelf Distributions (NI 44-102) to distributions of non-convertible securities (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.
Terms defined in National Instrument 14-101 Definitions, MI 11-102 and NI 44-101 have the same meanings if used in this decision, unless otherwise defined herein.
The decision is based on the following facts represented by the Filer:
1. The Filer is a corporation organized under the Canada Business Corporations Act (the CBCA).
2. The head and registered office of the Filer is located in Calgary, Alberta.
3. The Filer's authorized share capital consists of an unlimited number of common shares (the Common Shares) and such number of preferred shares issuable in series at any time as have aggregate voting rights either directly or on conversion or exchange that in the aggregate represent less than 50 percent of the voting rights attaching to the then issued and outstanding Common Shares (the Preferred Shares).
4. As of May 10, 2021, there were 30,000,000 Common Shares and no Preferred Shares issued and outstanding.
5. On October 18, 2018, the Filer filed and obtained a receipt from the securities regulatory authority or regulator in each of the provinces and territories of Canada (the Reporting Jurisdictions) for a long form prospectus pursuant to which it became a reporting issuer in the Reporting Jurisdictions (the IPO). In connection with the closing of the IPO, the Common Shares were listed and posted for trading on the Toronto Stock Exchange (the TSX).
6. Pursuant to three distributions, an aggregate of $650 million aggregate principal amount of medium-term notes (the Notes) were issued by the Filer under a short form base shelf prospectus dated November 14, 2018, as supplemented by a prospectus supplement dated November 15, 2018 and respective pricing supplements.
7. On March 31, 2020, the Public Sector Pension Investment Board and the Alberta Teachers' Retirement Fund Board completed the indirect acquisition of, among other things, all of the issued and outstanding Common Shares in an all-cash transaction pursuant to a plan of arrangement under the CBCA (the Arrangement). In connection with the closing of the Arrangement, the Common Shares were delisted from the TSX.
8. Following the Arrangement, the Filer remained a reporting issuer in each of the Reporting Jurisdictions as the Notes remain widely held.
9. On November 16, 2020, the Filer filed and obtained a receipt from the securities regulatory authority or regulator in each of the Reporting Jurisdictions for a short form base shelf prospectus (the Base Shelf Prospectus) providing for the distribution from time to time of Preferred Shares and debt securities of the Filer.
10. The Filer was qualified to file the Base Shelf Prospectus based on the alternative qualification criteria in Section 2.3 of NI 44-101. The Filer does not satisfy the qualification criteria of Section 2.2 of NI 44-101 and Section 2.2 of NI 44-102 because the Filer has no equity securities listed and posted for trading on a short form eligible exchange.
11. Effective December 2, 2020, DBRS Morningstar affirmed the Filer's corporate rating and Notes rating of BBB (high) with a Stable trend. Accordingly, the Filer and the Notes have a designated rating.
12. The Filer proposes to issue convertible securities (the Proposed Convertible Securities) under the Base Shelf Prospectus that would be convertible into other securities of the Filer (the Proposed Underlying Securities).
13. Absent the Exemption Sought, the Filer is not permitted to distribute the Proposed Convertible Securities pursuant to the Base Shelf Prospectus because the alternative qualification criteria in Section 2.3 of NI 44-101 do not permit the distribution of convertible securities.
14. The Proposed Convertible Securities will have a designated rating on a provisional basis and the Filer will satisfy the other ratings requirements as set out in Section 2.3(e) of NI 44-101 and Section 2.3 of NI 44-102 (the Designated Ratings Requirements). The Proposed Underlying Securities, if issued directly (rather than upon conversion), would also satisfy the Designated Ratings Requirements.
15. The Filer is not in default of any requirements under the securities legislation of any Reporting Jurisdiction.
16. The Filer is not in default of any of the periodic and timely disclosure requirements under National Instrument 51-102 Continuous Disclosure Obligations.
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 that the Exemption Sought is granted provided that at the time of distribution of the Proposed Convertible Securities:
(a) the Proposed Convertible Securities to be distributed:
(i) have received a designated rating on a provisional basis;
(ii) are not the subject of an announcement by a designated rating organization or its DRO affiliate, of which the Filer is or ought reasonably to be aware, that the designated rating given by the organization may be down-graded to a rating category that would not be a designated rating; and
(iii) have not received a provisional or final rating lower than a designated rating from any designated rating organization or its DRO affiliate; and
(b) the Filer has reasonable grounds for believing that the Proposed Underlying Securities, if distributed at the time of distribution of the related Proposed Convertible Securities, would satisfy the criteria in (a)(i) through (a)(iii) immediately above.