The Securities Commission granted an order for Akumin Inc. to cease being a reporting issuer in all Canadian jurisdictions where it held this status. Akumin Inc., a provider of outpatient radiology and oncology solutions in the U.S., underwent a reorganization plan approved by a U.S. bankruptcy court, which led to the company becoming privately-held and no longer subject to U.S. Securities Exchange Act registration. As part of the reorganization, Akumin Inc. issued contingent value rights (CVRs) to former shareholders, but the distribution of these CVRs to Canadian holders was contingent on the company ceasing to be a reporting issuer in Canada.
Key Facts:
– Akumin Inc. transitioned from an Ontario corporation to a Delaware corporation.
– It was a reporting issuer in Canada and filed with the SEC in the U.S.
– The company’s common shares were delisted from both NASDAQ and the Toronto Stock Exchange.
– A restructuring support agreement led to a prepackaged Chapter 11 bankruptcy filing.
– The reorganization plan involved canceling existing common shares and issuing new securities, including CVRs, to former shareholders.
– The CVRs are non-transferable rights to future cash payments contingent on specific trigger events.
– Akumin Inc. is now a privately-held company in the U.S. with Stonepeak as the sole shareholder.
Reasoning:
– The distribution of CVRs to Canadian shareholders would be penalized if Akumin Inc. remained a reporting issuer in Canada.
– The company is not an SEC registrant and does not have public reporting obligations in the U.S.
– The CVRs will not be publicly traded or subject to SEC or Canadian reporting requirements.
– The reorganization plan requires Akumin Inc. to not be subject to continuous disclosure obligations.
– Canadian shareholders are protected by the Independent Accountant Certification Process for CVR distributions.
– The company does not intend to seek public financing or distribute any securities in Canada other than CVRs and new notes under the reorganization plan.
Outcome:
The order was granted, allowing Akumin Inc. to cease being a reporting issuer in Canada. This enables the company to distribute CVRs to Canadian shareholders under the reorganization plan without conflicting with Canadian securities laws.
Relevant Laws and Regulations:
– Securities Act, R.S.O. 1990, c. S.5, as amended, s. 1(10)(a)(ii).
– National Policy 11-206 Process for Cease to be a Reporting Issuer Applications.
– U.S. Securities Exchange Act of 1934.
– U.S. Bankruptcy Code.
– National Instrument 51-102 Continuous Disclosure Obligations.
– National Instrument 45-106 Prospectus Exemptions.