The Securities Commission has granted an exemption to an issuer from the requirement to take up all securities deposited under an issuer bid before extending the bid. This decision is in connection with the issuer’s proposed purchase of a portion of its common shares through an issuer bid, which commenced on August 22, 2022.
Under subsection 2.32(4) of National Instrument 62-104 Take-Over Bids and Issuer Bids, an issuer is typically not allowed to extend a bid unless it first takes up all securities validly deposited and not withdrawn. However, the issuer sought an exemption from this requirement, arguing that the determination of the purchase price for the shares requires knowledge of all shares tendered, which would not be possible if shares had to be taken up before any extension of the offer.
The Commission agreed to grant the exemption, subject to conditions that include the issuer taking up and paying for the shares as described in the issuer bid circular, eligibility to rely on the Liquid Market Exemption, prompt announcement of the exemption receipt, and compliance with Regulation 14E of the Securities Exchange Act of 1934 in the United States.
The issuer’s bid involves a modified Dutch auction procedure with a specified price range for the shares, and the purchase will be funded through a combination of cash on hand and a margin loan facility. The issuer believes the bid is in the best interests of the company and its shareholders, providing value and potentially increasing equity ownership for non-tendering shareholders.
The decision was made under the securities legislation of Ontario, with the Ontario Securities Commission acting as the principal regulator. The issuer also provided notice that it intends to rely on subsection 4.7(1) of Multilateral Instrument 11-102 Passport System in various Canadian provinces.