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Legal Development Round Up - Fasken Martineau

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					     Legal Developments Round Up




Robert Cooper                       Blair Horn
McCarthy Tétrault LLP               Fasken Martineau LLP



                                             Mergers and Acquisitions 2010
                  The Continuing Legal Education Society of British Columbia
                                                                June 3, 2010
                 HudBay Minerals Inc.
        Ontario Securities Commission Decision
                     January 2009

• Reversal of TSX decision not to impose shareholder
  approval on HudBay in connection with merger with
  Lundin Mining – “quality of the market place”
    Dilution > 100%
    Share price ↓ 40% on announcement
    Corporate Governance (changes to Board)
    Fair treatment of shareholders
• Financial Advisory Fees, Fairness Opinions and
  Independence
                 HudBay Minerals Inc.
        Ontario Securities Commission Decision
                  January 2009 (cont.)
• Sidecar Private Placement Voting – Since considered in
  Profound Energy
• Review of TSX decision principles since considered in
  InterRent
• TSX Response Section 611(c)
    Subject to Subsection 611(d), security holder approval will
     be required in those instances where the number of
     securities issued or issuable in payment of the purchase
     price for an acquisition exceeds 25% of the number of
     securities of the listed issuer which are outstanding, on a
     non-diluted basis.
ARC Equity Management and Profound Energy Alberta
              Securities Commission
                  August 2009
• Use of private placements by acquisition targets in the
  context of M&A transactions
• Facts:
    Paramount Energy Trust agreed to acquire 100% of
     Shares of Profound Energy
    100% premium
    Sidecar private placement of Special Warrants convertible
     into 19.9% of Profound Energy stock
    Special Warrants convertible regardless of success of
     acquisition
    ARC a 31% shareholder of Profound and not supportive of
     transaction
ARC Equity Management and Profound Energy Alberta
              Securities Commission
               August 2009 (cont.)
    Paramount acquired 59.4% and increased to 67.34%
     following Special Warrant conversion and proceeded with
     going private transaction
    ARC applied to ASC to prevent going private transaction
• Decision
    Public interest jurisdiction not to be exercised lightly –
     Canadian Tire cited
    Private placement had legitimate business purpose
    Failure to appeal TSX decision to approve private
     placement a key factor
    ASC specifically declined to adopt, as a legal principle,
     HudBay obiter re: entitlement to vote sidecar private
     placement shares
                       InterRent
             Ontario Securities Commission
                      August 2009

• OSC declined to intervene in TSX decision
• Facts:
    InterRent applied to TSX for approval of 49% private
     placement and externalization of property management
     agreement
    TSX permitted private placement without shareholder
     approval but required vote on management agreement
    NorthWest Value Partners, InterRent’s largest Unitholder,
     argued to TSX that private placement would materially
     affect control, therefore Unitholder approval should be
     required. Extensive submissions received by TSX
    NorthWest sought review of TSX decision by OSC
                         InterRent
               Ontario Securities Commission
                    August 2009 (cont.)

• Decision:
    OSC deferred to TSX decision and dismissed NorthWest’s
     request for review
    OSC confirmed that it will intervene in only rare
     circumstances and an applicant faces a heavy burden in
     proving intervention justified
    OSC concluded:
      •   TSX followed fair process
      •   TSX provided articulated reasons
      •   Decision was reasonable
      •   No intervention
              Shareholder Rights Plans


• Comments on Lions Gate/Pulse Data and Canadian
  Hydro Developers
                    BCE 17 Months Out


• Too early to tell or an affirmation of existing law?
• Impact on Commission Decisions?

				
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