.)~N~ .Qb, 2007 IN THE MArrER OF
THE SECURITIES LEGISLATION
OF MANITOBA AND ONTARIO (the "Jurisdictions")
AND
IN THE MATTER OF THE
MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
THE PROVINCE OF MANITOBA (the "Province") AND
THE MANITOBA HYDRO-ELECTRIC BOARD ("Manitoba Hydro"),
A CROWN CORPORATION
(collectively, the "Filers")
MRRS DECISION DOCUMENT
Background The local securities regulatory authority or regulator (the "Decision Maker") in each of the Jurisdictions has received an application from the Filers for a decision under the securities legislation of the Jurisd ictions (the "Legislation") for decisions (the "Requested Relief') as follows: 1. a decision (the "Continuous Disclosure Relief') under section 13.1 of National Instrument 51-102 Continuous Disclosure Obligations ("NI 51-102") that the requirements of NI 51-102 (collectively, the "Continuous Disclosure Requirements") shall not apply to the Filers ; 2. a decision: (a) under section 4.5 of Multilateral Instrument 52-109 - Certification of Disclosure in Issuers' Annual and Interim Filings ("MI 52-109") that the requirements of MI 52-109 shall not apply to the Filers ; (b) under section 8.1 of Multilateral Instrument 52-110 - Audit Committees ("MI 52-110") that the requirements of MI 52-110 shall not apply to the Filers; c) under section 3.1 of National Instrument 58-101 - Disclosure of Corporate Governance Practices ("NI 58-101 ") that the requirements of Part 2 of NI 58-101 shall not apply to the Filers;
- 2 Â d) under section 7.1 of National Instrument 13-101 - System for Electronic Document Analysis and Retrieval ("SEDAR") that the requirements of SEDAR shall not apply to the Filers; and e) under the Legislation and under section 6.1 of National Instrument 55-102 System for Electronic Disclosure by Insiders ("NI 55-102") that the insider reporting requirements of the Legislation and the requirement to file an insider profile shall not apply to the Filers (the "Insider Reporting and Insider Profile Relief'; (the "Consequential Disclosure Relief'). Under National Policy 12-201 - Mutual Reliance Review System for Exemptive Relief Applications: (a) The Manitoba Securities Commission is the principal regulator for this application, and (b) this MRRS decision document evidences the decision of each Decision Maker. Interpretation Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are defined in this decision. Representations This decision is based on the following facts represented by the Filers : 1. The Province, as issuer, is formally described as The Crown in Right of the Province of Manitoba. 2. Manitoba Hydro . as issuer, is formally described as The Manitoba Hydro-Electric Board , a wholly-owned Crown corporation of the Province pursuant to The Manitoba Hydro Act, as amended by The Manitoba Hydro Amendment Act. 3. The Province and Manitoba Hydro have each been designated as a reporting issuer by The Manitoba Securities Commission as of May 29, 2007. 4. The Province and Manitoba Hydro have been issuing either Manitoba Hydro Bonds or Manitoba Builder Bonds annually since 1989 (the "Bonds"). Shortly after inception of the Bond issues, the Province began listing Bonds without annual redemption features on The Winnipeg Stock Exchange. The practice of listing Bonds without annual redemption features on The Winnipeg Stock Exchange continued each year until The Winnipeg Stock Exchange merged with the TSX Venture Exchange. Such Bonds were thereafter listed on the TSX Venture Exchange until the spring of 2006 when cost considerations caused the Province and Manitoba Hydro to de-list the Bonds. 5. The Province and Manitoba Hydro have received requests from broker dealers in Manitoba to re-instate a listing to facilitate secondary trading of Bonds, and the
- 3 Â Province and Manitoba Hydro wish to provide greater liquidity and transparency with respect to such Bonds. 6. Bonds can only be sold to Manitoba residents in the first instance. 7. The securities for which the relief is sought are existing Manitoba Builder Bonds and Manitoba Hydro Bonds, and future issues of such Bonds(collectively the "Bonds"), listed on the Canadian Trading and Quotation System (the "CNQ"), and such Bonds will either be direct debt obligations of the Province (in the case of Manitoba Builder Bonds) or obligations guaranteed by the Province (in the case of Manitoba Hydro Bonds). The existing Bonds and the Bonds being issued in 2007 are as follows: Bond Series Bond Type Maturity Date Builder Bonds VII Annual Fixed Rate June 15, 2008 Builder Bonds VII Compound Fixed Rate June 15, 2008 Builder Bonds VII Annual Floating Rate June 15, 2008 Builder Bonds VIII Annual Fixed Rate June 15, 2007 Builder Bonds VIII Annual Fixed Rate June 15, 2009 Builder Bonds VIII Compound Fixed Rate June 15, 2009 Builder Bonds VIII Annual Floating Rate June 15, 2009 Builder Bonds IX Annual Fixed Rate June 15, 2008 Builder Bonds IX Annual Fixed Rate June 15, 2010 Builder Bonds IX Compound Fixed Rate June 15,2010 Builder Bonds IX Annual Floating Rate June 15, 2010 Hydro Bonds 8 Fixed Rate Annual June 15, 2007 Hydro Bonds 8 Compound Fixed Rate June 15, 2007 Hydro Bonds 8 Annual Floating Rate June 15, 2007 Hydro Bonds 9 Annual Fixed Rate June 15, 2009 Hydro Bonds 9 Annual Fixed Rate June 15, 2011 Hydro Bonds 9 Compound Fixed Rate June 15, 2011 Hydro Bonds 9 Annual Floating Rate June 15, 2011 Hydro Bonds 10 Annual Fixed Rate June 15, 2010 Hydro Bonds 10 Annual Fixed Rate June 15, 2012 Hydro Bonds 10 Compound Fixed Rate June 15, 2012 Hydro Bonds 10 Annual Floating Rate June 15, 2012
- 4 Â All the Bonds in the above table are currently listed on CNO with the exception of the Hydro Bonds 10 which are anticipated to be listed on or immediately after June 15, 2007 when the offering of those Bonds closes. 8. All securities of the Province and Manitoba Hydro issued and outstanding in Canada, including the Bonds, are exempt securities which qualify pursuant to the exemption available in s. 2.34(2) of National Instrument 45-106 Prospectus and Registration Exemption . Except for the Bonds, which are listed or will be listed on CNO, none of the securities of The Province or Manitoba Hydro are listed or proposed to be listed on any stock exchange in Canada. 9. Manitoba Hydro does not have any securities issued to the public except Manitoba Hydro Bonds. 10. Manitoba Builder Bonds are direct obligations of the Province and Manitoba Hydro Bonds are unconditionally guaranteed as to principal and interest by the Province . 11. The Bonds rank pari passu with all other debt issues of the Province of Manitoba. 12. No Bonds other than those that rank pari passu will be issued in the future. 13. The Bonds are currently rated based upon the long term debt rating assigned to the Province. 14. Long term direct debt obligations of the Province or debt obligations guaranteed by the Province are rated as follows by the following rating agencies : Standard & Poors: "AA-" Moody's : "Aa1" DBRS: "A (high)" 15. Financial information concerning the Filers is available as follows: a. Disclosure sources for the Province, which includes budget information and the public accounts of the Province, are available at: http://www.gov .mb.ca/finance/financialreports.html b. and for Manitoba Hydro, which includes annual and interim financial statements , are available at: http://www.hydro.mb.ca/corporate/financial .shtml; http://www.hydro.mb.ca/corporate/ar/archives.shtml; and http://www.hydro .mb.ca/corporate/qr/archives.shtml. 16. In connection with the listing, the CNO web site will provide a "home" page for the Bond issues of the Province and Manitoba Hydro where web links, as described above, to the disclosure information for the Province and for Manitoba Hydro will appear, and where the Bond ratings of the Province and Manitoba Hydro will also appear.
- 5 Â 17. Changes in the debt rating of the Province will be reported on the Province of Manitoba "home" page on CNQ and the links to disclosure information on that same page will provide updated information about the Province and Manitoba Hydro as it becomes available. 18. The Bonds must maintain a minimum "investment grade" rating to continue being listed on CNQ, being the following or better:
Standard & Poors: "BBB"
Moody's : "Baa"
DBRS: "BBB"
19. The Bonds will not be listed or traded on any other exchange or marketplace except CNQ. Decision Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met. THE DECISION of the Decision Makers under the Legislation is that the Requested Relief is granted provided that (a) The Bonds are to be listed on CNQ and will not be listed or traded on any other exchange or marketplace except CNQ, and no other securities of the Filers, apart from the Bonds, are to be listed or traded on an exchange or marketplace as defined in National Instrument 21-101 Marketplace Operation in Canada. (b) Changes in the debt rating of the Province are reported on the Province of Manitoba "home" page on CNQ on a timely basis and the links to disclosure information on that same page are maintained to provide updated information about the Province and Manitoba Hydro as it becomes available. (c) The Bonds are of, or fully guaranteed by, the Province and maintain a minimum "investment grade" rating as described in paragraph 18. (d) All future debt issued by the Filers will rank pari passu or be subordinate to the Bonds. (e) The Bonds and any other securities issued by the Filers are or will be issued on a basis which is exempt from the prospectus requirements of the Legislation and only issued relying upon s. 2.34(2) of National Instrument 45-106 - Prospectus and Registration Exemptions.
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