O. Reg. 261/92: EXEMPTIONS RESPECTING THE ALGOMA STEEL CORPORATION, LIMITED

Securities Act
Loi sur les valeurs mobilières

ONTARIO REGULATION 261/92

EXEMPTIONS RESPECTING THE ALGOMA STEEL CORPORATION, LIMITED

Consolidation Period: From May 15, 1992 to the e-Laws currency date.

No amendments.

This Regulation is made in English only.

1. In this Regulation,

“Algoma” means a corporation amalgamated under the laws of Ontario under the name The Algoma Steel Corporation, Limited, which name is required to be changed to 108668 Ontario Limited under the Plan;

“Algoma Preference Shareholders” means the holders of Algoma Preference Shares;

“Algoma Preference Shares” means the outstanding 8 per cent Cumulative Redeemable Tax Deferred Preference Shares Series A and 9 ¾ per cent Cumulative Redeemable Preference Shares Series B in the capital of Algoma but excludes the $2 Cumulative Redeemable Convertible Class B Preference Shares Series 1 in the capital of Algoma;

“Algoma Trust Indenture” means the Trust Indenture dated as of the 15th day of May, 1958 between a predecessor of Algoma and Montreal Trust Company, as trustee, as amended;

“Articles of Arrangement” means articles of arrangement required by the Business Corporations Act in respect of the Plan;

“Bank Debentureholders” means Canadian Imperial Bank of Commerce, Royal Bank of Canada and The Toronto-Dominion Bank;

“Bargaining Unit Employees” means,

(a) the employees of Algoma who are represented by a union, including employees on lay-off, and

(b) those former employees of Algoma who were employees of Algoma at any time between the lst day of July, 1991 and the 31st day of October, 1991 and who were represented by a union at that time;

“Certificate of Arrangement” means the certificate of arrangement issued under subsection 183 (2) of the Business Corporations Act in respect of the Articles of Arrangement;

“Claim” means any right of any person against Algoma,

(a) as at the Effective Date, for the purposes of sections 2.02, 3.05, 6.02 and 6.03 of the Plan,

(b) as provided in sections 3.08 and 3.09 of the Plan, in the case of Deferred Trade Creditors and Specified Trade Creditors, respectively, or

(c) as at the Settlement Date, in all other cases,

in connection with any indebtedness, liability or obligation of any kind of Algoma whether or not reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, unsecured, present, future, known, unknown, by guarantee, by surety or otherwise;

“Compromised Creditors” means all Creditors except,

(a) the Employees,

(b) the Retired Employees,

(c) the Priority Creditors,

(d) the Reorganization Creditors, and

(e) the Trade Creditors (other than the Deferred Trade Creditors and the Specified Trade Creditors);

“Co-operative” means a co-operative as defined in the. Co-operative Corporations Act that is established under that Act for the benefit of the Bargaining Unit Employees or the Salaried Employees, as contemplated by section 3.07 of the Plan;

“Court” means the Ontario Court of Justice (General Division);

“Creditor” means any person having a Claim;

“Crown” means any government or government agency, body or commission, whether federal or provincial;

“Debentures” means the debentures issued under the Algoma Trust Indenture and outstanding on the Settlement Date including, without limitation, all outstanding,

(a) 8 ¾ per cent Sinking Fund Debentures, Series D,

(b) 10 ⅜ per cent Sinking Fund Debentures, Series E,

(c) 11 per cent Sinking Fund Debentures, Series F,

(d) Debentures, Series H,

(e) Income Debentures, Series I,

(f) Debentures, Series J,

(g) 17 ⅜ per cent Sinking Fund Debentures, Series L,

(h) Debentures, Series N, and

(i) Debentures, Series O;

“Debentureholders” means the holders of Debentures other than Dofasco Inc.;

“Debentureholders’ Secured Claims” means the part of the Claims of the Debentureholders that is deemed by Algoma to be secured for the purposes of the Plan, which is the sum of 60 per cent of the aggregate outstanding principal amount of the Debentures held by the Debentureholders and all of the accrued and unpaid interest on those Debentures to but not including the 18th day of February, 1991 (minus any such interest that is waived under the election right referred to in section 3.11 of the Plan);

“Debentureholders’ Unsecured Claims” means the part of the Claims of the Debentureholders that is deemed by Algoma to be unsecured for the purposes of the Plan, which is the sum of 40 per cent of the aggregate outstanding principal amount of the Debentures held by the Debentureholders and all of the accrued and unpaid interest on those Debentures from and including the 18th day of February, 1991 to but not including the Settlement Date (minus any such interest that is waived under the election right referred to in section 3.11 of the Plan);

“Deferred Trade Creditors” means all Trade Creditors whose Claims against Algoma as at the 18th day of February, 1991 were stayed by order of the Court (other than the Priority Creditors);

“Effective Date” means the date set forth in the Certificate of Arrangement;

“Employees” means the Bargaining Unit Employees and the Salaried Employees;

“Exchange Right” means the right contemplated by section 3.14 of the Plan to exchange NA Secured Debentures for Subco Preferred Shares;

“New Algoma” means Algoma Steel Inc., a corporation incorporated under the Business Corporations Act under section 3.02 of the Plan;

“NA Common Shares” means the Common Shares in the capital of New Algoma;

“NA Employee Voting Shares” means the Employee Voting Shares, issuable in two series, in the capital of New Algoma;

“NA Note” means the promissory note required to be issued by New Algoma to Algoma under section 3.05 of the Plan;

“NA Secured Debentures” means the secured debentures that may be issued by New Algoma to holders of Subco Preferred Shares in exchange for such shares under section 3.14 of the Plan;

“Plan” means the document filed with the Court on the 21st day of January, 1992 (Court file number B62/91-A) titled “The Algoma Steel Corporation, Limited Plan of Arrangement Pursuant to the Companies’ Creditors Arrangement Act (Canada) and the Business Corporations Act (Ontario)” and dated the 21st day of January, 1992, as amended from time to time;

“Priority Creditors” means the Crown, the City of Sault Ste. Marie, the Public Utilities Commission of Sault Ste. Marie and the Township of Michipicoten;

“Put Right” means the right contemplated by section 3.14 of the Plan to cause New Algoma to purchase Subco Preferred Shares;

“Reorganization Creditors” means the legal, accounting and financial advisors to each of,

(a) Algoma,

(b) the Employees,

(c) the Bank Debentureholders or any of them,

(d) Hongkong Bank of Canada, and

(e) Royal Bank of Canada,

in respect of such advisors’ Claims arising in connection with the reorganization of Algoma, including the Plan, and in respect of such advisors’ fees arising in connection with the reorganization of Algoma, including the Plan;

“Retired Employees” means former employees of Algoma in respect of their vested rights as against Algoma under any pension, deferred compensation or other benefit plan or agreement;

“Salaried Employees” means,

(a) the employees of Algoma who are not Bargaining Unit Employees as defined in clause (a) of the definition of “Bargaining Unit Employees”, and

(b) those former employees of Algoma who were employees of Algoma at any time between the lst day of July, 1991 and the 31st day of October, 1991 but are not Bargaining Unit Employees as defined in clause (b) of the definition of “Bargaining Unit Employees”;

“Settlement Date” means the first day of the month in which the Effective Date occurs;

“Specified Trade Creditor” means a Trade Creditor, other than a De-ferred Trade Creditor, who was paid $400,000 or more by Algoma during the twelve-month period ending the 31st day of December, 1991 in respect of goods or services supplied;

“Specified Unsecured Creditors” means the Debentureholders in respect of the Debentureholders’ Unsecured Claims and each other Compromised Creditor who has a Claim as at the Settlement Date (including, without limitation, NBD Bank, Canada and James Morrison Management Limited) but excludes the Debentureholders in respect of the Debentureholders’ Secured Claims, Dofasco Inc., the Deferred Trade Creditors, the Specified Trade Creditors and the Subsidiaries;

“Subco” means Algoma Finance Corp., a corporation incorporated under the Business Corporations Act under section 3.03 of the Plan;

“Subco Preferred Shares” means the 5.50 per cent cumulative redeemable non-voting preferred shares in the capital of Subco;

“Subsidiary” means any wholly-owned subsidiary of Algoma (as determined under the Business Corporations Act) that has a Claim;

“Trade Creditors” means Creditors whose Claims arise by reason of the supply of goods or services to or for the account of Algoma, other than,

(a) the Employees,

(b) Dofasco Inc.,

(c) Prudential Steel Ltd.,

(d) the Priority Creditors,

(e) the Reorganization Creditors, and

(f) the Subsidiaries;

“Trust” means a trust established for the benefit of the Bargaining Unit Employees, the Salaried Employees, or both the Bargaining Unit Employees and the Salaried Employees, as contemplated by section 3.07 of the Plan. O. Reg. 261/92, s. 1.

2. Registration under the Act is not required and section 53 of the Act does not apply in respect of the following trades contemplated by or arising by reason of the Plan:

1. The issuance of common shares in the capital of Subco to New Algoma in connection with the incorporation and organization of Subco.

2. A trade from New Algoma to Algoma of the NA Note in connection with the transfer of assets and liabilities from Algoma to New Algoma.

3. The issuance of one NA Common Share to Algoma in connection with the transfer of assets and liabilities from Algoma to New Algoma.

4. The issuance of NA Employee Voting Shares to a Trust or a Co-operative.

5. A trade of NA Employee Voting Shares from a Trust to a Co-operative.

6. The issuance by a Co-operative to a member of the Co-operative of a security evidencing a beneficial or indirect interest in NA Employee Voting Shares.

7. A trade of NA Employee Voting Shares from a Co-operative to New Algoma.

8. The issuance of NA Common Shares to a Trust.

9. A trade of NA Common Shares where both parties to the trade are Trusts.

10. The issuance by a Trust to a beneficiary of the Trust of a security evidencing a beneficial interest in,

i. NA Common Shares,

ii. NA Employee Voting Shares, or

iii. both NA Common Shares and NA Employee Voting Shares.

11. A trade of NA Common Shares from a Trust to a beneficiary of the Trust.

12. The issuance of Subco Preferred Shares to a Debentureholder.

13. The issuance of Subco Preferred Shares to Dofasco Inc.

14. The issuance of NA Common Shares to an Algoma Preference Shareholder.

15. The issuance of NA Common Shares to a Specified Unsecured Creditor.

16. The issuance of NA Common Shares to a Compromised Creditor whose Claims are not determined as at the Settlement Date and who is entitled after the Effective Date to receive NA Common Shares.

17. The issuance of the Exchange Right to a holder of a Subco Preferred Share.

18. The issuance of NA Secured Debentures in exchange for Subco Preferred Shares under the Exchange Right.

19. A trade of Subco Preferred Shares in exchange for NA Secured Debentures under the Exchange Right.

20. The issuance of the Put Right to a holder of a Subco Preferred Share.

21. A trade of Subco Preferred Shares under the Put Right. O.Reg.261/92, s. 2.

3. Section 53 of the Act applies in respect of the first trade in NA Common Shares previously acquired from a Trust under the exemption contained in paragraph 11 of section 2 unless,

(a) disclosure to the Commission has been made of the exempt trade under paragraph 11 of section 2;

(b) no unusual effort is made to prepare the market or to create a demand for the NA Common Shares and no extraordinary commission or consideration is paid in respect of the first trade; and

(c) the first trade is not a distribution as defined in clause (c) of the definition of “distribution” in subsection 1 (1) of the Act. O.Reg. 261/92, s. 3.

4. If the sole business carried on by Subco is that of raising funds which are lent to New Algoma or which are used to refinance funds so raised, then after the Effective Date,

(a) compliance by New Algoma with the requirements of Parts XVIII and XIX of the Act shall be deemed to be compliance by Subco and, for the purpose of such compliance, securities issued by Subco shall be deemed to be securities issued by New Algoma; and

(b) for the purpose of allocating New Algoma to the category of reporting issuer in clause (c) of the definition of “reporting issuer” in subsection 1 (1) of the Act, but without affecting Subco’s status as a reporting issuer, securities issued by Subco shall be deemed to be securities issued by New Algoma. O. Reg. 261/92, s. 4.

5. Registration under the Act is not required in respect of a trade by Subco if,

(a) but for section 206 of Regulation 1015 of the Revised Regulations of Ontario, 1990, registration would not be required in respect of the trade under section 35 of the Act; and

(b) the trade is an issuance by Subco of securities in consideration of proceeds which are lent to New Algoma or which are used to refinance funds originally raised for New Algoma. O.Reg.261/92, s. 5.

6. An offer to acquire Subco Preferred Shares by New Algoma under the Put Right is exempt from sections 95 to 100 of the Act. O. Reg. 261/92, s. 6.

7. Omitted (provides for coming into force of provisions of this Regulation). O. Reg. 261/92, s. 7.