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Westjet Receives Exemption From Certain Securities Regulatory Requirements


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CALGARY, Sept. 21, 2012 /CNW/ - WestJet today announced that it has received an exemption to treat WestJet's variable voting shares and common voting shares as a single class for the purposes of applicable take-over bid requirements and early warning reporting requirements contained under Canadian securities laws. WestJet applied for the exemption, which is effective immediately, to facilitate an investment in variable voting shares by non-Canadians (as defined under the Canada Transportation Act).

Pursuant to an application by WestJet, the securities regulatory authorities in each of the provinces of Canada granted exemptive relief (the "Decision") from (i) applicable formal take-over bid requirements, as contained under Canadian securities laws, such that those requirements would only apply to an offer to acquire 20 per cent or more of the outstanding variable voting shares and common voting shares of WestJet on a combined basis, and (ii) applicable early warning reporting requirements, as contained under Canadian securities laws, such that those requirements would only apply to an acquirer who acquires or holds beneficial ownership of, or control or direction over, 10 per cent or more of the outstanding variable voting shares and common voting shares of WestJet on a combined basis (or five per cent in the case of acquisitions during a take-over bid). A copy of the Decision is available on SEDAR at www.sedar.com.

The Decision takes into account that WestJet's dual class shareholding structure was implemented solely to ensure compliance with the foreign ownership requirements of the Canada Transportation Act. An investor does not control or choose which class of WestJet shares it acquires and holds. The class of shares ultimately available to an investor is only a function of the investor's status as a Canadian or non-Canadian (as defined under the Canada Transportation Act). The relatively small number of outstanding variable voting shares (the share class for non-Canadians), absent the Decision, may have limited the ability of non-Canadians to acquire shares of WestJet in the ordinary course without the apprehension of inadvertently triggering the take-over bid rules or early warning reporting requirements.

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I'm surprised one of our financial aces hasn't offered up something. I suspect it revolves around a requirement to notify securities regulators of a take-over attempt, likely triggered by the acquisition of a percentage of the outstanding shares. Since foriegn ownership of airlines is restricted to 25%, the stock boffins came up with a separate class of shares which proportionately allocate 25% of the voting control to foriegn-held shares, if those shares actually comprise more than 25% of the float.

I believe this relaxes the reporting requirement to the acquisition of actual voting control (20%, 10% & 5% resp), rather than simply being triggered by the gross percentage of the stock float that's been acquired.

I don't think this is a big deal, probably meant to encourage some foriegn equity participation without raising false flags. Ready to be corrected ...

Cheers, IFG :b:

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I have not tried to analize this in detail, but I suspect this is merely housekeeping to try and lessen the chance of some unpleasantness down the road such as Telus has recently experienced. From what I gather, that case involved an American private equity company or something similar, who took the company to court to try and make some money on the difference in share price between two classes of shares.

In Canada, different share classes are often used to get around foreign ownership regulations. This Telus case illustrates an unforseen downside. I suspect this Westjet case is just an attempt to make similar court challenges unlikely down the line.

I too would welcome a more specific explanation.

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Isn't this much ado ...? But then again, is imitation the sincerest form of flattery? After all, a few months ago, this:

Air Canada Receives Conditional Exemption from Applicable Take-Over Bid and Related Early Warning Reporting Requirements

.... On May 4, 2012, pursuant to an application by Air Canada, the Autorité des marchés financiers, as principal regulator, the Ontario Securities Commission and the securities regulatory authorities in the other provinces of Caen again nada granted exemptive relief (the "Decision") from (i) applicable formal take-over bid requirements, as contained under Canadian securities laws, such that those requirements would only apply to an offer to acquire 20% or more of the outstanding Class A variable voting shares and Class B voting shares of Air Canada on a combined basis, and (ii) applicable early warning reporting requirements, as contained under Canadian securities laws, such that those requirements would only apply to an acquirer who acquires or holds beneficial ownership of, or control or direction over 10% or more of the outstanding Class A variable voting shares and Class B voting shares of Air Canada on a combined basis (or 5% in the case of acquisitions during a take-over bid). A copy of the Decision is available on SEDAR at www.sedar.com ....

CNW Release: LINK

Cheers, IFG :b:

p.s. AEF thread on the AC iteration .

Edited by IFG
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There are 2 classes of shares, voting for canadians and non-voting for non-canadians, aka the WJA.A. The voting shares outstanding is ~126 M shares while the non-voting is ~26 M shares.

If one foreign investor acquires 3 M shares, that will represent more than 10% of the non-voting shares, therefore will have to comply with filings as though he/she is an insider, even though 3 M shares only represent ~2% of the total outstanding shares.

The exemption will prevent that foreign investor from making said filings, as an insider, as they don't really represent the required % of outstanding shares for that fact.

I think that is what this is about....Cheers

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