Pre-Effective Amendment to Registration Statement of a Canadian Issuer for Securities Offered for Cash Upon the Exercise of Rights — Form F-7 Filing Table of Contents
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Approximate date of commencement of
proposed sale to the public: As soon as practicable after this
registration statement becomes effective.
This
registration statement and any amendment thereto shall become effective upon
filing with the Commission in accordance with Rule 467(a).
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to the home jurisdiction’s shelf prospectus offering
procedures, check the following box: o
CALCULATION
OF REGISTRATION FEE
Title
of each class of securities to be registered
Amount
to be registered
Proposed
maximum offering price per unit
Proposed
maximum aggregate offering price(1)
Amount
of registration fee(2)
Common
Shares
U.S.
$379,399
$15.12(3)
(1)
Based
on the exchange rate of U.S. $1.00 to Cdn. $1.2388, the noon buying
rate as reported by the Federal Reserve Bank of New York on February6, 2009 for all transfers in foreign currencies as certified for customs
purposes.
(2)
Calculation
of Fee is in accordance with General Instruction II.F of Form
F-7.
(3)
Previously
paid to the Securities and Exchange
Commission.
If, as a
result of stock splits, stock dividends or similar transactions, the number of
securities purported to be registered on this registration statement changes,
the provisions of Rule 416 shall apply to this registration
statement.
PART
I
INFORMATION
REQUIRED TO BE SENT TO SHAREHOLDERS
ITEM
1. HOME JURISDICTION DOCUMENT.
Rights Offering Prospectus
ITEM
2. INFORMATION LEGENDS
See the outside front cover page of the
Rights Offering Prospectus
ITEM
3. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
Not applicable
ITEM
4. LIST OF DOCUMENTS FILED WITH THE COMMISSION
The
documents filed with the U.S. Securities and Exchange Commission as part of the
Registration Statement are listed in the Rights Offering Prospectus under the
caption “Documents Filed as Part of the Registration Statement.”
No
securities regulatory authority has expressed an opinion about these securities
and it is an offence to claim otherwise. This short form prospectus constitutes
a public offering of these securities only in those jurisdictions where they may
be lawfully offered for sale and therein only by persons permitted to sell such
securities in those jurisdictions.
Information has been incorporated by
reference in this short form prospectus from documents filed with securities
commissions or similar authorities in Canada. Copies of the documents
incorporated herein by reference may be obtained on request without charge from
the Secretary of Taiga Building Products Ltd. at Suite 800,
4710 Kingsway, Burnaby, British Columbia, V5H 4M2, telephone (604) 438-1471
and are also available electronically at www.sedar.com.
Taiga
Building Products Ltd. ("Taiga" or the "Corporation") is distributing
(the "Offering") to the
holders (the "Holders")
of its outstanding common shares of record at 5:00 p.m. (Toronto time) on March2, 2009 (the "Record
Date"), rights (the "Rights") to subscribe for
common shares of the Corporation (the "Common Shares").
The
Rights are fully transferable within Canada (as more particularly set forth
herein) and will be evidenced by certificates in registered form thereof (the
"Rights Certificates").
Each Holder is entitled to one Right for each common share held on the Record
Date. Each Right entitles the holder thereof (provided that such holder is in an
Eligible Jurisdiction, as defined below, or is an Approved Eligible Holder, as
defined below) to purchase 2,218 Common Shares (the "Basic Subscription Right") of
the Corporation at a price of $0.14 per Common Share (the "Subscription Price") prior to
5:00 p.m. (Toronto time) (the "Expiry Time") on March 26,2009 (the "Expiry
Date"). Rights not
exercised before the Expiry Time on the Expiry Date will be void and of no
value. Holders who exercise their Basic Subscription Right in full are
entitled to subscribe for additional Common Shares (the "Additional Shares"), if
available, pursuant to an additional subscription privilege (the "Additional Subscription
Privilege"). See "Details of the Rights Offering — Additional
Subscription Privilege".
Offering Price
Proceeds to the Corporation(1)
Per
Common Share
$
0.14
$
0.14
Total
$
10,000,000
$
10,000,000
______________
(1)
Assuming
the exercise of all Rights, before deducting the expenses of the Offering,
estimated to be approximately $300,000, which will be paid from the
proceeds of the Offering.
This
short form prospectus qualifies the distribution of the Rights and the Common
Shares issuable upon the exercise thereof. The Rights will be listed on the
Toronto Stock Exchange ("TSX") and will be posted for
trading until 12:00 p.m. (Toronto time) on the Expiry Date. The TSX has
conditionally approved the listing of the Common Shares issuable upon the
exercise of the Rights. Approval of such listing will be subject to the
Corporation fulfilling all of the listing requirements of the TSX. The currently
outstanding common shares are listed and posted for trading on the TSX under the
symbol "TBL". The closing price for common shares of the Corporation on the TSX
on February 18, 2009, the last date on which there was a trade reported in such
common shares prior to the date on which the exercise price of the Rights was
established by Taiga, was $0.25.
Computershare
Investor Services Inc. (the "Subscription Agent"), at its
offices in Vancouver, British Columbia and Toronto, Ontario (the "Subscription Office"), is the
subscription agent for this Offering. See "Details of the Rights Offering –
Subscription and Transfer Agent".
For
common shares of the Corporation held through a securities broker or dealer,
bank or trust company or other participant (a "Participant") (other than for
the account or benefit of Ineligible Holders (defined below)), that is in the
book based system administered by CDS Clearing and Depository Services Inc.
("CDS"), a subscriber
(other than Ineligible Holders (defined below)), may subscribe for Common Shares
by instructing the Participant holding the subscriber's Rights to exercise all
or a specified number of such Rights and forwarding the Subscription Price for
each Common Share subscribed for to such Participant in accordance with the
terms of this Offering. A subscriber wishing to subscribe for Additional Shares
pursuant to the Additional Subscription Privilege must forward its request to
the Participant that holds the subscriber's Rights prior to the Expiry Time on
the Expiry Date, along with payment for the number of Additional Shares
requested. Any excess funds will be returned by mail or credited to
the subscriber's account with its Participant without interest or deduction.
Subscriptions for Common Shares made through a Participant will be irrevocable
and subscribers will be unable to withdraw their subscriptions for Common Shares
once submitted. See "Details of the Rights Offering – Rights Certificate –
Common Shares Held Through CDS".
For
common shares of the Corporation held in registered form, a Rights Certificate
evidencing the number of Rights to which a Holder is entitled will be mailed
with a copy of this short form prospectus to each registered Holder in an
Eligible Jurisdiction (as hereinafter defined) as of the Record Date. In order
to exercise the Rights represented by the Rights Certificate, the holder of
Rights must complete and deliver the Rights Certificate to the Subscription
Agent in the manner and upon the terms set out in this short form prospectus.
See "Details of the Rights Offering – Rights Certificate – Common Shares Held in
Registered Form".
If a
Holder does not exercise, or sells or otherwise transfers, its Rights, then such
Holder's current percentage ownership in the Corporation will be diluted as a
result of the exercise of the Rights by other Holders. See "Details
of the Rights Offering – Dilution to Existing Holders".
This
Offering is made only to Holders (the "Eligible Holders") in each of the
Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New
Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador and
in the United States (the "Eligible Jurisdictions"). This
short form prospectus is not to be construed as an offering of Common Shares for
sale in any jurisdiction outside the Eligible Jurisdictions (an "Ineligible Jurisdiction") or a
solicitation therein of an offer to buy any securities. Rights Certificates will
not be sent to Holders with addresses of record in any Ineligible Jurisdiction
(an "Ineligible
Holder"). Instead, such Ineligible Holders will be sent a copy of this
short form prospectus with a letter advising them that their Rights Certificates
will be held by the Subscription Agent, who will hold such Rights as agent for
the benefit of all such Ineligible Holders. See "Details of the Rights Offering
– Ineligible Holders".
Berjaya
Group Berhad ("Berjaya")
holds, directly or indirectly, through a wholly-owned subsidiary, 12,669,808
common shares, representing approximately 39.34% of the Corporation's
outstanding common shares, and Genghis S.à.r.l. ("Genghis") holds 6,238,400
common shares, representing approximately 19.37% of the Corporation's
outstanding common shares. Although there is no standby purchase commitment with
respect to the Offering, Berjaya and Genghis have each expressed an intention to
the Corporation to exercise at least its Basic Subscription Right, subject to
customary conditions, and provided that in any event, neither will exercise its
Rights under the Offering such as to acquire beneficial ownership, control or
direction over 50% or more of the common shares of the Corporation then
outstanding. Genghis is a private Luxembourg company controlled by a trust whose
beneficiaries include members of Dr. Kooi Ong Tong's family. Dr. Tong, the
representative of Genghis, is a director and executive chairman of the
Corporation.
The
Corporation is subject to the provisions of the Competition Act (Canada) (the
"Competition
Act"). Genghis and the Corporation have received an Advance
Ruling Certificate ("ARC") from the Competition
Bureau of Canada pursuant to the provisions of the Competition Act which allows
Genghis, directly or indirectly, to exercise its Rights pursuant to the Offering
in order to acquire 20% or more of the Corporation's common shares then
outstanding. In order to comply with the provisions of the
Competition Act, the Corporation will permit the exercise of only that portion
of the Rights owned by Berjaya that would result in Berjaya beneficially owning,
or exercising control or direction over, not more than 49.9% of the
Corporation's common shares then outstanding.
ii
The
Corporation entered into a credit agreement (the "Credit Agreement") with GE
Canada Finance Holding Company and certain other parties dated September 1,2005, as amended, which provides that an event of default will occur upon any
person, other than Berjaya or Dr. Tong, directly or indirectly, acquiring
ownership or control of 20% or more of the Corporation's outstanding common
shares on a fully diluted basis. In order to avoid defaulting under
the Credit Agreement, a holder, other than Berjaya or Dr. Tong, should only
exercise that portion of their Rights under this Offering that would result in
the holder beneficially owning, or exercising control or direction over, not
more than 19.9% of our common shares then outstanding, on a fully diluted
basis. See "Details of the Rights Offering – Limits on the Exercise
of Rights".
This
offering is made by a Canadian issuer that is permitted, under a
multijurisdictional disclosure system adopted by the United States, to prepare
this short form prospectus in accordance with the disclosure requirements of
Canada. Prospective investors should be aware that such requirements are
different from those of the United States. Consolidated financial statements
incorporated by reference in this short form prospectus have been prepared in
accordance with Canadian generally accepted accounting principles, and are
subject to Canadian generally accepted auditing standards, and thus may not be
comparable to financial statements of United States companies.
The
enforcement by investors of civil liabilities under the United States federal
securities laws may be affected adversely by the fact that we are incorporated
under the laws of British Columbia, Canada, that some or all of our officers and
directors are residents of a country other than the United States, that some or
all of the experts named in the short form prospectus may be residents of a
country other than the United States, and that all or a substantial portion of
our assets and said persons may be located outside the United
States.
THESE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION (THE "SEC") OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SEC OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS SHORT FORM PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENCE.
Prospective
investors should be aware that the acquisition or disposition of the securities
described in this short form prospectus and the expiry of an unexercised Right
may have tax consequences in Canada, the United States, or elsewhere, depending
on each particular prospective investor's specific circumstances. See "Canadian
Federal Income Tax Considerations" and "Certain United States Federal Income Tax
Considerations". Such consequences for investors who are resident in,
or citizens of, the United States are not described fully herein. Prospective
investors should consult their own tax advisors with respect to such tax
considerations.
There are
risks associated with an investment in the Common Shares. See "Risk Factors" for
a summary discussion of factors that should be considered by prospective
investors and their advisors in assessing the appropriateness of an investment in the Common
Shares.
There is
no managing or soliciting dealer for the Offering, and we will not pay a fee of
any kind for the solicitation of the exercise of Rights. No underwriter has been
involved in the preparation of this short form prospectus or performed any
review of the contents of this short form prospectus.
The
Corporation's head and registered offices are located at Suite 800,
4710 Kingsway, British Columbia, Canada V5H 4M2 and 2800 Park
Place, 666 Burrard Street, Vancouver, British Columbia, Canada
V6C 2Z7, respectively.
This
short form prospectus contains forward looking statements within the meaning of
applicable Canadian securities laws. Forward-looking statements may include
estimates, plans, expectations, opinions, forecasts, projections, guidance or
other statements that are not statements of fact. When used in this document,
the words "may", "would", "could", "will", "intend", "plan", "anticipate",
"believe", "estimate", "expect" and similar expressions, as they relate to Taiga
or our management, are intended to identify forward-looking statements. Examples
of such forward-looking statements within this document include statements
relating to: our objectives, strategies, financial position, inventory levels,
operating results and activities; implicit and/or explicit financial forecasts;
our ability to remain in compliance with debt covenants; our perception of the
building products industry or market and anticipated trends in that market in
any of the countries in which we do business; our anticipated ability to produce
and procure products, or the terms under which we may procure our products;
relationships with suppliers; and outcome of legal actions.
Forward-looking
statements reflect Taiga's current views with respect to expectations, beliefs,
assumptions, estimates and forecasts about our business and the industry and
markets in which we operate. Forward-looking statements are not guarantees of
future performance and involve risks, uncertainties and assumptions which are
difficult to predict. Assumptions underlying our expectations regarding
forward-looking statements or information contained in this short form
prospectus include, among others: that we will maintain our position in the
markets we operate; that we will be successful in implementing our strategies
and achieve our business objectives; that we will be able to generate and
maintain sufficient cash flows to support our operations; that we will be able
to manage risks relating to deteriorating economic conditions and a decline in
housing markets; that we will remain in compliance with our debt covenants; that
we will be able to maintain sufficient inventory levels; that we will be able to
establish and/or maintain necessary relationships with suppliers; that we will
be successful in our legal actions; and that we will retain key personnel. The
foregoing list of assumptions is not exhaustive.
Persons
reading this short form prospectus are cautioned that forward-looking statements
or information are only predictions, and that our actual future results or
performance are subject to certain risks and uncertainties including: dependence
on market economic conditions; changes in business strategies; changes in
operational costs; changes in laws and regulations, including tax,
environmental, employment, competition, anti-terrorism and trade laws; sales and
margin risk and fluctuations in commodity prices; high level of indebtedness;
interest rate risk; customer risk; acquisitions risk; inventory risk; the
seasonal and cyclical nature of Taiga's business; the effects of litigation
including product liability claims; competition risks; environmental
liabilities; credit risk; foreign currency risk; dependence on key personnel;
availability of future financing; level of dividends; income tax risk;
creditworthiness and other factors referenced under the section "Risk Factors"
in our Annual Information Form dated June 27, 2008, under the section "Risks and
Uncertainties" in our management’s discussion and analysis in our most recently
filed quarterly report and under the heading "Risk Factors" herein.
Should
one or more of these risks or uncertainties materialize, or should assumptions
underlying forward looking statements prove incorrect, actual results may vary
materially from those described herein. These forward looking statements are
made as of the date of this short form prospectus or, in the case of documents
incorporated by reference herein, as of the date of such documents, and we do
not intend, and do not assume any obligation, to update these forward looking
statements, except as may be required by applicable law. We cannot assure you
that such statements will prove to be accurate as actual results and future
events could differ materially from those anticipated in such statements.
Investors are cautioned that forward-looking statements are not guarantees of
future performance and accordingly investors are cautioned not to put undue
reliance on forward-looking statements due to the inherent uncertainty
therein.
GENERAL
MATTERS
In this
short form prospectus, "we", "us" and "our" refer to the
Corporation. All references in this short form prospectus to
"dollars" or "$" are to Canadian dollars unless otherwise noted. The
Corporation's financial statements incorporated herein by reference have been
prepared in accordance with Canadian generally accepted accounting
principles.
You
should rely only on the information contained in this short form prospectus and
in the material incorporated by reference herein. We have not authorized anyone
to provide you with information different from that contained in this short form
prospectus. We are distributing the Rights only in jurisdictions where, and to
persons to whom, distributions are lawfully permitted. The information contained
in this short form prospectus is accurate only as of the date of this short form
prospectus, regardless of the time of delivery of this short form prospectus or
of any sale of the Rights.
Information
has been incorporated by reference in this short form prospectus from documents
filed with securities commissions or similar authorities in Canada. Copies of
documents incorporated herein by reference may be obtained on request without
charge from the Secretary of the Corporation at Suite 800,
4710 Kingsway, Burnaby, British Columbia V5H 4M2, telephone (604)
438-1471, and are also available electronically at www.sedar.com.
The
following documents, as filed with the various securities commissions or similar
authorities in each of the provinces of Canada in which the Corporation is
reporting, are specifically incorporated by reference into and form an integral
part of this short form prospectus:
(a)
the
annual information form of the Corporation dated June 27, 2008, for
the year ended March 31, 2008 (the "Annual Information
Form");
(b)
the
comparative audited consolidated financial statements of the Corporation
and notes thereto for the year ended March 31, 2008, together with
the auditors' report thereon;
(c)
management's
discussion and analysis of financial condition and results of operations
for the Corporation for the financial year ended March 31,2008;
(d)
the
comparative unaudited interim consolidated financial statements of the
Corporation for the three and nine month periods ended December 31,2008, together with notes thereto;
(e)
management's
discussion and analysis of financial condition and results of operations
of the Corporation for the three and nine month periods ended
December 31, 2008;
(f)
the
management proxy circular dated May 30, 2008, relating to the annual
meeting of shareholders of the Corporation held on July 4, 2008;
and
(g)
the
material change report dated and filed on SEDAR on December 18, 2008
with respect to changes in management of the
Corporation.
This
short form prospectus incorporates by reference any other document required to
be incorporated by reference in a short form prospectus under applicable
securities laws and filed by the Corporation between the time the short form
prospectus is receipted by the applicable securities regulators and the closing
of the Rights Offering.
Any
statement contained in this short form prospectus or in a document incorporated
or deemed to be incorporated by reference herein will be deemed to be modified
or superseded, for the purposes of this short form prospectus, to the extent
that a statement contained in this short form prospectus or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. The modifying or
superseding statement need not state that it has modified or superseded a prior
statement or include any other information set forth in the document that it
modifies or supersedes. The making of a modifying or superseding statement is
not to be deemed an admission for any purposes that the modified or superseded
statement, when made, constituted a misrepresentation, an untrue statement of a
material fact or an omission to state a material fact that is required to be
stated or that is necessary to make a statement not misleading in light of the
circumstances in which it was made. Any statement so modified or superseded will
not, except as so modified or superseded, be deemed to constitute a part of this
short form prospectus.
3
SUMMARY
The
following is a summary of the principal features of the Offering and
should be read together with, and is qualified in its entirety by, the
more detailed information contained elsewhere or incorporated by reference
in this short form prospectus.
Issuer:
Taiga
Building Products Ltd.
The
Offering:
Rights
to subscribe for up to 71,428,571 Common Shares. Each Holder on the
Record Date will receive one Right for each common share held. Each Right
entitles the holder (provided that such Holder is in an Eligible
Jurisdiction or is an Approved Eligible Holder) thereof to subscribe
for 2.218 Common Shares.
5:00
p.m. (Toronto time) on the Expiry Date. Rights not exercised on or before
the Expiry Time on the Expiry Date will be void and have no
value.
Subscription
Price:
The
Subscription Price per Common Share will be equal to
$0.14.
Net
Proceeds:
Approximately
$9,700,000, assuming the exercise of all Rights and after deducting
estimated expenses of approximately $300,000.
Basic
Subscription Right:
Each
Right entitles the holder thereof to subscribe for 2.218 Common
Shares upon payment of the Subscription Price. No fractional Common Shares
will be issued. See "Details of the Rights Offering – Subscription Basis"
and "Details of the Rights Offering – Basic Subscription
Right".
Additional
Subscription Privilege:
Holders
of Rights who exercise in full the Basic Subscription Right for their
Rights are also entitled to subscribe pro–rata for Common
Shares, if any, not otherwise purchased pursuant to the Basic Subscription
Right. See "Description of Offered Securities – Additional Subscription
Privilege".
Exercise
of Rights:
For
all Holders in an Eligible Jurisdiction whose Common Shares are held in
registered form (a "Registered Eligible
Holder"), a Rights Certificate representing the total number of
Rights to which such Registered Eligible Holder is entitled as at the
Record Date will be mailed with a copy of this short form prospectus. In
order to exercise the Rights represented by the Rights Certificate, such
holder of Rights must complete and deliver the Rights Certificate in
accordance with the instructions set out under "Details of the Rights
Offering – How to Complete the Rights Certificate". For common shares of
the Corporation held by an Eligible Holder through a Participant in the
book–based system administered by CDS, a subscriber may subscribe for
Common Shares by instructing the Participant holding the subscriber's
Rights to exercise all or a specified number of such Rights and forwarding
the Subscription Price for each Common Share subscribed for in accordance
with the terms of this Offering to such Participant. See "Details of the
Rights Offering – Rights Certificate – Common Shares Held Through
CDS".
Holders
in Ineligible Jurisdictions:
No
subscription under the Basic Subscription Right nor under the Additional
Subscription Privilege will be accepted from any person, or such person's
agent, who appears to be, or who the Corporation has reason to believe is,
not resident in an Eligible Jurisdiction, except that the Corporation may
accept subscriptions in certain circumstances from persons in such
jurisdictions who have demonstrated to the Corporation that such offering
to and subscription by such person or agent is lawful and in compliance
with all securities and other laws applicable in the jurisdiction where
such person or agent is resident (each an "Approved Eligible
Holder"). No Rights Certificates will be mailed to Ineligible
Holders and Ineligible Holders will not be permitted to exercise their
Rights. Instead, Ineligible Holders will be sent a copy of this short form
prospectus with a letter advising them that their Rights Certificates will
be issued to and held on their behalf by the Subscription Agent. Holders
of common shares of the Corporation who have not received Rights
Certificates but are resident in an Eligible Jurisdiction or wish to be
recognized as Approved Eligible Holders should contact the Subscription
Agent at the earliest possible time.
4
Rights
of registered Ineligible Holders will be held on their behalf by the
Subscription Agent until 5:00 p.m. (Toronto time) on March 16, 2009, in
order to provide the beneficial holders thereof the opportunity to claim
the Rights Certificate, or direct the Subscription Agent to exercise the
Rights on their behalf, by satisfying the Corporation that the exercise of
their Rights will not be in violation of the laws of the applicable
jurisdiction and does not require the Corporation to file any documents,
make any application or pay any amount in their jurisdiction of residence.
Such Ineligible Holders who direct the Subscription Agent to exercise the
Rights on their behalf will be required to submit payment in full of the
Subscription Price for each Common Share subscribed for on or prior to the
Expiry Time on the Expiry Date. After such time, the Subscription Agent
will attempt to sell, on a best efforts basis, the Rights of such
registered Ineligible Holders, for their account, on such date(s) and at
such price(s) as the Subscription Agent will determine in its sole
discretion. Ineligible Holders whose shares are held through a Participant
in CDS who wish to be recognized as Approved Eligible Holders should
contact their Participant.
Rights
of beneficial Ineligible Holders will be held on their behalf either by
the Subscription Agent or by the relevant securities broker or dealer,
bank or trust company or other participant (including a Participant)
through which they hold securities. Either the Subscription Agent or the
relevant participant, as the case may be, will attempt to sell the Rights
of such beneficial Ineligible Holders, for their account, on such date(s)
and at such price(s) as determined by the particular agent, in its sole
discretion. See "Details of the Rights Offering — Ineligible
Holders".
Use
of Proceeds:
Taiga
intends to use the entirety of the net proceeds from the Offering for
working capital purposes, including the reduction of the amount
of indebtedness owing under its revolving credit
facilities.
Listing
and Trading:
The
Rights will be listed on the TSX and will be posted for trading until
12:00 p.m. (Toronto time) on the Expiry Date. The TSX has
conditionally approved the listing of the Common Shares issuable upon
exercise of the Rights. Approval of such listing will be
subject to the Corporation fulfilling all of the listing requirements of
the TSX. The currently outstanding common shares of the Corporation
are listed and posted for trading on the TSX under the symbol
"TBL".
Risk
Factors:
An
investment in Common Shares is subject to a number of risk factors. See
"Risk Factors".
5
THE
CORPORATION
Taiga
Forest Products Ltd. ("Old
Taiga") in its English form and Produits Forestiers Taiga Ltee in its
French form was formed on October 1, 1984 through the amalgamation of Taiga
Wood Products Ltd. (Produits de Bois Taiga Ltee) and Caneda Forest Products Ltd.
pursuant to the Company
Act (British Columbia). On May 26, 2005, Old Taiga entered into an
arrangement agreement with a newly incorporated subsidiary of Old Taiga, Taiga
Building Products Ltd. (Produits de Batiment Taiga Ltee in its French form), a
company formed under the Business Corporations Act
(British Columbia), which resulted in the Corporation acquiring all of the
issued and outstanding common shares of Old Taiga ("Taiga Shares") in exchange for
stapled units of the Corporation ("Stapled Units"), each
comprised of one common share of the Corporation and one 14% subordinated note
(a "Note"), issued under
an indenture dated as of September 1, 2005 (the "Indenture"), all pursuant to
an arrangement under the Business Corporations Act
(British Columbia) (the "Arrangement") which became
effective on September 1, 2005. The purpose of the Arrangement was to
establish the Corporation as a publicly traded company carrying on, directly or
indirectly, the business and operations of Old Taiga. After giving effect to the
Arrangement, shareholders of Old Taiga, together with purchasers of the Stapled
Units, owned all of the issued and outstanding Stapled Units of the Corporation,
the Corporation owned all of the issued and outstanding Taiga Shares and Old
Taiga became a wholly-owned subsidiary of the Corporation. In May 2006, the
Corporation purchased and cancelled certain of its outstanding Notes, as a
result of which the Stapled Units were separated into Notes and common shares of
the Corporation. The Notes and common shares began trading separately on the TSX
on May 4, 2006 under the symbols "TBL.NT" and "TBL", respectively. Further
information regarding the Arrangement is available under the Corporation's
profile on SEDAR at www.sedar.com. For greater certainty, we are not
incorporating by reference on this short form prospectus any historical
disclosure not otherwise listed under "Documents Incorporated by
Reference".
The
principal and head office of the Corporation is located at Suite 800,
4710 Kingsway, Burnaby, British Columbia, V5H 4M2. The registered and
records office of the Corporation is located at 2800 Park Place,
666 Burrard Street, Vancouver, British Columbia, V6C 2Z7.
BUSINESS
OF THE CORPORATION
Business
Overview
Taiga is
the largest independent wholesale distributor, by revenue, of building products
in Canada. Taiga's revenues in fiscal 2008 were approximately $1.0 billion.
Approximately 83% of Taiga's revenues in fiscal 2008 were derived from sales of
its products in Canada, with the balance from the United States and elsewhere.
Sales in the United States are generated from Taiga's distribution centres in
Rocklin and Sanger, California and from Taiga's Canadian distribution centres
that service customers in the United States.
Taiga
distributes the following products: (i) dimension lumber; (ii) panel
products, including plywood, particle board and oriented strandboard; and
(iii) allied and treated products such as roofing materials, mouldings,
composite decking, polyethylene sheeting, batt and foam insulation, flooring,
engineered wood and treated wood.
As a
wholesale distributor, Taiga maintains substantial inventories of building
products at 15 strategically located distribution centres throughout Canada and
two distribution centres in California. In addition, Taiga distributes building
products through the use of third party reload facilities and directly from
producers to retailers and industrial manufacturers.
Taiga
operates three wood preservation plants that produce treated wood products and
one remanufacturing facility that produces building materials such as fence
products and custom-cut lumber. Taiga distributes its treated wood and
manufactured products through its distribution network.
Taiga's
primary customers are "big-box" and other building products retailers, building
supply yards and industrial manufacturers. Building products retailers and
building supply yards sell building products to either "do-it-yourself"
consumers or contractors. Taiga's customers include national retail chains such
as The Home Depot, Inc., Rona Inc. and Home Hardware Stores Limited, regional
retail chains and members of buying groups, such as Sexton Group, Tim-BR Mart,
Castle Building Centres and Independent Lumber Dealers of Canada. The scale of
Taiga's operations enables it to satisfy its customers' needs by providing large
uniform volumes of its focused range of building products. Taiga maintains
just-in-time inventories of its products at its distribution centres, as well as
at third party reload centres located throughout North America.
6
Products
Dimension
Lumber and Panel Products
Dimension
Lumber
Dimension
lumber is lumber cut to standard sizes and used as building materials. Dimension
lumber is a commodity product as it exhibits standardization across suppliers,
as opposed to the quality and design differences associated with branded
products such as insulation and roofing. Taiga's gross margins on dimension
lumber are achieved by offering value-added services to its customers, such as
just-in-time delivery, extended payment terms and consistent
supply.
Taiga has
over 30 years of experience in the dimension lumber commodity markets. This
experience, coupled with daily participation in the lumber market, provides
Taiga with extensive knowledge of the lumber market and facilitates trading
activities. Dealing in commodities allows Taiga to build substantial volume into
its distribution network and promotes higher capacity usage of in-bound and
out-bound transportation which reduces cost. Taiga's expertise and scale enable
Taiga to be price competitive in both supply and sales.
Panel
Products
Panel
products are standard size wooden building panels such as plywood, particle
board, medium density fibre board and oriented strandboard. Like dimension
lumber, panel products are also commodity products that are marketed and sold in
a manner similar to sales of dimension lumber. However, certain panel products
are subject to greater price volatility than dimension lumber.
Allied
Products and Treated Wood
Allied
Products
Allied
products are building products that have a natural connection to Taiga's
principal products and that generally have a brand presence, for example: "Johns
Manville" residential insulation, "LP SmartStart" siding, "Owens Corning" rigid
insulation, "Trex" composite decking and "Grace" accessory roofing products.
Taiga also sells allied products under its "Taiga Select" brand name including
flooring and mouldings. Allied products complement Taiga's other product lines.
Management believes that producers distribute their product through Taiga
because of the scale of Taiga's operations and its national market penetration.
Taiga has targeted the allied products segment for growth and believes that the
higher margins generally attributable to branded products can enhance
profitability. Expanding sales of these building products can also smooth the
volatility that characterizes commodity markets.
Treated
Wood
Treated
wood is lumber that has been chemically treated to increase its ability to
withstand variable weather conditions. It is used for fencing, decking,
foundations, landscaping and for other external applications. Taiga produces
treated wood at its three wood preservation plants located in British Columbia,
Alberta and Ontario. This product is marketed under the brand name "Taiga
Select". Taiga intends to continue to support the growth of its treated wood
brand. In addition to distributing its own treated wood, Taiga also distributes
treated wood produced by other manufacturers. Taiga also provides wood treatment
services to other lumber producers on a contract basis. Sales of treated wood
generally have higher gross margins than sales of untreated dimension lumber and
other panel products.
7
CONSOLIDATED
CAPITALIZATION
The
following table sets forth the consolidated capitalization of the Corporation as
at December 31, 2008 before and after giving effect to the Offering. This
table should be read in conjunction with the Corporation's comparative unaudited
interim consolidated financial statements for the three and nine months ended
December 31, 2008, all incorporated herein by reference.
Current
portion of long-term debt, principal value
79
79
Current
portion of obligations under capital leases
482
482
Long-Term
Debt:
Long-term
Debt
2,816
2,816
Obligations
under capital leases
11,364
11,364
Subordinated
Notes
128,834
128,834
Total
Debt:
243,682
233,982
Shareholders'
Equity:
Common
Shares
13,229
22,929
(authorized
– unlimited)
Accumulated
other comprehensive loss
(607
)
(607
)
Retained
earnings (deficit)
(98,076
)
(98,076
)
Total
shareholders' equity (deficiency)
(85,454
)
(75,754
)
Total
Capitalization
$
158,228
$
158,228
Note:
(1)
The
unaudited pro forma capitalization as at December 31, 2008 assumes
the full exercise of all Rights under the Offering after deducting the
estimated expenses of the Offering in the amount of $300,000. There is no
standby commitment in connection with this
Offering.
USE
OF PROCEEDS
The
aggregate net proceeds to be derived by the Corporation from the Offering are
estimated to be approximately $9,700,000, assuming the exercise of all of the
Rights and after deducting the estimated expenses of the Offering of
approximately $300,000. Taiga intends to use the entirety of the net proceeds
from the Offering for working capital purposes, including the reduction
of the amount of indebtedness owing under its revolving credit
facilities.
The
actual use of the net proceeds of the Offering may vary depending on the
operating and capital needs of the Corporation from time to time. Accordingly,
management of the Corporation will have broad discretion in the application of
the proceeds of the Offering.
PLAN
OF DISTRIBUTION
There is
no managing or soliciting dealer for the Offering and no fee of any kind will be
paid by us for the solicitation of the exercise of the Rights. For a description
of the distribution of the Rights, see "Details of the Rights
Offering".
The
Rights will be listed and posted for trading on the TSX until 12:00 p.m.
(Toronto time) on the Expiry Date. The TSX has also conditionally approved the
listing of the Common Shares issuable upon the exercise of the Rights. Approval
of such listing will be subject to the Corporation fulfilling all of the listing
requirements of the TSX. The Subscription Price was determined by the board of
directors in accordance with the policies for rights offerings set out in the
TSX Company Manual, and was calculated at 50% of the volume weighted average
trading price of the common shares of the Corporation on the TSX for the
10 day period ended on the day immediately preceding the date of this short
form prospectus.
DESCRIPTION
OF SECURITIES BEING DISTRIBUTED
The
authorized capital of the Corporation consists of an unlimited number of common
shares, unlimited class A common shares, unlimited class A preferred shares and
unlimited class B preferred shares. As of the date hereof, 32,205,680 common
shares, no class A common shares and no class A or class B preferred shares were
issued and outstanding. For a description of the Rights, see "Details
of the Rights Offering".
Common
Shares
The
holders of Common Shares are entitled to one vote per Common Share and to
receive notice of, and attend any meeting of the shareholders of the Corporation
(other than meetings of a class or series of shares of the Corporation). The
holders of Common Shares are entitled to receive dividends if, as and when
declared by the board of directors of the Corporation on Common Shares as a
class. The holders of Common Shares will be entitled to share rateably in any
distribution of the assets of the Corporation in the event of any liquidation,
dissolution or winding-up of the Corporation, whether voluntary or involuntary,
or any other distribution of the assets of the Corporation for the purpose of
winding-up its affairs. The Common Shares carry non pre-emptive or conversion
rights and are not subject to redemption.
8
PRIOR
SALES
Taiga has
not issued any common shares or any securities convertible into common shares in
the 12-month period before the date of this short form prospectus.
TRADING
PRICE AND VOLUME
The
common shares of the Corporation are listed and posted for trading on the TSX
under the symbol "TBL". The following table sets forth, for the periods
indicated, the reported high and low sales prices and aggregate volume of
trading of the common shares of the Corporation on the TSX:
Holders
of record at 5:00 p.m. (Toronto time) on the Record Date will receive Rights on
the basis of one Right for each common share of the Corporation held at that
time. The Rights permit the holders thereof (provided that such holder is in an
Eligible Jurisdiction or is an Approved Eligible Holder) to subscribe for and
purchase from the Corporation an aggregate of approximately 71,428,571
Common Shares, assuming exercise in full of the Rights issued
hereunder.
The
Rights will be represented by the Rights Certificates which are transferable
(subject to certain restrictions for holders in the United States) and
divisible. A Right does not entitle the holder thereof to any rights whatsoever
as a security holder of the Corporation other than to subscribe for and purchase
Common Shares as described herein. Rights Certificates will be issued in
registered form. For Holders in an Eligible Jurisdiction who hold their common
shares of the Corporation in registered form as of the Record Date, a Rights
Certificate evidencing the number of Rights to which such Registered Eligible
Holder is entitled and the number of Common Shares which may be obtained on
exercise of those Rights will be mailed with a copy of this short form
prospectus. See "— Rights Certificate — Common Shares Held in Registered
Form". The Rights and the Common Shares issuable upon the exercise of
the Rights are not qualified under the securities laws of any jurisdiction other
than the Eligible Jurisdictions and, except as permitted herein, Rights may not
be exercised by or on behalf of a holder resident in an Ineligible Jurisdiction.
Rights Certificates will not be sent to Holders with addresses of record in any
Ineligible Jurisdiction. Instead, such Ineligible Holders will be sent a copy of
this short form prospectus with a letter advising them that their Rights
Certificates will be issued to and held on their behalf by the Subscription
Agent, as agent for their benefit.
9
Eligible
Holders that hold their common shares of the Corporation through a Participant
in the book–based system administered by CDS as of the Record Date will not
receive physical certificates evidencing their ownership of Rights. A global
certificate representing such Rights will be issued in registered form to, and
deposited with, CDS. The Corporation expects that each beneficial shareholder
will receive a confirmation of the number of Rights issued to it from its
Participant. CDS will be responsible for establishing and maintaining book–entry
accounts for Participants holding Rights. See "— Rights Certificate — Common
Shares Held Through CDS". Rights delivered to Participants may not be delivered
by such Participants to beneficial holders of common shares of the Corporation
unless such holders are resident in an Eligible Jurisdiction. Such
intermediaries can only exercise such Rights on behalf of Ineligible Holders if
they can demonstrate to us that such issuance is lawful as described below and
they have submitted payment in full of the Subscription Price to the
Subscription Agent on or prior to the Expiry Time on the Expiry
Date.
Ineligible
Holders who have demonstrated to us that the exercise of the Rights and issuance
of the Common Shares upon the exercise of the Rights is not prohibited by local
securities laws and does not require us to file any documents, make any
application, or pay any amount in their jurisdiction of residence on or before
March 16, 2009 will be entitled to direct the Subscription Agent to exercise
their Rights on their behalf. Such Approved Eligible Holders will be required to
submit payment in full of the Subscription Price for each Common Share
subscribed for to the Subscription Agent at the address noted above on or prior
to the Expiry Time on the Expiry Date. Rights that Ineligible Holders would
otherwise be entitled to receive will be held by the Subscription Agent who
will, prior to the Expiry Time on the Expiry Date, attempt to sell such Rights
(other than those held for Approved Eligible Holders that have directed the
Subscription Agent to exercise their Rights) on the open market, on a best
efforts basis, and the net proceeds thereof, if any, will be forwarded to such
Ineligible Holders as described herein. See "Details of the Rights Offering —
Ineligible Holders".
Subscription
Basis
For each
Right held, an Eligible Holder or Approved Eligible Holder thereof is entitled
to subscribe for 2.218 Common Shares at the Subscription Price of $0.14 per
Common Share. Any subscription for Common Shares will be irrevocable once
submitted.
Fractional
Common Shares will not be issued upon the exercise of Rights. Where the exercise
of Rights would appear to entitle a holder of Rights to receive fractional
Common Shares, the holder's entitlement will be reduced to the next lowest whole
number of Common Shares as the case may be. CDS Participants that hold Rights
for more than one beneficial holder may, upon providing evidence satisfactory to
the Corporation, exercise Rights on behalf of their accounts on the same basis
as if the beneficial owners of common shares of the Corporation were holders of
record on the Record Date.
Limits
on the Exercise of Rights
Although
there is no standby purchase commitment with respect to the Offering, Berjaya
and Genghis have each expressed an intention to the Corporation to exercise at
least its Basic Subscription Right, subject to customary conditions, and
provided that in any event, neither will exercise its Rights under the Offering
such as to acquire beneficial ownership, control or direction over 50% or more
of the common shares of the Corporation then outstanding. Genghis is a private
Luxembourg company controlled by a trust whose beneficiaries include members of
Dr. Tong's family. Dr. Tong, the representative of Genghis,
is a director and executive chairman of the Corporation.
Genghis
and the Corporation have received an ARC under the Competition Act which allows
Genghis, directly or indirectly, to exercise its Rights pursuant to the Offering
in order to acquire 20% or more of the Corporation's common shares then
outstanding. In order to comply with the provisions of the
Competition Act, the Corporation will permit the exercise of only that portion
of the Rights owned by Berjaya that would result in Berjaya beneficially owning,
or exercising control or direction over, not more than 49.9% of the
Corporation's common shares then outstanding.
The
Credit Agreement provides that an event of default will occur upon any person,
other than Berjaya or Dr. Tong, directly or indirectly, acquiring ownership
or control of 20% or more of the Corporation's outstanding common shares on a
fully diluted basis. In order to avoid defaulting under the Credit
Agreement, a holder, other than Berjaya or Dr. Tong, should only exercise
that portion of its Rights under this Offering that would result in the holder
beneficially owning, or exercising control or direction over, not more than
19.9% of our common shares then outstanding, on a fully diluted
basis.
10
Purchases
by holders of Rights of Common Shares issuable upon the exercise of Rights will
not trigger the provisions relating to takeover bids pursuant to applicable
Canadian securities law.
Exercise
Period and Expiration Date
The
Rights will be eligible for exercise following mailing, which is expected
to occur on or about March 5, 2009. The exercise period for the Rights will
expire at the Expiry Time on the Expiry Date. Eligible Holders and Approved
Eligible Holders who exercise the Rights will become holders of Common Shares
issued through the exercise of the Rights on the completion of the Offering.
Certificates for the Common Shares will be delivered following the Expiry Date.
Rights not exercised prior to the Expiry Time on the Expiry Date will be void and of no
value.
Shareholders
Resident in the United States
We have
filed with the SEC a Registration Statement on Form F-7 under the United States
Securities Act of 1933,
as amended (the "U.S.
Securities Act") so that Common Shares issuable upon the exercise of the
Rights will not be subject to transfer restrictions. However, the Rights may be
transferred only in transactions outside of the United States in accordance with
Regulation S under the U.S. Securities Act, which will permit the resale of the
Rights by persons through the facilities of the TSX, provided that the offer is
not made to a person in the United States, neither the seller nor any person
acting on its behalf knows that the transaction has been prearranged with a
buyer in the United States, and no "directed selling efforts", as that term is
defined in Regulation S, are conducted in the United States in connection with
the resale. Certain additional conditions are applicable to our "affiliates", as
that term is defined under the U.S. Securities Act.
Basic
Subscription Right
Each
Holder at the close of business on the Record Date is entitled to receive one
Right for each common share of the Corporation held. For each Right held, the
holder (other than an Ineligible Holder), is entitled to acquire 2.218
Common Shares under the Basic Subscription Right at the Subscription Price by
subscribing and making payment in the manner described herein on or before the
Expiry Time on the Expiry Date. A holder of Rights that subscribes for some, but
not all, of the Common Shares pursuant to the Basic Subscription Right will be
deemed to have elected to waive the unexercised balance of such Rights and such
unexercised balance of Rights will be void and of no value unless the
Subscription Agent is otherwise specifically advised by such holder at the time
the Rights Certificate is surrendered that the Rights are to be transferred to a
third party or are to be retained by the holder. Holders of Rights who exercise
in full the Basic Subscription Right for their Rights are also entitled to
subscribe for the Additional Shares, if any, that are not otherwise subscribed
for under the Offering, on a pro–rata basis prior to the
Expiry Time on the Expiry Date pursuant to the Additional Subscription
Privilege. See "– Additional Subscription Privilege". Fractional Common Shares
will not be issued upon the exercise of Rights. CDS Participants that hold
Rights for more than one beneficial Holder as at the Record Date may, upon
providing evidence satisfactory to the Corporation and the Subscription Agent,
exercise Rights on behalf of their accounts on the same basis as if the
beneficial owners of common shares of the Corporation were holders of record on
the Record Date.
For
common shares of the Corporation held in registered form, in order to exercise
the Rights represented by a Rights Certificate, the holder of Rights must
complete and deliver the Rights Certificate to the Subscription Agent in
accordance with the terms of this Offering in the manner and upon the terms set
out in this short form prospectus and pay the Subscription Price. See
"– Rights Certificate – Common Shares Held in Registered Form".
For
common shares of the Corporation held through a Participant in the book–based
system administered by CDS, a holder of Rights may subscribe for Common Shares
by instructing the Participant holding the subscriber's Rights to exercise all
or a specified number of such Rights and forwarding the Subscription Price for
each Common Share subscribed for in accordance with the terms of this Offering
to such Participant. Subscriptions for Common Shares made in connection with the
Offering through a Participant will be irrevocable and subscribers will be
unable to withdraw their subscriptions for Common Shares once
submitted. See "– Rights Certificate – Common Shares Held Through
CDS".
11
The
Subscription Price is payable in Canadian funds by certified cheque, bank draft
or money order drawn to the order of the Subscription Agent. In the case of
subscription through a Participant, the Subscription Price is payable by
certified cheque, bank draft or money order drawn to the order of such
Participant, by direct debit from the subscriber's brokerage account or by
electronic funds transfer or other similar payment mechanism. The entire
Subscription Price for Common Shares subscribed for must be paid at the time of
subscription and must be received by the Subscription Agent prior to the Expiry
Time on the Expiry Date. Accordingly, a subscriber subscribing through a
Participant must deliver its payment and instructions sufficiently in advance of
the Expiry Date to allow the Participant to properly exercise the Rights on its
behalf.
Payment
of the Subscription Price will constitute a representation to the Corporation
and, if applicable, to the Participant, by the subscriber (including by its
agents) that (i) either the subscriber is not a citizen or resident of an
Ineligible Jurisdiction or the subscriber is an Approved Eligible Holder and
(ii) the subscriber is not purchasing the Common Shares for resale to any person
who is a citizen or resident of an Ineligible Jurisdiction.
Additional
Subscription Privilege
A holder
of Rights who has exercised in full the Basic Subscription Right for its Rights
may subscribe for Additional Shares, if available, at a price equal to the
Subscription Price for each Additional Share. The number of Additional Shares
will be the difference, if any, between the total number of Common Shares
issuable upon exercise of Rights and the total number of Common Shares
subscribed and paid for pursuant to the Basic Subscription Right at the Expiry
Time on the Expiry Date. Subscriptions for Additional Shares will be received
subject to allotment only and the number of Additional Shares, if any, that may
be allotted to each subscriber will be equal to the lesser of (a) the number of
Additional Shares that such subscriber has subscribed for and (b) the product
(disregarding fractions) obtained by multiplying the number of Additional Shares
available to be issued by a fraction, the numerator of which is the number of
Rights previously exercised by the subscriber under the Basic Subscription Right
and the denominator of which is the aggregate number of Rights previously
exercised under the Basic Subscription Right by all holders of Rights that have
subscribed for Additional Shares. If any holder of Rights has subscribed for
fewer Additional Shares than such holder's pro–rata allotment of
Additional Shares, the excess Additional Shares will be allotted in a similar
manner among the holders who were allotted fewer Additional Shares than they
subscribed for.
To apply
for Additional Shares under the Additional Subscription Privilege, each holder
of Rights must forward their request to the Subscription Agent or their
Participant, as applicable, prior to the Expiry Time on the Expiry Date. Payment
for Additional Shares, in the same manner as required upon exercise of the Basic
Subscription Right, must accompany the request when it is delivered to the
Subscription Agent or a Participant, as applicable. Any excess funds will be
returned by mail by the Subscription Agent or credited to a subscriber's account
with its Participant, as applicable, without interest or deduction. Payment of
such price must be received by the Subscription Agent prior to the Expiry Time
on the Expiry Date, failing which the subscriber's entitlement to such
Additional Shares will terminate. Accordingly, a subscriber subscribing through
a Participant must deliver its payment and instructions to a Participant
sufficiently in advance of the Expiry Time on the Expiry Date to allow the
Participant to properly exercise the Additional Subscription Privilege on its
behalf.
Subscription
and Transfer Agent
The
Subscription Agent has been appointed the agent of the Corporation to receive
subscriptions and payments from holders of Rights Certificates and to perform
certain services relating to the exercise and transfer of Rights. The
Corporation will pay for the services of the Subscription Agent. Subscriptions
and payments under the Offering should be sent to the Subscription Agent
at:
By Mail
By Hand, Courier or Registered
Mail
Computershare
Trust Company of Canada
P.O.
Box 7021
31
Adelaide St E
Toronto,
ON M5C 3H2
Attention: Corporate
Actions
Computershare
Trust Company of Canada
100
University Avenue, 9th
floor
Toronto,
ON M5J 2Y1
Attention:
Corporate Actions
Enquiries
relating to the Offering should be addressed to the Subscription Agent by
telephone at 1-800-564-6253 or to Taiga by telephone at
(604) 438-1471.
12
Rights
Certificate – Common Shares Held in Registered Form
For
Registered Eligible Holders a Rights Certificate representing the total number
of Rights to which each such Registered Eligible Holder is entitled as at the
Record Date will be mailed with a copy of this short form prospectus. In order
to exercise the Rights represented by the Rights Certificate, such holder of
Rights must complete and deliver the Rights Certificate in accordance with the
instructions set out under "– How to Complete the Rights Certificate". Rights
not exercised by the Expiry Time on the Expiry Date will be void and of no
value. The method of delivery is at the discretion and risk of the holder of the
Rights Certificate and delivery to the Subscription Agent will only be effective
when actually received by the Subscription Agent at its office. Rights
Certificates and payments received after the Expiry Time on the Expiry Date will
not be accepted.
Rights
Certificate – Common Shares Held Through CDS
For
Eligible Holders who hold their common shares of the Corporation through a
securities broker or dealer, bank or trust company or other CDS Participant in
the book based system administered by CDS, a global certificate representing the
total number of Rights to which all such Eligible Holders as at the Record Date
are entitled will be issued in registered form to CDS and will be deposited with
CDS following the Record Date. The Corporation expects that each beneficial
Eligible Holder will receive a confirmation of the number of Rights issued to it
from its Participant in accordance with the practices and procedures of that
Participant. CDS will be responsible for establishing and maintaining book-entry
accounts for Participants holding Rights.
Neither
the Corporation nor the Subscription Agent will have any liability for (i) the
records maintained by CDS or Participants relating to the Rights or the
book-entry accounts maintained by them, (ii) maintaining, supervising or
reviewing any records relating to such Rights, or (iii) any advice or
representations made or given by CDS or Participants with respect to the rules
and regulations of CDS or any action to be taken by CDS or
Participants.
The
ability of a person having an interest in Rights held through a Participant to
pledge such interest or otherwise take action with respect to such interest
(other than through a Participant) may be limited due to the lack of a physical
certificate.
Holders
who hold common shares of the Corporation through a Participant must arrange
purchases or transfers of Rights through their Participant. It is anticipated by
the Corporation that each such purchaser of a Common Share or Right will receive
a customer confirmation of issuance or purchase, as applicable, from the
Participant through which such Right is issued or such Common Share is purchased
in accordance with the practices and policies of such Participant.
How
to Complete the Rights Certificate
Form
1 — Basic Subscription Right
The
maximum number of Rights that may be exercised pursuant to the Basic
Subscription Right is shown in the box on the upper right hand corner on the
face of the Rights Certificate. Form 1 must be completed and signed to exercise
all or some of the Rights represented by the Rights Certificate pursuant to the
Basic Subscription Right. If Form 1 is completed so as to exercise some but not
all of the Rights represented by the Rights Certificate, the holder of the
Rights Certificate will be deemed to have waived the unexercised balance of such
Rights, unless the Subscription Agent is otherwise specifically advised by such
holder at the time the Rights Certificate is surrendered that the Rights are to
be transferred to a third party or are to be retained by the holder, and such
holder may not participate in the Additional Subscription Privilege. The
completion of Form 1 constitutes a representation that the beneficial
holder of the Rights Certificate is not an Ineligible Holder.
Form
2 — Additional Subscription Privilege
Complete
and sign Form 2 on the Rights Certificate and specify the number of Additional
Shares you wish to subscribe for only if you also wish to participate in the
Additional Subscription Privilege. See "— Additional Subscription Privilege".
The completion of Form 2 constitutes a binding commitment to subscribe for
the number of Additional Shares specified.
13
Form
3 —Transfer of Rights
Holders
of Rights who do not wish to exercise their Rights may sell or transfer their
Rights through usual investment channels, such as investment dealers and
brokers, at the expense of the holder. Holders of Rights may elect to exercise
only a part of their Rights and dispose of the remainder of them. Complete and
sign Form 3 on the Rights Certificate only if you wish to transfer the Rights to
a person in an Eligible Jurisdiction or an Approved Eligible Holder. Your
signature must be guaranteed by a Canadian Schedule I chartered bank, a major
trust company in Canada, or a member of an acceptable Medallion Signature
Guarantee Program, including Securities Transfer Agents Medallion Program
(STAMP), Stock Exchange Medallion Program (SEMP) and the Medallion Signature
Program of the New York Stock Exchange (MSP). Members of STAMP are usually
members of a recognized stock exchange in Canada or members of the Investment
Dealers Association of Canada. The guarantor must affix a stamp bearing the
actual words "Signature Guaranteed". It is not necessary for a transferee to
obtain a new Rights Certificate to exercise the Rights, but the signatures of
the transferee on Forms 1 and 2 must correspond in every particular with the
name of the transferee (or the bearer if no transferee is specified) as the
absolute owner of the Rights Certificate for all purposes. If Form 3 is
completed, the Subscription Agent will treat the transferee as the absolute
owner of the Rights Certificate for all purposes and will not be affected by
notice to the contrary.
Persons
interested in selling or purchasing Rights should be aware that the exercise of
Rights by holders who are located in Ineligible Jurisdictions will not be
permitted unless the person exercising the rights meets the conditions and
satisfies the procedures described herein. See "- Ineligible
Holders".
Form
4 — Dividing or Combining
Complete
and sign Form 4 on the Rights Certificate only if you wish to divide or combine
the Rights Certificate, and surrender it to the Subscription Agent. Rights
Certificates need not be endorsed if the new Rights Certificate(s) is issued in
the same name. The Subscription Agent will then issue a new Rights Certificate
in such denominations (totaling the same number of Rights as represented by the
Rights Certificate(s) being divided or combined) as are required by the Rights
Certificate holder. Rights Certificates must be surrendered for division or
combination in sufficient time prior to the Expiry Time to permit the new Rights
Certificates to be issued to and used by the Rights Certificate
holder.
Payment
Enclose
payment in Canadian funds by certified cheque, bank draft, money order or other
form or payment acceptable to the Subscription Agent payable to the order of
"Computershare Trust Company of Canada". The amount of payment will be $0.14 per
Common Share. Payment must also be included for any Additional Shares subscribed
for under the Additional Subscription Privilege. In the event of an over
subscription for Additional Shares pursuant to the Additional Subscription
Privilege, the Subscription Agent will return to subscribers the excess funds
paid for the subscription of such Additional Shares not available to be issued
to such subscribers.
Deposit
Deliver
or mail the completed Rights Certificate and payment in the return envelope
provided, addressed to the Subscription Agent so that it is received by the
Subscription Agent listed above before the Expiry Time on the Expiry Date. If
mailing, registered mail is strongly recommended. Please allow sufficient time
to avoid late delivery. The signature of the Rights Certificate holder must
correspond in every particular with the name that appears on the face of the
Rights Certificate.
Signatures
by a trustee, executor, administrator, guardian, attorney, officer of a
corporation or any person acting in a fiduciary or representative capacity
should be accompanied by evidence of authority satisfactory to the Subscription
Agent. All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of any subscription will be determined by the
Corporation in its sole discretion, and any determination by the Corporation
will be final and binding on the Corporation and its security holders. Upon
delivery or mailing of the completed Rights Certificate to the Subscription
Agent, the exercise of the Rights and the subscription for Common Shares is
irrevocable. The Corporation reserves the right to reject any subscription if it
is not in proper form or if the acceptance thereof or the issuance of Common
Shares pursuant thereto could be unlawful. The Corporation also reserves the
right to waive any defect in respect of any particular subscription. Neither the
Corporation nor the Subscription Agent is under any duty to give any notice of
any defect or irregularity in any subscription, nor will they be liable for the
failure to give any such notice. Any holder of Rights that fails to
complete and deliver their subscription in strict accordance with the foregoing
instructions prior to the Expiry Time on the Expiry Date will forfeit their
Rights under the Basic Subscription Right and the Additional Subscription
Privilege attaching to those Rights.
14
Undeliverable
Rights
Rights
Certificates returned to the Subscription Agent as undeliverable will not be
sold by the Subscription Agent and no proceeds of sale will be credited to such
holders.
Sale
or Transfer of Rights
Subject
to certain restrictions for holders in the United States, holders of Rights in
registered form may, instead of exercising their Rights to subscribe for Common
Shares, sell or transfer their Rights to any person that is not an Ineligible
Holder by completing Form 3 on the Rights Certificate and delivering the Rights
Certificate to the transferee. See "– How to Complete the Rights Certificate"
and "– Shareholders Resident in the United States". A permitted transferee of
the Rights of a registered holder of a Rights Certificate may exercise the
Rights transferred to such permitted transferee without obtaining a new Rights
Certificate. If a Rights Certificate is transferred in blank, the Corporation
and the Subscription Agent may thereafter treat the bearer as the absolute owner
of the Rights Certificate for all purposes and neither the Corporation nor the
Subscription Agent will be affected by any notice to the contrary.
Holders
of Rights through Participants who wish to sell or transfer their Rights must do
so in the same manner in which they sell or transfer common shares of the
Corporation. See "Rights Certificate — Common Shares Held Through
CDS".
Dilution
to Existing Holders
If a
Holder wishes to retain its current percentage ownership in the Corporation and
assuming that all Rights are exercised, it should purchase all of the Common
Shares for which it may subscribe pursuant to the Basic Subscription Right for
the Rights delivered under the Offering. If that Holder does not do so and other
holders of Rights exercise any of their Rights, that Holder's current percentage
ownership in the Corporation will be diluted by the issue of Common Shares under
this Offering.
Delivery
of Common Shares
Certificates
for Common Shares duly subscribed and paid for will be delivered by first class
mail following the Expiry Time by the Subscription Agent to the
subscriber.
In the
case of a subscriber who participates in the Additional Subscription Privilege,
certificates combining Common Shares subscribed for under the Basic Subscription
Right and the Additional Subscription Privilege will be sent as soon as
practicable after the Expiry Time and the determination of the number of Common
Shares to which each such participant is entitled. In the event that pursuant to
the Additional Subscription Privilege the number of Common Shares delivered to
the subscriber is less than the number subscribed for, a cheque representing a
refund, without interest or deduction, of the excess portion of the total
Subscription Price paid by the subscriber will accompany the delivery of the
certificates herein described.
Subject
to the exceptions set out under "— Ineligible Holders", certificates
representing Common Shares will not be issued or mailed to an address in an
Ineligible Jurisdiction.
Ineligible
Holders
This
Offering is made only in the Eligible Jurisdictions. Accordingly, neither a
subscription under the Basic Subscription Right nor under the Additional
Subscription Privilege will be accepted from any person or such person's agent
who appears to be, or who the Corporation has reason to believe is, an
Ineligible Holder, except that the Corporation may accept subscriptions in
certain circumstances from persons in such jurisdictions if the Corporation
determines that such offering to and subscription by such person or agent is
lawful and in compliance with all securities and other laws applicable in the
jurisdiction where such person or agent is resident and does not require Taiga
to file any documents, make any application or pay any amount in their
jurisdiction of residence. The Rights and the Common Shares issuable upon the
exercise of the Rights have not been qualified for distribution in any
jurisdiction other than an Eligible Jurisdiction and accordingly may only be
offered, sold, acquired, exercised or transferred in transactions not prohibited
by applicable laws in Ineligible Jurisdictions.
15
Rights
Certificates will not be issued and forwarded by the Corporation to Holders
whose registered address is not in an Eligible Jurisdiction. Holders will be
required to provide a residency declaration in connection with any exercise of
the Rights. Ineligible Holders will be presumed to be resident in the place of
their registered address unless the contrary is shown to the satisfaction of the
Corporation. Ineligible Holders will be sent this short form prospectus together
with a letter advising them that their Rights Certificates will be issued to and
held on their behalf by the Subscription Agent. The letter will also set out the
conditions required to be met, and procedures that must be followed, by
Ineligible Holders wishing to participate in the Rights Offering. Rights
Certificates in respect of Rights issued to Ineligible Holders will be issued to
and held by the Subscription Agent as agent for the benefit of Ineligible
Holders. The Subscription Agent will hold the Rights until 5:00 p.m. (Toronto
time) on March 16, 2009, in order to provide Ineligible Holders an opportunity
to claim the Rights Certificate by satisfying the Corporation that the issue of
Common Shares pursuant to the exercise of Rights will not be in violation of the
laws of the applicable jurisdiction. Following such date, the Subscription
Agent, for the account of registered Ineligible Holders, will, prior to the
Expiry Time on the Expiry Date, attempt to sell the Rights of such registered
Ineligible Holders represented by Rights Certificates in the possession of the
Subscription Agent, on a best efforts basis, on such date(s) and at such
price(s) as the Subscription Agent will determine in its sole discretion.
Holders in Ineligible Jurisdictions who have demonstrated to us that they have
met the conditions required to be met to participate in the Offering and have
followed the procedure described in the letter to exercise the Rights, including
submitting an investor letter to the Subscription Agent on or before March 16,2009, will be entitled to direct the Subscription Agent to exercise their Rights
on their behalf. Shareholders of record will be presumed to be resident in the
place of their address of record, unless the contrary is shown to our
satisfaction.
Rights of
beneficial Ineligible Holders will be held on their behalf either by the
Subscription Agent or by the relevant securities broker or dealer, bank or trust
company or other participant (including a Participant) through which they hold
securities. Either the Subscription Agent or the relevant participant, as the
case may be, will attempt to sell the Rights of such beneficial Ineligible
Holders, for their account, on a best efforts basis, on such date(s) and at such
price(s) as determined by the particular agent, in its sole discretion. A
registered Holder of common shares (including an intermediary) whose address
appears on our records to be in an Ineligible Jurisdiction, but who holds Rights
on behalf of a Holder who is eligible to participate in the Rights Offering,
must notify the Subscription Agent, in writing, on or before March 16, 2009 that
the beneficial Holder, on behalf of whom such common shares are held, wishes to
participate in the Rights Offering. In that case, the registered Holder giving
such notification must demonstrate, to our satisfaction, that the exercise of
such Rights is not prohibited in the beneficial Holder's jurisdiction of
residence. Otherwise, the Subscription Agent will attempt to sell the Rights
held on behalf of such beneficial Holder as described above. Accordingly, the
Subscription Agent will not attempt to sell Rights of Ineligible Holders until
after March 16, 2009. Beneficial owners of common shares of the Corporation
registered in the name of a resident of an Ineligible Jurisdiction, who are not
themselves resident in an Ineligible Jurisdiction, who wish to be recognized as
an Approved Eligible Holder and who believe that their Rights Certificates may
have been delivered to the Subscription Agent, should contact the Subscription
Agent at the earliest opportunity and in any case in advance of March 16, 2009,
to request to have their Rights Certificates exercised on their
behalf.
The
Subscription Agent will, prior to the Expiry Time on the Expiry Date, attempt to
sell the Rights, other than those held for Approved Eligible Holders that have
directed the Subscription Agent to exercise their Rights on or before March 16,2009, on such date(s), on a best efforts basis, and at such price(s) as the
Subscription Agent determines, in its sole discretion. No charge will be made
for the sale of Rights by the Subscription Agent except for a proportionate
share of any brokerage commissions incurred by the Subscription Agent and the
costs of or incurred by the Subscription Agent in connection with the sale of
the Rights. Registered Ineligible Holders will not be entitled to instruct the
Subscription Agent in respect of the price or the time at which the Rights are
to be sold. The Subscription Agent will endeavour to effect sales of Rights on
the open market and any proceeds received by the Subscription Agent with respect
to the sale of Rights net of brokerage fees and costs incurred and, if
applicable, the Canadian tax required to be withheld, will be divided on a pro–rata basis among such
registered Ineligible Holders and delivered by mailing cheques (in Canadian
funds) of the Subscription Agent therefor as soon as practicable to such
registered Ineligible Holders at their addresses recorded on the books of the
Corporation. Amounts of less than $10.00 will not be remitted. The Subscription
Agent will act in its capacity as agent of the registered Ineligible Holders on
a best efforts basis only and the Corporation and the Subscription Agent do not
accept responsibility for the price obtained on the sale of, or the inability to
sell, the Rights on behalf of any registered Ineligible Holder. Neither the
Corporation nor the Subscription Agent will be subject to any liability for the
failure to sell any Rights of registered Ineligible Holders or as a result of
the sale of any Rights at a particular price or on a particular day. There is a risk that the proceeds
received from the sale of Rights will not exceed the costs of or incurred by the
Subscription Agent in connection with the sale of such Rights and, if
applicable, the Canadian tax required to be withheld. In such event, no proceeds will be
remitted.
16
Similar
provisions will apply to Rights held by a participant on behalf of a beneficial
Ineligible Holder.
Holders
of Rights who are not resident in Canada should be aware that the acquisition
and disposition of Rights and Common Shares may have tax consequences in the
jurisdiction in which they reside which are not described herein. Accordingly,
such holders should consult their own tax advisors about the specific tax
consequences of acquiring, holding and disposing of Rights or Common
Shares.
Ineligible
Holders may be able to exercise the Rights provided that they furnish an
investor letter satisfactory to us on or before March 16, 2009. The form of
investor letter will be included in the letter sent to Ineligible Holders and is
available upon request from the Subscription Agent.
Each
purchaser of the Common Shares located in such Ineligible Jurisdictions will be
required to execute and deliver to the Subscription Agent an investment letter
certifying its status, confirming adherence to certain restrictions and
procedures regarding the transfer of the Common Shares, and confirming, among
others, the following representations:
(a)
that
Taiga may issue the Common Shares to the purchaser pursuant to an
available exemption from registration and prospectus requirements or if
such is not applicable, that the purchaser is permitted to purchase the
Common Shares under the applicable securities laws, that the issuance of
the Common Shares by Taiga is lawful under applicable securities laws, and
will not result in Taiga becoming subject to or required to comply with
any disclosure, prospectus or reporting requirements under applicable
laws, that the purchaser is aware of any resale restrictions and provides
an opinion of counsel reasonably satisfactory to Taiga confirming the
foregoing;
(b)
that
the purchaser has received and read a copy of this short form prospectus,
and the purchaser has not relied on financial or other information
supplied to it by any person other than information contained in this
short form prospectus. The purchaser has made its own assessment
concerning the relevant tax, legal and other economic considerations
relevant to its investment in the Common Shares;
and
(c)
each
such Ineligible Holder will also be required to represent in the
investment letter that it acknowledges that Taiga and others will rely
upon the truth and accuracy of the acknowledgements, representations and
agreements in the investor letter. Such Ineligible Holder understands that
Taiga and others are relying on such investment letter in order to comply
with securities laws. Such Ineligible Holder irrevocably authorizes any
financial intermediary, which includes any nominee, custodian or other
financial intermediary through which it holds its currently outstanding
common shares of the Corporation, to provide Taiga, the Subscription Agent
and our counsel with a copy of such investment letter and such information
regarding its identity and holding of common shares of the Corporation
(including pertinent account information and details of its identity and
contact information) as is necessary or appropriate to facilitate its
exercise of the Rights or the purchase of the Common Shares. It also
irrevocably authorizes Taiga and the Subscription Agent to produce such
investment letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters set forth herein.
RISK
FACTORS
An
investment in the Common Shares is subject to a number of risks. A prospective
purchaser of the Common Shares should carefully consider the information and
risks faced by the Corporation described in this short form prospectus and the
documents incorporated herein by reference, including without limitation the
risk factors set out under the heading "Risk Factors" in the Corporation's
Annual Information Form and "Risks and Uncertainties" in the Corporation's
management's discussion and analysis in its most recently filed quarterly
report.
Dilution
If you do
not exercise all of your Rights pursuant to the Basic Subscription Right, your
current percentage ownership in the Corporation will be diluted by the issuance
of Common Shares upon the exercise of Rights by other Holders.
17
Trading
Market for Rights
Although
we expect that the Rights will be listed on the TSX, we cannot provide any
assurance that an active or any trading market in the Rights will develop or
that Rights can be sold on the TSX at any time.
The
Market Price of our Securities May Be Subject to Significant Fluctuations Which
May be Based on Factors Unrelated to Taiga's Financial Performance or
Prospects
The
trading price of our securities have been and may continue to be subject to
significant fluctuations which may be based on factors unrelated to Taiga's
financial performance or prospects. These factors include macroeconomic
developments in North America and globally, and market perceptions of the
attractiveness of particular industries.
We
have Discretion in the Use of the Net Proceeds from this Offering
We
currently intend to allocate the net proceeds we will receive from this Offering
as described under "Use of Proceeds". However, our management will have
discretion in the actual application of the net proceeds, and we may elect to
allocate net proceeds differently from that described in "Use of Proceeds" if we
believe it would be in our best interests to do so. Our shareholders may not
agree with the manner in which our management chooses to allocate and spend the
net proceeds. The failure by our management to apply these funds effectively
could have a material adverse effect on our business.
Sales
of Substantial Amounts of our Securities may have an Adverse Effect on the
Market Price of our Securities
Sales of
substantial amounts of our securities, or the availability of such securities
for sale, could adversely affect the prevailing market prices for our
securities. A decline in the market prices of our securities could impair our
ability to raise additional capital through the sale of securities should we
desire to do so.
CANADIAN
FEDERAL INCOME TAX CONSIDERATIONS
In the
opinion of Sangra Moller LLP, Canadian counsel to the Corporation, the following
is a general summary of the principal Canadian federal income tax considerations
arising in respect of the receipt of Rights under this Offering. This summary is
only applicable to holders of Rights who acquire such Rights pursuant to the
Offering in their capacity as a shareholder and who, for purposes of the Income Tax Act (Canada) (the
"Tax Act") and at all
relevant times, are resident in Canada and hold their common shares, and will
hold their Rights and Common Shares issued pursuant to the exercise of the
Rights, as capital property and deal at arm's length with, and are not
affiliated with, the Corporation (a "Resident Rights
Holder").
This
summary is based on the provisions of the Tax Act and the regulations thereunder
(the "Regulations") in
force on the date hereof and counsel's understanding of the current
administrative policies and practices of the Canada Revenue Agency ("CRA") published in writing
prior to the date hereof. This summary takes into account all specific proposals
to amend the Tax Act and the Regulations which have been publicly announced by
or on behalf of the Minister of Finance (Canada) prior to the date hereof (the
"Proposed Amendments")
and assumes that all such Proposed Amendments will be enacted in their present
form. No assurance can be given that the Proposed Amendments will be enacted in
the form proposed, if at all. This summary does not otherwise take into account
or anticipate any changes in law, whether by judicial, governmental or
legislative decision or action or changes in the administrative policies and
practices of the CRA, nor does it take into account provincial, territorial or
foreign income tax legislation or considerations which may differ materially
from those described in this summary.
This
summary does not apply to a Resident Rights Holder that is a "financial
institution" for purposes of section 142.2 of the Tax Act, a "specified
financial institution" as defined for purposes of the Tax Act, or a Resident
Rights Holder to which the "functional currency" reporting rules in subsection
261(4) of the Tax Act apply, nor does it apply to a taxpayer an interest in
which is a tax shelter investment for the purposes of the Tax Act. Such holders
should consult their own tax advisors.
This
summary is of a general nature only and is not exhaustive of all possible
Canadian federal income tax considerations. It does not take into account or
consider the tax laws of any province or territory or of any jurisdiction
outside Canada. This summary is not intended to be, nor should it be construed
to be, legal or tax advice to any particular Resident Rights Holder, and no
representations concerning the tax consequences to any particular Resident
Rights Holder are made. Resident Rights Holders should consult their own tax
advisers regarding the income tax considerations applicable to them having
regard to their particular circumstances.
18
Receipt
of Rights
Generally,
no amount will be required to be included in computing the income of a Resident
Rights Holder as a consequence of acquiring Rights under the Offering. The cost
to a Resident Rights Holder of Rights received under the Offering will be nil.
The adjusted cost base of each identical Right held by a Resident Rights Holder
will be averaged with the adjusted cost base of each other Right held by the
Resident Rights Holder (including any Rights acquired otherwise than pursuant to
the Offering).
Exercise
of Rights
The
exercise of Rights will not constitute a disposition of property for purposes of
the Tax Act and, consequently, no gain or loss will be realized by a Resident
Rights Holder upon the exercise of Rights. Common Shares acquired by a Resident
Rights Holder upon the exercise of Rights will have a cost to the Resident
Rights Holder equal to the aggregate of the Subscription Price paid plus the
adjusted cost base to the Resident Rights Holder of the Rights exercised (if
any). The adjusted cost base of each Common Share held by a Resident Rights
Holder will be averaged with the adjusted cost base of each other Common Share
held by the Resident Rights Holder.
Disposition
of Rights or Shares
Upon the
disposition of a Right or Common Share by a Resident Rights Holder (in the case
of Rights other than pursuant to the exercise or expiry thereof), the Resident
Rights Holder will realize a capital gain (or capital loss) equal to the amount
by which the proceeds of disposition, net of reasonable costs of the
disposition, exceed (or are less than) the adjusted cost base of the Right or
Common Share to the Resident Rights Holder.
Under the
Tax Act, one-half of any capital gain (or capital loss) realized by a Resident
Rights Holder is a taxable capital gain (or an allowable capital loss). A
taxable capital gain must be included in the Resident Rights Holder's income.
Subject to and in accordance with the provisions of the Tax Act, allowable
capital losses must be deducted from taxable capital gains of the Resident
Rights Holder in the year in which such allowable capital losses are realized.
Any remaining allowable capital losses may ordinarily be carried back and
deducted in any of the three preceding years or carried forward and deducted in
any following year against taxable capital gains realized in such years, to the
extent and under the circumstances specified in the Tax Act.
The
amount of any capital loss realized by a corporate Resident Rights Holder on the
disposition of a Common Share may be reduced by the amount of dividends received
or deemed to be received by it on such Common Share to the extent and under the
circumstances prescribed by the Tax Act. Similar rules may apply to a
partnership or trust of which a corporation, trust or partnership is a member or
beneficiary. Holders to whom these rules may be relevant should consult their
own tax advisors.
A
Resident Rights Holder that is a "Canadian-controlled private corporation" (as
defined in the Tax Act) throughout the year may be liable to pay an additional
refundable tax of 6⅔% on certain investment income, including taxable capital
gains.
Capital
gains realized by an individual or certain trusts may give rise to a liability
for alternative minimum tax.
Expiry
of Rights
Upon the
expiry of an unexercised Right, a Resident Rights Holder will realize a capital
loss equal to the adjusted cost base, if any, of the Right to the Resident
Rights Holder. See above regarding the treatment of capital losses.
ELIGIBILITY
FOR INVESTMENT
In the
opinion of Sangra Moller LLP, Canadian counsel to the Corporation, if issued on
the date hereof, and provided that the Rights and the Common Shares are listed
on the TSX, the Rights and the Common Shares issuable upon the exercise thereof
will be qualified investments for a trust governed by a registered retirement
savings plan, a registered retirement income fund, a registered disability
savings plan, a registered education savings plan or a deferred profit sharing
plan (each a "Registered
Plan") under the Tax Act and the regulations thereunder. The foregoing
assumes that the Corporation is not a connected person (within the meaning of
the Tax Act) under the governing plan of any Registered Plan and further assumes
that there will be no changes in the applicable legislation currently in effect
prior to the date of issue of the relevant securities.
19
CERTAIN
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
Downey
Brand LLP, United States counsel to the Corporation, have advised the
Corporation that the following is a summary of certain material United States
federal income tax consequences relevant to the receipt, exercise, termination
or disposition of Rights and the ownership and disposition of Common Shares, but
does not purport to be a complete analysis of all the potential tax
considerations relating thereto. This summary is based on the tax laws of the
United States (including the Internal Revenue Code of
1986, as amended (the "Code"), its legislative
history, existing and proposed regulations thereunder, published rulings and
court decisions) as in effect on the date hereof, all of which are subject to
change, possibly with retroactive effect. We have not sought any ruling from the
Internal Revenue Service ("IRS") with respect to the
statements made and the conclusions reached in the following summary, and there
can be no assurance that the IRS will agree with such statements and
conclusions.
This
summary applies only if you will hold the Rights and/or the Common Shares as
capital assets. This summary also does not address the tax considerations
arising under the laws of any country other than the United States, any United
States state, or any local jurisdiction. In addition, this summary does not
address tax considerations applicable to an investor's particular circumstances
or to investors that may be subject to special tax rules, including, without
limitation:
·
banks,
insurance companies, or other financial
institutions;
·
holders
subject to the alternative minimum
tax;
·
tax-exempt
organizations;
·
brokers
or dealers in securities or
commodities;
·
traders
in securities that elect to use a mark-to-market method of accounting for
their securities holdings;
·
foreign
(non-United States) persons or
entities;
·
persons
that are S-corporations, partnerships or other pass-through
entities;
·
expatriates
and certain former citizens or long-term residents of the United
States;
·
holders
whose functional currency is not the U.S.
dollar;
·
persons
holding the Rights and/or Common Shares as part of a hedging, straddle,
conversion or constructive sale transaction or other risk reduction
transactions;
·
grantor
trusts;
·
real
estate investment trusts or regulated investment
companies;
·
holders
that own stock of Taiga representing 10% or more of the voting power;
or
·
persons
who are resident or ordinarily resident in
Canada.
Further,
the following assumes that you will not, due to your particular circumstances,
be restricted from receiving the Rights under applicable securities laws. You should consult your tax advisors
about the United States federal, state, local and foreign tax consequences to
you of the exercise or disposition of the Rights and of the ownership and
disposition of the Common Shares.
TO
COMPLY WITH INTERNAL REVENUE SERVICE CIRCULAR 230, YOU ARE HEREBY NOTIFIED THAT:
(A) ANY DISCUSSION OF FEDERAL TAX ISSUES IN THIS PROSPECTUS IS NOT INTENDED OR
WRITTEN BY US TO BE USED, AND CANNOT BE USED BY ANY PROSPECTIVE INVESTOR, FOR
THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THEM UNDER THE INTERNAL
REVENUE CODE; (B) ANY SUCH DISCUSSION IS BEING USED IN CONNECTION WITH THE
PROMOTION OR MARKETING BY THE CORPORATION OF THE TRANSACTIONS OR MATTERS
ADDRESSED HEREIN; AND (C) A TAXPAYER SHOULD SEEK ADVICE BASED ON THE TAXPAYER'S
PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
20
The
summary below applies to you only if you are a beneficial owner of Rights and/or
Common Shares not resident in Canada for purposes of the income tax treaty
between the United States and Canada (the "U.S. Tax Treaty") and you are,
for United States federal income tax purposes:
·
an
individual citizen or resident of the United
States;
·
a
corporation or other entity taxable as a corporation for United States
federal income tax purposes created or organized in the United States or
under the laws of the United States, any state thereof, or the District of
Columbia;
·
an
estate, the income of which is subject to United States federal income
taxation regardless of its source;
or
·
a
trust that (1) is subject to the primary supervision of a United States
court and the control of one or more United States persons or (2) has a
valid election in effect under applicable Treasury Regulations to be
treated as a United States person.
Taxation
of Rights
Receipt
of Rights
Under
section 305 of the Code, a shareholder who receives a right to acquire shares
generally will not be treated as having received a taxable distribution.
However, a shareholder who receives a right to acquire shares will, in certain
circumstances, be treated as having received a taxable dividend in an amount
equal to the value of such right. In particular, a common shareholder who
receives a right to acquire common shares generally will be treated as having
received a taxable distribution if a shareholder's proportionate interest in the
earnings and profits or assets of the corporation is increased and any other
shareholder receives a distribution of cash or other property. For the purposes
of the preceding sentence, the term "shareholder" includes holders of warrants,
options and convertible securities. The application of this rule is complex and
subject to some uncertainty if a company has warrants, options or convertible
securities outstanding. While the issue is not free from doubt, we believe that
the distribution of the Rights should be treated as a non-taxable stock
distribution under section 305(a) of the Code and we and our agents (including
the depositary) intend to treat the distribution of the Rights consistent with
this belief. The following discussion assumes that our position is respected,
and that you are not subject to United States federal income tax on the receipt
(or deemed receipt) of a Right. However, our position is not binding on the IRS
and there can be no assurance that the IRS will not disagree with such position.
If our position were finally determined by the IRS or a court to be incorrect,
the fair market value of the Rights you receive would be taxable to you as a
dividend in the manner described below under "— Taxation of Common Shares —
Dividends". You are strongly urged to consult your tax advisors regarding the
risk of having a taxable distribution as a result of the receipt of the
Rights.
Sale
or Other Disposition of Rights
Upon a
sale or other disposition of a Right, you will recognize capital gain or loss in
an amount equal to the difference between the amount realized and your adjusted
tax basis in the Right.
The
amount realized on a sale or other disposition of a Right for cash generally
will be the amount of cash you receive in exchange for such Right. If the
consideration you receive for the Right is not paid in U.S. dollars, the amount
realized will be the U.S. dollar value of the payment received determined by
reference to the spot exchange rate in effect on the date of the sale or other
disposition or, if the Right sold or exchanged is traded on an "established
securities market" and you are a cash basis taxpayer or an electing accrual
basis taxpayer, the spot exchange rate in effect on the settlement
date.
If the
fair market value of the Rights on the date of their distribution equals or
exceeds 15 percent of the fair market value on such date of the common shares
with respect to which the Rights are distributed, your tax basis in such common
shares must be allocated between such common shares and the Rights. Such an
allocation must be made in proportion to the fair market value of the common
shares and the fair market value of the Rights on the date the Rights are
distributed.
If the
fair market value of the Rights on the date of their distribution is less than
15 percent of the fair market value on such date of the common shares with
respect to which the Rights are distributed, your tax basis in such Rights will
be zero and your basis for the common shares with respect to which the Rights
are distributed will remain unchanged. Notwithstanding the foregoing sentence,
however, you may affirmatively elect (in a statement attached to your United
States federal income tax return for the year in which the Rights were received)
to allocate to the Rights a portion of your basis in such common shares in the
manner described in the immediately preceding paragraph. Any such election is
irrevocable and must be applied to all of the Rights you receive pursuant to
this Offering.
21
Subject
to the passive foreign investment company rules discussed below, any gain or
loss you recognize on the sale or other disposition of a Right to a third party
will be long-term capital gain or loss if your holding period in the Right is
deemed to be greater than one year. Your holding period in a Right will be
deemed to have begun on the same date as that of the common share with respect
to which you received such Right. Any gain or loss will generally be treated as
United States source gain or loss. The deductibility of capital losses is
subject to limitations.
Your tax
basis in any foreign currency you receive on the sale or other disposition of a
Right will be equal to the U.S. dollar amount that you realized on the sale or
disposition. Any gain or loss you realize on a subsequent conversion of foreign
currency generally will be U.S. source ordinary income or loss.
Termination
of Rights
Notwithstanding
the foregoing, if you allow a Right to expire without the Right being exercised,
sold or exchanged by you or on your behalf, no basis will be allocated to such
Right and you will not realize any loss upon the expiration of such
Right.
Exercise
of Rights
The
exercise of a Right by you will not be a taxable transaction for United States
federal income tax purposes. Your initial basis in the Common Shares acquired
upon exercise of a Right generally will be equal to the amount of cash paid for
the Common Shares (in U.S. dollar value of the Canadian dollar denominated
subscription price determined on the date of purchase) plus your basis (if any)
in the Right in U.S. dollars.
Taxation
of Common Shares
Dividends
Subject
to the passive foreign investment company rules discussed below, the gross
amount of any distribution by us of cash or property (including our shares,
unless such shares are distributed pro rata to all of our shareholders and
certain other conditions are met) with respect to Common Shares will be
includable in income by you as dividend income at the time of receipt to the
extent such distributions are made from our current or accumulated earnings and
profits as determined under United States federal income tax principles. Such a
dividend will not be eligible for the dividends received deduction generally
allowed to corporate shareholders. To the extent, if any, that the amount of any
distribution by us exceeds our current and accumulated earnings and profits as
determined under United States federal income tax principles, it will be treated
first as a tax-free return of your adjusted tax basis in the Common Shares and
thereafter as capital gain. Notwithstanding the foregoing, we do not intend to
maintain calculations of earnings and profits as determined under United States
federal income tax principles.
For
taxable years beginning before January 1, 2011, dividends received by an
individual may be eligible for preferential rates of taxation, provided (1)
certain holding period requirements are satisfied, (2) we are eligible for the
benefits of the U.S. Tax Treaty, and (3) we are not, and in the preceding year
were not, a "passive foreign investment company". The determination of whether a
dividend qualifies for the preferential rates must be made at the time the
dividend is paid.
Dividends
paid in Canadian dollars, including any Canadian withholding taxes, will be
included in your gross income in a U.S. dollar amount calculated by reference to
the exchange rate in effect on the date of receipt, regardless of whether the
Canadian dollars are converted into U.S. dollars at that time. If Canadian
dollars are converted into U.S. dollars on the date of receipt, you generally
should not be required to recognize any foreign exchange gain or
loss.
22
Sale
or Exchange of Common Shares
Subject
to the passive foreign investment company rules discussed below, generally you
will recognize gain or loss on the sale or exchange of Common Shares equal to
the difference between the amount realized on such sale or exchange and your
adjusted tax basis in the Common Shares. Gain or loss recognized by you on the
sale or exchange of a Common Share generally will be capital gain or loss and
generally will be long-term if held more than one year and otherwise short-term.
Long-term capital gains recognized by certain non-corporate United States
holders, including individuals, generally will be subject to a reduced tax rate.
The deductibility of capital losses is subject to limitations.
If the
consideration you receive for the Common Shares is not paid in U.S. dollars, the
amount realized will be the U.S. dollar value of the payment received determined
by reference to the spot exchange rate in effect on the date of the sale or
other disposition or, if the Common Share sold or exchanged is traded on an
"established securities market" and you are a cash basis taxpayer or an electing
accrual basis taxpayer, the spot exchange rate in effect on the settlement date.
You will have a tax basis in any foreign currency received equal to the U.S.
dollar amount realized. Any gain or loss you realize on a subsequent conversion
of foreign currency will be United States source ordinary income or
loss.
Foreign
Tax Credit Considerations
For
purposes of the United States foreign tax credit limitations, dividends on the
Common Shares will be foreign source income and generally will be "passive
category income" but could, in the case of certain United States holders,
constitute "general category income." In general, gain or loss realized upon
sale or exchange of the Common Shares by you will be United States source income
or loss, as the case may be.
Subject
to certain complex limitations, including holding period requirements, generally
you will be entitled to a credit against your United States federal income tax
liability or a deduction in computing your United States federal taxable income
in respect of any Canadian taxes withheld by us (to the extent not refundable).
You should consult your tax advisors as to the consequences of Canadian
withholding taxes and the availability of a foreign tax credit or
deduction.
Passive
Foreign Investment Company Status
In
general, a non-United States corporation is classified as a passive foreign
investment company ("PFIC") for each taxable year
in which (i) 75% or more of its gross income is passive income (as defined for
United States federal income tax purposes) or (ii) on average for such taxable
year, 50% or more (by value) of its assets either produce or are held for the
production of passive income. We believe that we are not and have never been a
PFIC, and expect that we will not become a PFIC in the foreseeable future.
However, PFIC classification is factual in nature, generally cannot be
determined until the close of the taxable year in question, and is determined
annually based on application of complex rules which are uncertain in some
respects. Consequently, we cannot provide any assurance that we have not been or
will not become a PFIC for any taxable year during which you hold or held Common
Shares. If the Company were determined to be a PFIC for any taxable year during
which you held our Common Shares, you could be subject to special, adverse
United States federal income tax rules (including increased tax liability and
interest) on any gain realized on the sale or other disposition of Common Shares
or on any "excess distribution" made to you. You should consult your tax
advisors concerning the United States federal income tax consequences of the
Corporation being or having been a PFIC.
Information
Reporting and Backup Withholding
A United
States holder (other than an "exempt recipient," including a corporation and
certain other persons who, when required, demonstrate their exempt status) may
be subject to backup withholding at a rate of 28%, and to information reporting
requirements with respect to dividends or other payments on, and to proceeds
from the sale or exchange of, Rights or Common Shares. In general, if a
non-corporate United States holder subject to information reporting fails to
furnish a correct taxpayer identification number or otherwise fails to comply
with applicable backup withholding requirements, backup withholding may apply.
The backup withholding tax is not an additional tax and may be credited against
your regular United States federal income tax liability or refunded by the IRS
where applicable.
23
LEGAL
MATTERS
Certain
legal matters relating to the Offering and to the Rights to be distributed
pursuant to this short form prospectus will be reviewed on our behalf by Sangra
Moller LLP as to matters of Canadian law, and by Downey Brand LLP as to matters
of United States law.
INTERESTS
OF EXPERTS
As at the
date hereof, the partners and associates of Sangra Moller LLP and the partners
and associates of Downey Brand LLP each owned, in the aggregate, less than one
percent of the outstanding common shares of the Corporation.
AUDITORS,
TRANSFER AGENT AND REGISTRAR
The
auditors of the Corporation were Cinnamon Jang Willoughby & Company,
Chartered Accountants, at their offices in Burnaby, British Columbia, for the
fiscal year ended March 31, 2008. Cinnamon Jang Willoughby & Company
resigned as auditors of the Corporation effective December 23, 2008. There
were no reservations or Reported Events (as defined in National Instrument
51-102 – Continuous Disclosure
Obligations) relating to Cinnamon Jang Willoughby & Company's audit
reports in respect of the audits of the Corporation's two most recently
completed financial years. The Corporation's audit committee appointed Dale
Matheson Carr-Hilton Labonte LLP at their offices in Vancouver, British Columbia
as successor auditors of the Corporation effective January 13, 2009, to
fill the vacancy created by the resignation of Cinnamon Jang Willoughby &
Company, to hold office until the next annual general meeting of the
Corporation. Dale Matheson Carr-Hilton Labonte LLP are independent within the
meaning of the Rules of Professional Conduct of the Institute of Chartered
Accountants of British Columbia.
Computershare
Trust Company of Canada is the Corporation's registrar and transfer agent at its
principal offices located at 510 Burrard Street, 2nd Floor, Vancouver, British
Columbia V6C 3B9.
PURCHASERS'
STATUTORY RIGHTS
Securities
legislation in certain of the provinces of Canada provides purchasers with the
right to withdraw from an agreement to purchase securities. This right may be
exercised within two business days after receipt or deemed receipt of a
prospectus and any amendment. In several of the provinces, securities
legislation further provides a purchaser with remedies for rescission or, in
some jurisdictions, revisions of the price or damages if this short form
prospectus and any amendment contains a misrepresentation or is not delivered to
the purchaser, provided that such remedies for rescission, revision of the price
or damages are exercised by the purchaser within the time limit prescribed by
the securities legislation of the purchaser's province. You should refer to any
applicable provisions of the securities legislation of your province for the
particulars of these rights or consult with a legal advisor.
DOCUMENTS
FILED AS PART OF THE REGISTRATION STATEMENT
The
following documents are filed with the SEC as part of the Registration Statement
of which this short form prospectus forms a part: (i) our annual information
form dated June 27, 2008, for the year ended March 31, 2008; (ii) our
comparative audited consolidated financial statements and notes thereto for the
year ended March 31, 2008; (iii) our management’s discussion and analysis of
financial condition and results from operations for the Corporation for the year
ended March 31, 2008; (iv) our comparative unaudited interim consolidated
financial statements for the three and nine month periods ended December 31,2008; (v) our management’s discussion and analysis of financial condition and
results of operations for the three and nine month periods ended December 31,2008; (vi) our management proxy circular dated May 30, 2008, relating to the
annual meeting of the shareholders of the Corporation held on July 4, 2008;
(vii) the material change report dated and filed on SEDAR on December 18, 2008
with respect to the changes in management of the Corporation; (viii) the Consent
of Downey Brand LLP; (ix) the Consent of Sangra Moller LLP; (x) the Consent of
Cinnamon Jang Willoughby & Company; (xi) Power of Attorney.
24
AUDITORS'
CONSENT
We have
read the short form prospectus dated February 19, 2009 for the rights
to purchase common shares of Taiga Building Products Ltd. (the "Corporation"). We have
complied with Canadian generally accepted standards for an auditor's involvement
with offering documents.
We
consent to the incorporation by reference in the above–mentioned short form
prospectus of our report to the shareholders of the Corporation on the
consolidated balance sheets of the Corporation as at March 31, 2008 and
2007 and the consolidated statements of earnings and deficit, of comprehensive
income, and cash flows for the years then ended. Our report is dated
May 26, 2008.
This
short form prospectus, together with the documents incorporated herein by
reference, constitutes full, true and plain disclosure of all material facts
relating to the securities offered by this short form prospectus as required by
the securities legislation of British Columbia, Alberta, Saskatchewan, Manitoba,
Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and
Labrador.
/s/ Jim
Bradshaw
Jim
Bradshaw
Chief
Executive Officer
/s/ Tom
Stefan
Tom
Stefan
Vice
President, Finance and Administration
On behalf
of the Board of Directors
of the
Corporation
/s/
Daniel L.
McDonald
Daniel
L. McDonald
Director
/s/
Peter
Buecking
Peter
Buecking
Director
26
PART
II
INFORMATION
NOT REQUIRED TO BE SENT TO SHAREHOLDERS
EXHIBITS.
The
Exhibits to this Registration Statement are:
Exhibit
Number
Exhibit
1.1*
Taiga
Building Products Ltd.’s annual information form dated June 27, 2008, for
the year ended March 31, 2008 (the “Annual Information
Form”).
1.2*
Taiga
Building Products Ltd.’s comparative audited consolidated financial
statements of the Corporation and notes thereto for the year ended March31, 2008, together with the auditors’ report thereon.
1.3*
Management’s
discussion and analysis of financial condition and results of operations
for Taiga Building Products Ltd. for the financial year ended March 31,2008.
1.4*
The
comparative unaudited interim consolidated financial statements of Taiga
Building Products Ltd. for the three and nine month periods ended December31, 2008.
1.5*
Management’s
discussion and analysis of financial condition and results of operations
of Taiga Building Products Ltd. for the three and nine month periods ended
December 31, 2008.
1.6*
The
management proxy circular dated May 30, 2008, relating to the annual
meeting of shareholders of Taiga Building Products Ltd. held on
July 4, 2008.
1.7*
The
material change report dated and filed on SEDAR on December 18, 2008 with
respect to the changes in management of Taiga Building Products
Ltd.
Power
of Attorney (contained on the signature page of this Registration
Statement)
*Previously
Filed.
PART
III
CONSENT
TO SERVICE OF PROCESS
No
consents to service of process are required by Part III of this registration
statement in connection with this filing.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the Registrant certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form F-7 and has duly caused this Amendment No. 1 to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the city of Vancouver, country of Canada on the 19th day of
February, 2009.
TAIGA BUILDING PRODUCTS
LTD.
By: /s/ Tom
Stefan
Tom
Stefan
Vice
President, Finance and Administration
POWER
OF ATTORNEY
The
registrant and each person whose signature appears below constitutes and
appoints Tom Stefan as attorney-in-fact with full power of substitution, to
execute in the name and on behalf of the issuer and each such person,
individually, and in each capacity stated below, one or more amendments
(including post-effective amendments) to the registration statement as the
attorney-in-fact acting in the premises deems appropriate and to file any such
amendment to the original registration statement with the Securities and
Exchange Commission.
Pursuant
to the requirements of the Securities Act of 1933, this Amendment No. 1 to
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
*
President
and Chief Executive Officer (Principal Executive
Officer)
Pursuant
to the requirements of Section 6(a) of the Securities Act of 1933, the agent for
service of process has duly caused this Amendment No. 1 to the Registration
Statement to be signed on its behalf by the undersigned, solely in its capacity
as the agent for service of process of Taiga Building Products Ltd. in the
United States in Sacramento, California on the 19th of
February, 2009.
DOWNEY BRAND LLP
By: /s/ Bruce F.
Dravis
Bruce
F. Dravis
Attorney
EXHIBIT
INDEX
Exhibit
Number
Exhibit
1.1*
Taiga
Building Products Ltd.’s annual information form dated June 27, 2008, for
the year ended March 31, 2008 (the “Annual Information
Form”).
1.2*
Taiga
Building Products Ltd.’s comparative audited consolidated financial
statements of the Corporation and notes thereto for the year ended March31, 2008, together with the auditors’ report thereon.
1.3*
Management’s
discussion and analysis of financial condition and results of operations
for Taiga Building Products Ltd. for the financial year ended March 31,2008.
1.4*
The
comparative unaudited interim consolidated financial statements of Taiga
Building Products Ltd. for the three and nine month periods ended December31, 2008.
1.5*
Management’s
discussion and analysis of financial condition and results of operations
of Taiga Building Products Ltd. for the three and nine month periods ended
December 31, 2008.
1.6*
The
management proxy circular dated May 30, 2008, relating to the annual
meeting of shareholders of Taiga Building Products Ltd. held on July 4,2008.
1.7*
The
material change report dated and filed on SEDAR on December 18, 2008 with
respect to the changes in management of Taiga Building Products
Ltd.
