Deals

GlaxoSmithKline Acquires ID Biomedical

On December 8, 2005, GlaxoSmithKline Inc. and GlaxoSmithKline plc (GSK) completed the acquisition of the issued and outstanding securities of ID Biomedical Corp. (IDB) by way of a court-approved plan of arrangement under the British Columbia Business Corporations Act. The total value of the transaction was approximately C$1.7 billion (US$1.4 billion). GSK also assumed responsibility for IDB’s net debt, which was US$77 million at June 30, 2005. In addition, GSK agreed to provide a credit facility to IDB of up to US$120 million to permit it to repay term debt and to finance its operations up to closing. IDB was represented by Paul Pinsonnault, vice-president, legal affairs of IDB, with assistance in Canada by Borden Ladner Gervais LLP with a team that included Ian Webb, Warren Learmonth and Eric Doherty (securities/corporate), Donald Bird (financial services) and Jeffrey Thomas (competition).

Advent Acquires Equity Stake in lululemon athletica

On December 5, 2005, private equity funds managed by Advent International Corp. and Highland Capital Partners, both of Boston, Massachusetts, acquired a 48 per cent equity stake in Canadian athletic apparel maker and retailer, lululemon athletica Inc. for proceeds of $108 million. lululemon operates 33 company-owned stores primarily in Canada, with a presence in the US, Japan and Australia. The transaction also provided partial liquidity to lululemon’s founder, Chip Wilson, who will retain a majority position in the lululemon group. The sale was preceded by a reorganization of the lululemon group, which established an enterprise value of $225 million. Advent was represented with respect to Canadian matters by Borden Ladner Gervais LLP with a team that included Elinore Richardson, Barbara Smith and Kathleen Keilty.

BCE Renews $1B MTN Program

On November 16, 2005, BCE Inc. completed the renewal of its $1 billion medium term note program. The program was established pursuant to a short-form base shelf prospectus dated November 11, 2005, as supplemented by a prospectus supplement dated November 15, 2005, filed in all provinces of Canada. The dealers were BMO Nesbitt Burns Inc., Casgrain&Company Ltd., CIBC World Markets Inc., Desjardins Securities Inc., Merrill Lynch Canada Inc., National Bank Financial, RBC Dominion Securities Inc., Scotia Capital Inc. and TD Securities Inc. The dealers were represented by Richard Shannon and Fred Enns of Borden Ladner Gervais LLP.

Shore Gold Completes Offering

On November 29, 2005, Shore Gold Inc. completed a short form prospectus offering of 17,150,000 common shares for aggregate gross proceeds of approximately $120,050,000. The offering was made on a bought deal basis through a syndicate of underwriters led by Genuity Capital Markets and included GMP Securities Ltd., Orion Securities Inc., Wellington West Capital Markets Inc., Westwind Partners Inc., Loewen, Ondaatje, McCutcheon Ltd. and Research Capital Corp. The proceeds of the offering are being used for advanced exploration and evaluation programs on the FALC Joint Venture Project, further work on Shore Gold’s Star Kimberlite Project and for general corporate purposes. The FALC Joint Venture and Star Kimberlite properties are advanced-stage diamond exploration properties. Fred Pletcher and Melanie Bradley of Borden Ladner Gervais LLP represented the underwriters.

Ritchie Bros. Completes Cross-Border Offering

On November 23, 2005, Ritchie Bros. Auctioneers Inc., the world’s largest auctioneer of industrial equipment, of Richmond, BC, completed a cross-border secondary offering in Canada and the US under the Canada/US Multijurisdictional Disclosure System of 2,500,000 common shares (including the exercise of an underwriters’ option) at a price of US$39.80 per common share (for total proceeds of US$99.5 million). The shares were sold by Globo Investments Ltd., a company controlled by David Ritchie, chairman of Ritchie Bros.’ board of directors. Raymond James Ltd. acted as the lead underwriter for the offering, and BMO Nesbitt Burns Inc., Scotia Capital Inc., CIBC World Markets Inc., Sprott Securities Inc., and Blackmont Capital Inc. comprised the remaining members of the underwriting syndicate. Raymond James and the underwriters were represented by Borden Ladner Gervais LLP with a team that comprised of Barbara Smith, Warren Learmonth and Jennifer Wilson.

Grafikom Buys Quebecor’s Canadian Facilities

On November 14, 2005, Grafikom LP completed the acquisition of six of Quebecor World Inc.’s Canadian facilities in a management buyout. The facilities specialize in commercial and specialty printing; Grafikom is now one of the largest commercial sheetfed, digital and specialty printing networks in Canada. The total purchase price of C$53 million, subject to certain adjustments, was financed by equity subscriptions by the private equity arm of Genuity Financial Group, certain institutional investors and members of management, together with senior debt financing from Bank of Montreal. Bank of Montreal was represented by Borden Ladner Gervais LLP with a team that included Kevin McGrath, Catherine Bray and Nathan Chan.

Real Estate

Osmington, CPPIB and Westerkirk Acquire Shopping Centres in Quebec

On December 1, 2005, Osmington Inc., CPP Investment Board Real Estate Holdings Inc. and Westerkirk Investments Trust completed an acquisition of two major shopping centres in Quebec—Les Galeries de la Capital in Quebec City and Carrefour de l’Estrie in Sherbrooke—for an undisclosed purchase price. The purchasing entities were represented by Borden Ladner Gervais LLP (BLG) with a team led by Morty Gross, Q.C., that included Noella Milne and Jason Aurini (commercial real estate, Toronto), and Sylvie Bouvette, Caroline Émond and Glen Bowman (commercial real estate, Montréal). The borrowers were represented by Morty Gross, Noella Milne, Jason Aurini and Glen Bowman of BLG.

Suits

Ontario Court of Appeal Holds Mistaken Bidder to its Bid

In its decision dated September 7, 2005 (as amended by Addendum dated November 18, 2005), the Ontario Court of Appeal allowed the appeal of Toronto Transit Commission (TTC), and held that a bidder, Gottardo Construction Company (Gottardo), who makes a mistake in its bid remains bound unless the mistake is visible on the face of the tender. TTC called for tenders for the construction of the Birchmount Bus Garage, and shortly after the bids were publicly opened, the low bidder (Gottardo) advised TTC that it had made a mistake and that its bid should have been higher, and asked to be let out of its bid. When the TTC proceeded with the next step of the tender process, and requested additional documentation from the three lowest bidders, including a cost breakdown summary of the bid prices, Gottardo failed to submit most of the documents and tried to rely on (i) its failure to submit the additional documents as rendering its bid non-compliant, and (ii) the higher bid amount in its cost breakdown summary as evidencing the mistake, thus preventing the TTC from accepting it. TTC took the position that because the initial bid appeared to be in order, and no error was visible on its face, Gottardo was bound to perform the work at the price bid. When Gottardo refused, TTC retained the next-lowest bidder to do the work, and sued Gottardo and CGU Insurance Company of Canada (CGU), the company that issued its bid bond, for the difference. Relying on the landmark case of Ontario v. Ron Engineering&Construction (Eastern) Ltd., [1981] 1 S.C.R. 111 (S.C.C.), TTC argued that Contract A (the contract between a bidder and the party calling for bids that governs the tender process) was formed when Gottardo submitted its initial bid. Gottardo and CGU took the position that, in a case where bidders are required, by the terms of the tender call, to submit additional documentation, Contract A is not formed until all required documents have been submitted. The Court of Appeal applied the test in M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619 to hold that Contract A comes into existence when the parties exhibit the intention to create legal relations, which in this case was on submission of the initial bid. Contract A bound Gottardo to keep its bid open for acceptance for 120 days, and to enter into Contract B (the construction contract) if selected as the winning bid. Gottardo’s failure to submit the additional documents was a breach of Contract A, but did not relieve Gottardo from the requirements of Contract A. Further, Gottardo could not rely upon the different total tender price in its cost breakdown summary to establish an error on the face of its tender and avoid its obligations under Contract A. The Court of Appeal also overruled the trial judge’s obiter finding that equity should intervene to grant rescission of Contract A in light of the financial hardship to Gottardo as a consequence of its mistake. Where the TTC was unaware of the bidder’s mistake when Contract A was formed and did not act fraudulently or contribute to the error, equity would not intervene. Gottardo and CGU have applied for leave to appeal the decision to the Supreme Court of Canada. CGU was represented by Matthew Alter of Borden Ladner Gervais LLP in Toronto.