As filed with the Securities and Exchange Commission on April 11, 2002.
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM F-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
____________
BRASCAN CORPORATION
(Exact name of registrant as specified in its charter)
Province of Ontario, Canada 1121, 1031, 1061, 1311, 1321, 2421, 4939, 6311 Not Applicable
(Providence or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Numbers) Identification Number)
Brascan Corporation
181 Bay Street, Suite 4400
P.O. Box 762
Toronto, Ontario M5J 2T3
(416) 363-9491
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Andrew J. Beck, Esq.
Torys LLP
237 Park Avenue
New York, New York 10017-3142
(212) 880-6000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Edwin Nordholm, Esq.
Torys LLP
Suite 3000, Maritime Life Tower
Toronto Dominion Centre
Toronto, Canada M5K 1N2
(416) 865-0040
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. [_]
PART I
INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS
Item 1. Home Jurisdiction Documents
Offer and Circular dated as of April 11, 2002, including Letter of
Transmittal and Notice of Guaranteed Delivery (attached to Exhibits
3.2 and 3.3 to this Registration Statement).
Item 2. Informational Legends
See the inside cover page of the Offer and Circular dated as of April
11, 2002.
Item 3. Incorporation of Certain Information by Reference
See "Documents Incorporated by Reference Regarding Brascan" in the
Offer and Circular dated as of April 11, 2002.
Item 4. List of Documents Filed with the Commission
See "Documents Filed as Part of the U.S. Registration Statement" in
the Offer and Circular dated as of April 11, 2002.
I-1
This document is important and requires your immediate attention. If you
are in doubt as to how to deal with it, you should consult your investment
dealer, stockbroker, bank manager, lawyer or other professional advisor.
BRASCAN CORPORATION
OFFER TO PURCHASE
all of the outstanding
Class A Shares and Class B Non-Voting Shares
of
TRILON FINANCIAL CORPORATION
not owned by Brascan Corporation or its affiliates
in exchange for, at the election of each Shareholder tendering to the
Offer,
(i) $17.00 in cash (subject to pro ration and other adjustments, as
described in sections 1 and 11, respectively, of the Offer); or
(ii) 0.5 of a Class A Limited Voting Share of Brascan Corporation (subject
to pro ration, as described in the Offer); or
(iii) 0.678 of a $25.00 Brascan Non-Cumulative Class A Preference Share,
Series 11 and $0.05 in cash
for each share of Trilon Financial Corporation tendered.
The aggregate amount of cash paid as consideration is limited to $388
million. The aggregate number of Class A Limited Voting Shares of Brascan
Corporation issued as share consideration is limited to 11.4 million
shares. If either of these limits is exceeded, the amount of cash paid in
the first option above and the number of Class A Limited Voting Shares of
Brascan Corporation issued in the second option above will be adjusted on a
pro rata basis. The Brascan Non-Cumulative Class A Preference Shares,
Series 11 will only be issued if Shareholders elect in aggregate to receive
at least $10,000,000 (or such lesser amount as Brascan may determine) in
issue price of Brascan Non-Cumulative Class A Preference Shares, Series 11.
The offer (the "Offer") to purchase Class A Shares and Class B Non-Voting
Shares (collectively, the "Trilon Shares") of Trilon Financial Corporation
("Trilon") by Brascan Corporation ("Brascan") will be open for acceptance
until 11:59 p.m. (local time) on May 16, 2002, unless withdrawn or
extended. Subject to the terms and conditions of the Offer, Brascan will
take up and pay for the Trilon Shares deposited under the Offer on, or as
soon as practicable after, May 17, 2002.
Brascan has received conditional listing approval from The Toronto Stock
Exchange for the additional Class A Limited Voting Shares of Brascan and
the Brascan Non-Cumulative Class A Preference Shares, Series 11 to be
issued under the Offer. Brascan has also applied to list the additional
Class A Limited Voting Shares of Brascan on the New York Stock Exchange and
the Brussels Stock Exchange.
The Offer is subject to the conditions set forth in section 4 of the Offer,
"Conditions of the Offer", including that the number of Trilon Shares
tendered to the Offer represents more than 50% of the total number of Class
A Shares of Trilon outstanding (calculated on a fully diluted basis), other
than those Trilon Shares owned by Brascan, its associates or affiliates or
by other persons whose Trilon Shares may not be included as part of the
minority approval of a Subsequent Acquisition Transaction (as defined
herein). Brascan reserves the right to amend any or all of the conditions
in its sole discretion at any time.
The Trilon board of directors, after review of the Offer by an independent
committee of the board has determined that the Offer is fair to holders of
Trilon Shares ("Shareholders") other than Brascan and its affiliates and
has unanimously recommended that those Shareholders accept the Offer and
tender their Trilon Shares to the Offer.
April 11, 2002
Shareholders who wish to accept the Offer must properly complete and execute
the accompanying Letter of Transmittal (printed on green paper) or a manually
signed facsimile thereof and deposit it, together with certificates
representing their Trilon Shares, in accordance with the instructions in the
Letter of Transmittal. A Shareholder who wishes to deposit Trilon Shares and
whose share certificates for those Trilon Shares are not readily available
should complete and execute the accompanying Notice of Guaranteed Delivery
(printed on blue paper) or a manually signed facsimile thereof and deposit it
in compliance with the procedure for guaranteed delivery set forth under
section 3 of the Offer, "How to Tender Trilon Shares to the Offer".
Questions and requests for assistance may be directed to the CIBC Mellon Trust
Company (the "Depositary") and additional copies of this document, the Letter
of Transmittal and the Notice of Guaranteed Delivery may be obtained without
charge on request from the Depositary at its offices and phone numbers shown
on the last page of this document. Persons whose Trilon Shares are held in an
account with an investment dealer, stockbroker, bank, trust company or other
nominee should contact their representative if they wish to accept the Offer.
This document does not constitute an offer or a solicitation to any person in
any jurisdiction in which such offer or solicitation is unlawful. The Offer is
not being made to, nor will deposits be accepted from or on behalf of,
Shareholders in any jurisdiction in which the making or acceptance of the
Offer would not be in compliance with the laws of such jurisdiction. However,
Brascan or its agents may, in Brascan's sole discretion, take such action as
it may deem necessary to extend the Offer to Shareholders in such
jurisdiction.
INFORMATION FOR U.S. SHAREHOLDERS
This offering is made by a foreign issuer that is permitted, under a
multijurisdictional disclosure system adopted by the United States, to prepare
this document in accordance with the disclosure requirements of its home
country. Shareholders should be aware that such requirements are different
from those of the United States. The financial statements included or
incorporated herein, if any, have been prepared in accordance with foreign
generally accepted accounting principles, and may be subject to foreign
auditing and auditor independence standards, and, thus, may not be comparable
to financial statements of United States companies.
Shareholders should be aware that acquisition of the Brascan Shares and
Brascan Non-Cumulative Class A Preference Shares, Series 11 described herein
may have tax consequences both in the United States and in the home country of
Brascan. Such consequences for investors who are resident in, or citizens of,
the United States may not be described fully herein.
The enforcement by investors of civil liabilities under the United States
federal securities laws may be affected adversely by the fact that each of
Trilon and Brascan is formed under the laws of Ontario, that some or all of
their directors and officers may be residents of Canada, that some or all of
the experts named in the Offer or Circular may be residents of Canada, and
that all or a substantial portion of the assets of said persons may be located
outside the United States.
THE SECURITIES OFFERED HEREUNDER HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Shareholders should be aware that, while the Offer is outstanding, Brascan or
its affiliates, directly or indirectly, may bid for and make purchases of
Trilon Shares or other securities as permitted by applicable laws or
regulations of Canada or its provinces or territories.
Additional copies of this document, the Letter of Transmittal and the Notice
of Guaranteed Delivery may be obtained from the Depositary at any of its
offices listed on the last page of this document.
All dollar references in the Offer and Circular are in Canadian dollars,
except as otherwise indicated.
ii
TABLE OF CONTENTS
Page
----
GLOSSARY.................................................................. iv
OFFER..................................................................... 1
1.The Offer............................................................... 1
2.Time for Acceptance..................................................... 3
3.How to Tender Trilon Shares to the Offer................................ 3
4.Conditions of the Offer................................................. 5
5.Extension and Variation of the Offer.................................... 7
6.Payment for Deposited Trilon Shares..................................... 7
7.Return of Trilon Shares................................................. 8
8.Withdrawal of Deposited Trilon Shares................................... 8
9.Market Purchases........................................................ 9
10.Notice and Delivery.................................................... 10
11.Dividends and Distributions............................................ 10
12.Other Terms of the Offer............................................... 11
13.Mail Service Interruption.............................................. 11
14.General................................................................ 12
CIRCULAR.................................................................. 13
1.Brascan Corporation..................................................... 13
2.Description of Brascan Non-Cumulative Class A Preference Shares,
Series 11............................................................... 17
3.OPSEU Strike............................................................ 21
4.Trilon Financial Corporation............................................ 21
5.Background to the Offer................................................. 22
6.Prior Valuations........................................................ 24
7.Valuation and Fairness Opinion.......................................... 25
8.Purpose of the Offer and Brascan's Plans for Trilon..................... 30
9.Brascan's Comments on the Offer......................................... 30
10.Holdings of Securities of Trilon....................................... 31
11.Acceptance of the Offer................................................ 34
12.Trading in Securities of Trilon........................................ 34
13.Commitments to Acquire Trilon Shares................................... 34
14.Arrangements, Agreements or Understandings............................. 34
15.Effect of the Offer on Market and Listings............................. 34
16.Source of Funds........................................................ 35
17.Price Range and Trading Volume of Trilon Shares........................ 35
18.Previous Distributions................................................. 36
19.Dividend Record of Trilon.............................................. 36
20.Depositary............................................................. 36
21.Acquisition of Trilon Shares not Deposited............................. 36
22.Canadian Federal Income Tax Considerations............................. 38
23.Interest of Persons in the Matters Related to the Offer................ 45
24.Material Changes and Other Information................................. 46
25.Documents Incorporated by Reference Regarding Brascan.................. 46
26.Eligibility for Investment............................................. 47
27.Interests of Experts................................................... 47
28.Statutory Rights....................................................... 47
29.Documents filed as Part of the United States Registration Statement.... 47
30.Consents............................................................... 48
APPROVAL AND CERTIFICATE OF BRASCAN CORPORATION........................... 49
iii
GLOSSARY
In the Offer and the Circular, unless the subject matter or context is
inconsistent therewith, the following terms shall have the meanings set forth
below:
"affiliate" has the meaning ascribed thereto in the OSA;
"associate" has the meaning ascribed thereto in the OSA;
"Brascan" means Brascan Corporation, a corporation existing under the OBCA;
"Brascan Non-Cumulative Class A Preference Shares, Series 11" means non-
cumulative Class A Preference Shares, Series 11 of Brascan;
"Brascan Shares" means Class A Limited Voting Shares of Brascan;
"CCRA" means Canada Customs & Revenue Agency;
"Circular" means the take-over bid circular accompanying and forming part of
the Offer;
"Compulsory Acquisition" has the meaning ascribed thereto in "Acquisition of
Trilon Shares not Deposited - Compulsory Acquisition" in the Circular;
"Current Brascan Market Price" means the weighted average trading price of the
Brascan Shares on The Toronto Stock Exchange for a period of 20 consecutive
trading days ending on the fourth day prior to the date specified for
conversion of the Class A Preference Shares, Series 11, or, if that fourth day
is not a trading day, on the immediately preceding trading day;
"CVMQ" means the Commission des valeurs mobilieres du Quebec;
"Deposit Period" means the period commencing on the date hereof and ending at
11:59 p.m. (local time) on May 16, 2002, or such later time or times or date
or dates as may be fixed by Brascan from time to time pursuant to section 5 of
the Offer, "Extension and Variation of the Offer";
"Depositary" means CIBC Mellon Trust Company;
"Directors' Circular" means the directors' circular prepared by the board of
directors of Trilon in respect of the Offer;
"Eligible Institution" means a Canadian chartered bank, a major trust company
in Canada, a member of the Securities Transfer Association Medallion Program
(STAMP), a member of the Stock Exchange Medallion Program (SEMP) or a member
of the New York Stock Exchange, Inc. Medallion Signature Program (MSP).
Members of these programs are usually members of a recognized stock exchange
in Canada or the United States, members of the Investment Dealers Association
of Canada, members of The National Association of Securities Dealers or banks
or trust companies in the United States;
"Expiry Time" means the later of (i) the end of the Deposit Period, and (ii)
the time at which Brascan is obligated to take up or reject the Trilon Shares
deposited under the Offer;
"fully-diluted" means, with respect to the number of Trilon Shares at any
time, the number of Trilon Shares actually outstanding at such time assuming
that any options then outstanding to acquire Trilon Shares or other securities
then outstanding which are convertible into or exercisable or exchangeable for
Trilon Shares have been exercised, converted or exchanged;
"going private transaction" has the meaning given to that term in Rule 61-501
and Policy Q-27;
"Independent Committee" means the special committee of the board of directors
of Trilon consisting of A. Gordon Craig, Susan E. Crocker, William A. Dimma
(Chair), Patrick J. Keenan, Donald C. Lowe and David R. McCamus, all of whom
are independent directors of Trilon;
"Letter of Transmittal" means the letter of transmittal and election form
accompanying this Circular, to be completed by registered holders of Trilon
Shares (printed on green paper);
iv
"Management" means the management of Trilon;
"Material Adverse Change" means any change (or any condition, event or
development involving a prospective change) in the business, operations,
affairs, assets, liabilities (including any contingent liabilities that may
arise through outstanding or threatened litigation or otherwise),
capitalization, financial condition or prospects of Trilon or Brascan or any
of their subsidiaries or associates that would reasonably be expected to
materially and adversely affect either Trilon and its subsidiaries and
associates, or Brascan and its subsidiaries and associates, as the case may
be, in each case on a consolidated basis;
"MDSUP" means the Management Deferred Share Unit Plan of Trilon;
"Minimum Condition" has the meaning ascribed thereto in section 4 of the
Offer, "Conditions of the Offer";
"Minimum Series 11 Amount" means $10,000,000, or such lesser amount as Brascan
may determine in its sole discretion;
"MSOP" means the Management Share Option Plan of Trilon;
"MSPP" means the Management Share Purchase Plan of Trilon;
"Notice of Guaranteed Delivery" means the notice of guaranteed delivery in the
form accompanying the Offer and Circular (printed on blue paper);
"NYSE" means the New York Stock Exchange;
"OBCA" means the Business Corporations Act (Ontario), as amended;
"Offer" means the offer to purchase Trilon Shares made hereby, the terms and
conditions of which are set forth in the accompanying Offer, Circular, Letter
of Transmittal and Notice of Guaranteed Delivery;
"Offer Period" means the period commencing on the date hereof and ending at
the Expiry Time;
"Options" means options to acquire Trilon Shares issued under Trilon's stock
option plan;
"OSA" means the Securities Act (Ontario), as amended;
"OSC" means the Ontario Securities Commission;
"Policy Q-27" means Policy No. Q-27 of the CVMQ;
"Rule 61-501" means OSC Rule 61-501 - Insider Bids, Issuer Bids, Going Private
Transactions and Related Party Transactions;
"Shareholders" means the holders of Trilon Shares, and "Shareholder" means any
one of them;
"Subsequent Acquisition Transaction" has the meaning ascribed thereto in
"Acquisition of Trilon Shares Not Deposited" in the Circular;
"subsidiary" has the meaning ascribed thereto in the OSA;
"Tax Act" means the Income Tax Act (Canada), as amended;
"TD Securities" means TD Securities Inc., the independent financial advisor
retained by the Independent Committee to prepare the Valuation and the
Fairness Opinion;
"Trilon" means Trilon Financial Corporation, a corporation existing under the
OBCA;
"Trilon Shares" means both the Class A Shares and the Class B Non-Voting
Shares of Trilon;
"TSE" means The Toronto Stock Exchange;
v
"undiluted" means, with respect to the number of shares in the capital of any
company at any time, the number of such shares actually outstanding at such
time without assuming that any options for such shares or other securities
then outstanding which are convertible into or exercisable or exchangeable for
such shares have been exercised, converted or exchanged; and
"Valuation and Fairness Opinion" means the written valuation and fairness
opinion dated April 9, 2002 of TD Securities to the Independent Committee as
to the fair market value as of April 4, 2002 of the Trilon Shares and the
value as of April 4, 2002 of the Brascan Shares and the Brascan Non-Cumulative
Class A Preference Shares, Series 11 as required pursuant to Rule 61-501 and
Policy Q-27 and the opinion of TD Securities as to whether the consideration
to be received pursuant to the Offer is fair, from a financial point of view,
to the Shareholders other than Brascan and its affiliates.
vi
BRASCAN CORPORATION
Suite 4400, BCE Place
181 Bay Street
Toronto, Ontario
Canada M5J 2T3
OFFER
April 11, 2002
TO: THE HOLDERS OF CLASS A SHARES AND CLASS B NON-VOTING SHARES OF TRILON
FINANCIAL CORPORATION
1.The Offer
Brascan hereby offers to purchase, on and subject to the terms and
conditions specified in this Offer, all of the outstanding Class A Shares and
Class B Non-Voting Shares of Trilon in exchange for, at the election of
Shareholders tendering to the Offer:
(i) Cash consideration: $17.00 in cash for each Trilon Share (subject to
pro ration as described below and subject to adjustment for a Trilon
dividend anticipated to be declared in April 2002 (see section 11 of
the Offer)),
(ii) Share consideration: 0.5 of a Brascan Share for each Trilon Share
(subject to pro ration as described below); or
(iii) Preference share consideration: 0.678 of a $25.00 Brascan Non-
Cumulative Class A Preference Share, Series 11 and $0.05 in cash.
Option to not receive cash: Shareholders electing to receive the
preference share consideration option above can elect to forego the
$0.05 in cash per Trilon Share. This option may enable certain
Shareholders to exchange their Trilon Shares for Brascan Non-Cumulative
Class A Preference Shares, Series 11 on a tax deferred basis who would
not be entitled to do so without foregoing the $0.05 in cash and to
enable Shareholders to obtain a tax deferral without filing
documentation that may otherwise be required to obtain such deferral.
See section 22 of the Circular, "Canadian Federal Income Tax
Considerations - Exchange of Trilon Shares for Brascan Non-Cumulative
Class A Preference Shares, Series 11 Only or for Brascan Shares Only".
The holders of Brascan Non-Cumulative Class A Preference Shares, Series 11
will be entitled to fixed non-cumulative preferential dividends in the amount
of $1.375 per share per annum, payable quarterly, representing a dividend
yield of 5.5% per annum. These preference shares are redeemable on or after
June 30, 2009 based on a specified redemption schedule. The Brascan Non-
Cumulative Class A Preference Shares, Series 11 are convertible by Brascan on
or after June 30, 2009, and by the holder on or after December 31, 2013, into
Brascan Shares based on 95% of the weighted average market price of the
Brascan Shares at the time of conversion, subject to the specific conversion
terms and conditions. The Brascan Non-Cumulative Class A Preference Shares,
Series 11 rank equally with all other series of Class A Preference Shares of
Brascan. See section 2 in the Circular, "Description of Brascan Non-Cumulative
Class A Preference Shares, Series 11". No Brascan Non-Cumulative Class A
Preference Shares, Series 11 will be issued unless Shareholders elect in
aggregate to receive at least the Minimum Series 11 Amount in issue price of
Brascan Non-Cumulative Class A Preference Shares, Series 11. If no Brascan
Non-Cumulative Class A Preference Shares, Series 11 are issued due to this
minimum condition, Shareholders electing to receive these preference shares
will be deemed to have elected to receive an equivalent amount of cash
consideration.
The Offer is made only for Trilon Shares and is not made for any options,
warrants, or other rights to purchase Trilon Shares. Any holder of options,
warrants or rights who wishes to accept the Offer should exercise the options,
warrants or rights in order to obtain certificates representing Trilon Shares
and deposit the same in accordance with the Offer. Any such exercise must be
effected sufficiently in advance of the Expiry Time to ensure that the holders
of options, warrants or other rights to purchase Trilon Shares will have share
certificate(s) available for deposit before the Expiry Time, or in sufficient
time to comply with the procedures regarding guaranteed delivery.
1
The aggregate value of cash paid (including the cash paid in lieu of
fractional shares and the $0.05 in cash per Trilon Share paid with the Brascan
Non-Cumulative Class A Preference Shares, Series 11) as consideration is
limited to $388 million. The aggregate number of Brascan Shares issued is
limited to 11.4 million shares. If either of these limits is exceeded pursuant
to elections made (or deemed to be made) by Shareholders who tender to the
Offer, the cash consideration paid or the number of Brascan Shares issued will
be adjusted on a pro rata basis for all Shareholders, as described below.
In the event that Brascan is unable to secure a certificate of amendment
under the OBCA in respect of articles of amendment creating the Brascan Non-
Cumulative Class A Preference Shares, Series 11 as a result of the strike by
Ontario government employees prior to taking up and paying for Trilon Shares
under the Offer, a Shareholder who elects to receive Brascan Non-Cumulative
Class A Redeemable Preference Shares, Series 11 will be entitled to receive
those preference shares as at the date that Brascan pays for Trilon Shares
tendered by that Shareholder. However, notwithstanding the foregoing and
sections 6 and 10 of the Offer, share certificates representing Brascan Non-
Cumulative Class A Preference Shares, Series 11 will not be delivered to
Shareholders until such time as Brascan receives a certificate of amendment
under the OBCA in respect of articles of amendment creating the Brascan Non-
Cumulative Class A Preference Shares, Series 11. Brascan will seek to secure
this certificate immediately upon the strike ending. The TSE has conditionally
approved for listing the Brascan Shares and the Brascan Non-Cumulative Class A
Preference Shares, Series 11 issuable in connection with the Offer. The TSE
will post these securities for trading when all conditions imposed by the TSE
have been met, including in respect of the listing of the Brascan Non-
Cumulative Class A Preference Shares, Series 11 when they are fully
transferable. The transferability of the Brascan Non-Cumulative Class A
Preference Shares, Series 11 may be adversely affected until such time as
Brascan receives the certificate of amendment described above.
The Letter of Transmittal and Notice of Guaranteed Delivery accompanying
this Offer and Circular set forth the manner in which such elections may be
made. Shareholders who otherwise validly accept the Offer but fail to make an
election or fail to properly make an election in the Letter of Transmittal or
Notice of Guaranteed Delivery shall be deemed to have elected to receive
$17.00 in cash per Trilon Share.
The actual consideration to be received by a Shareholder will be determined
in accordance with the following:
(a) The maximum aggregate value of cash (including any cash paid in lieu of
fractions of Brascan Non-Cumulative Class A Preference Shares, Series
11 and of Brascan Shares referred to below and including the $0.05 in
cash per Trilon Share paid along with Brascan Non-Cumulative Class A
Preference Shares, Series 11) that Brascan will pay as consideration
for the Trilon Shares acquired under the Offer shall be $388 million
(the "Maximum Cash Consideration").
(b) The maximum number of Brascan Shares that Brascan will issue as
consideration for the Trilon Shares acquired under the Offer shall be
11.4 million Brascan Shares (the "Maximum Share Consideration").
(c) If Shareholders in the aggregate elect or are deemed to have elected to
receive cash only consideration which, together with any cash to be
paid in lieu of fractions of Brascan Shares or of Brascan Non-
Cumulative Class A Preference Shares, Series 11 and together with the
$0.05 in cash per Trilon Share to be paid along with Brascan Non-
Cumulative Class A Preference Shares, Series 11, exceeds an aggregate
value equal to the Maximum Cash Consideration multiplied by a fraction,
the numerator of which is the number of Trilon Shares to be taken up
and the denominator of which is the number of issued and outstanding
Trilon Shares (other than those held by Brascan and its affiliates)
(the "Maximum Take-Up Date Cash Consideration"), the amount of cash
consideration available to those Shareholders who have elected or are
deemed to have elected cash only consideration will be allocated pro
rata (on a per share basis) among such Shareholders in an amount equal
to the aggregate amount of the cash sought (or deemed to be sought) by
such Shareholders multiplied by a fraction, the numerator of which is
the Maximum Take-Up Date Cash Consideration, less any cash to be paid
in lieu of fractions of Brascan Shares or of Brascan Non-Cumulative
Class A Preference Shares, Series 11 and less the $0.05 in cash per
Trilon Share to be paid along with Brascan Non-Cumulative Class A
Preference Shares, Series 11, and the denominator of which is the
aggregate amount of the cash consideration sought (or deemed to be
sought) by such Shareholders and the balance of their consideration
will be paid in Brascan Shares (provided that Brascan may, at the time
of electing to take up and pay for Trilon Shares, determine to modify
this allocation mechanism applicable to the Shareholders who have
elected to receive cash to provide for additional cash consideration to
be distributed at such time to take into account Brascan's intention
with respect to extensions of the Offer). For greater certainty, cash
to be paid for
2
fractional shares and the $0.05 in cash to be paid along with the
Brascan Non-Cumulative Class A Preference Shares, Series 11 will not be
subject to pro ration.
(d) If Shareholders in the aggregate elect to receive or are deemed to have
elected to receive Brascan Shares in a number which exceeds an amount
equal to the Maximum Share Consideration multiplied by a fraction
the numerator of which is the number of Trilon Shares to be taken-up
and the denominator of which is the number of issued and outstanding
Trilon Shares (other than those held by Brascan and its affiliates)
(the "Maximum Take-Up Date Share Consideration"), the number of Brascan
Shares available to those Shareholders will be allocated pro rata (on a
per share basis) among such Shareholders in an amount equal to the
number of Brascan Shares sought (or deemed to have been sought) by such
Shareholders multiplied by a fraction, the numerator of which is the
Maximum Take-Up Date Share Consideration and the denominator of which
is the number of Brascan Shares sought (or deemed to have been sought)
by such Shareholders, rounded down to the nearest whole number, and the
balance of their consideration will be paid in cash, provided that
Shareholders who are required to take cash may elect instead to receive
the preference share consideration described above (including $0.05 in
cash per Trilon Share unless the Shareholder has also elected to forego
this cash consideration) (provided that Brascan may, at the time of
electing to take up and pay for Trilon Shares, determine to modify this
allocation mechanism applicable to the Shareholders who have elected or
are deemed to have elected to receive Brascan Shares to provide for
additional Brascan Shares to be issued at such time to take into
account Brascan's intention with respect to extensions of the Offer).
Shareholders who have not made an election between cash and Brascan
Non-Cumulative Class A Preference Shares, Series 11 will be deemed to
have elected to receive cash.
No fractional Brascan Non-Cumulative Class A Preference Shares, Series 11
or Brascan Shares will be issued pursuant to the Offer. In lieu of fractional
Brascan Non-Cumulative Class A Preference Shares, Series 11 or fractional
Brascan Shares, a Shareholder accepting the Offer who would otherwise receive
a fraction of a Brascan Non-Cumulative Class A Preference Share, Series 11 or
of a Brascan Share will receive a cash payment determined on the basis of
$25.00 for each whole Brascan Non-Cumulative Class A Preference Share, Series
11 and $34.00 for each whole Brascan Share. The $25.00 represents the issue
price of the Brascan Non-Cumulative Class A Preference Shares, Series 11. The
$34.00 amount approximates the closing sale price of the Brascan Shares on the
TSE on March 25, 2002, the last date on which the Brascan Shares traded prior
to the first announcement of the Offer, which was $34.05 per Brascan Share.
The accompanying Circular, which is incorporated into and forms part of the
Offer, contains important information which should be read carefully before
making a decision with respect to the Offer.
2.Time for Acceptance
This Offer is open for acceptance during the period commencing on the date
hereof and ending at 11:59 p.m. (local time) on May 16, 2002, or until such
later time and date to which this Offer may be extended, unless the Offer is
withdrawn by Brascan.
3.How to Tender Trilon Shares to the Offer
Letter of Transmittal
The Offer may be accepted by delivering to CIBC Mellon Trust Company (the
"Depositary") at any of its offices listed in the Letter of Transmittal
(printed on green paper) accompanying this Offer, so as to arrive there not
later than the Expiry Time:
(a) certificate(s) representing the Trilon Shares in respect of which this
Offer is being accepted;
(b) a Letter of Transmittal (printed on green paper) in the form
accompanying this Offer or a manually executed facsimile thereof,
properly completed and executed as required by the rules and
instructions set out in the Letter of Transmittal; and
(c) any other relevant documents required by the rules and instructions set
out in the Letter of Transmittal.
Brascan reserves the right to permit the Offer to be accepted in a manner
other than as set forth herein.
3
Except as otherwise provided in the instructions and rules set out in the
Letter of Transmittal, the signature on the Letter of Transmittal must be
guaranteed by an Eligible Institution. If a Letter of Transmittal is executed
by a person other than the registered holder of the certificate(s) deposited
therewith, the certificate(s) must be endorsed, or be accompanied by an
appropriate share transfer power of attorney duly and properly completed by
the registered holder, with the signature on the endorsement panel or share
transfer power guaranteed by an Eligible Institution.
Procedure for Guaranteed Delivery
If a person wishes to deposit Trilon Shares pursuant to this Offer and (i)
the certificates representing the Trilon Shares are not immediately available,
or (ii) the certificate(s) and all other required documents cannot be
delivered to the Depositary at or prior to the Expiry Time, those Trilon
Shares may nevertheless be deposited validly under the Offer, provided that
all of the following conditions are met:
(a) the deposit is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed Delivery
(printed on blue paper) in the form accompanying the Offer, or a
facsimile thereof, together with a guarantee by an Eligible Institution
in the form specified in the Notice of Guaranteed Delivery, is received
by the Depositary at its office in Toronto as set forth in the
accompanying Notice of Guaranteed Delivery, during the Deposit Period;
and
(c) the certificate(s) representing deposited Trilon Shares, in proper form
for transfer, together with a properly completed and duly executed
Letter of Transmittal or a manually executed facsimile thereof, and any
other documents required by the Letter of Transmittal, are received at
the office of the Depositary in Toronto on or before 5:00 p.m. (local
time) on the third trading day on The Toronto Stock Exchange after the
expiry of the Deposit Period. To constitute delivery for the purpose of
satisfying a guaranteed delivery, the Letter of Transmittal and
accompanying share certificate(s) must be delivered to the same office
of the Depositary in Toronto where the Notice of Guaranteed Delivery
was delivered.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile transmission or mailed to the Depositary at its Toronto office
and must include a guarantee by an Eligible Institution in the form set forth
in the Notice of Guaranteed Delivery. An election in a Notice of Guaranteed
Delivery as to the form of consideration to be received by a Shareholder will
supersede any election made by that Shareholder in a Letter of Transmittal. If
no election as to the form of consideration to be received is made on the
Notice of Guaranteed Delivery, the Shareholder shall be deemed to have elected
to receive $17.00 in cash for each Trilon Share.
General
In all cases, payment for Trilon Shares deposited and taken up by Brascan
will be made only after timely receipt by the Depositary of the certificate(s)
representing the Trilon Shares, a properly completed and duly executed Letter
of Transmittal, or a manually signed facsimile thereof, properly completed and
signed, covering such Trilon Shares with the signature(s) guaranteed in
accordance with the instructions set out in the Letter of Transmittal and any
other required documents.
The method of delivery of certificate(s) representing Trilon Shares, the
Letter of Transmittal and all other required documents is at the option and
risk of the person depositing those documents. Brascan recommends that those
documents be delivered by hand to the Depositary and a receipt obtained or, if
mailed, that registered mail, with return receipt requested, be used and that
proper insurance be obtained.
Shareholders whose Trilon Shares are registered in the name of an
investment dealer, stockbroker, bank, trust company or other nominee should
contact such nominee if they wish to accept the Offer.
The execution of a Letter of Transmittal irrevocably appoints certain
senior officers of Brascan and any other person designated by Brascan in
writing, as the true and lawful agents, attorneys and attorneys-in-fact, and
proxies of the holder of the Trilon Shares covered by the Letter of
Transmittal with respect to Trilon Shares registered in the name of the
Shareholder on the securities register maintained by or on behalf of Trilon
and deposited pursuant to the Offer and purchased by Brascan (the "Purchased
Trilon Shares"), and with respect to any and all dividends, distributions,
payments, securities, rights, warrants, assets or other interests
(collectively "distributions") which may be declared, paid, accrued, issued,
distributed, made or transferred on or in respect of the Purchased Trilon
Shares or
4
any of them on or after the date of the Offer, full power of substitution
(such powers of attorney, being coupled with an interest, being irrevocable),
in the name of and on behalf of such Shareholder: (a) to register or record
the transfer or cancellation of Purchased Trilon Shares and distributions
consisting of securities on the appropriate registers maintained by or on
behalf of Trilon; (b) for so long as any such Purchased Trilon Shares are
registered or recorded in the name of such Shareholders (whether or not such
Purchased Trilon Shares are so registered or recorded as at the time of the
completion of the Letter of Transmittal), to execute and deliver (provided the
same is not contrary to applicable law), as and when requested by Brascan, any
instruments of proxy, authorisation or consent in form and on terms
satisfactory to Brascan in respect of any Purchased Trilon Shares and
distributions, and to designate in any such instruments of proxy any person or
persons as the proxyholder of such Shareholder in respect of such Purchased
Trilon Shares and distributions; (c) except as provided in section 11 of the
Offer, to execute and negotiate any cheques or other instruments representing
such distributions payable to or to the order of, or endorsed in favour of,
the Shareholder; and (d) to exercise any rights of a holder of Purchased
Trilon Shares and any distribution with respect to such Purchased Trilon
Shares, all as specified in the Letter of Transmittal.
The acceptance of the Offer pursuant to the procedures set forth above will
constitute an agreement between the depositing Shareholder and Brascan in
accordance with the terms and conditions of the Offer.
All questions as to the validity, form, eligibility (including timely
receipt) and acceptance of any Trilon Shares deposited pursuant to the Offer
will be determined by Brascan in its sole discretion. Depositing Shareholders
agree that such determination shall be final and binding. Brascan reserves the
absolute right to reject any and all deposits which it determines not to be in
proper form or which may be unlawful to accept under the laws of any
jurisdiction. Brascan reserves the absolute right to waive any defects or
irregularities in the deposit of any Trilon Shares. There shall be no
obligation on Brascan, the Depositary or any other person to give notice of
any defects or irregularities in any deposit and no liability shall be
incurred by any of them for failure to give any such notice. Brascan's
interpretation of the terms and conditions of the Offer, the Circular, the
Letter of Transmittal and Notice of Guaranteed Delivery will be final and
binding.
Brascan reserves the right to permit the Offer to be accepted in a manner
other than that set out above.
4.Conditions of the Offer
Brascan shall have the right to withdraw the Offer and not take up and pay
for, or extend the period of time during which the Offer is open and postpone
taking up and paying for, any Trilon Shares deposited under the Offer, unless
all of the following conditions are satisfied or waived by Brascan at or prior
to the Expiry Time:
(a) Brascan shall, on the completion of the Offer, own at least 66 2/3% of
the outstanding Class A Shares (calculated on a fully-diluted basis);
(b) there shall have been deposited under the Offer and not withdrawn that
number of Class A Shares representing more than 50% of the total number
of Class A Shares of Trilon outstanding (calculated on a fully-diluted
basis), other than Trilon Shares owned by Brascan, its associates or
affiliates or by persons whose Trilon Shares may not be included as
part of the minority approval of a Subsequent Acquisition Transaction
(the "Minimum Condition");
(c) all domestic or foreign governmental, administrative or regulatory
approvals, consents, authorizations, exemptions, waivers or
declarations (including in respect of the issuance of the Brascan Non-
Cumulative Class A Preference Shares, Series 11 and the Brascan Shares)
which Brascan considers necessary or desirable in connection with the
making of the Offer, the take-up of and payment for Trilon Shares under
the Offer or completing a Subsequent Acquisition Transaction shall have
been obtained or waived on terms satisfactory to Brascan in its sole
judgment;
(d) Brascan shall have determined in its sole judgment that (i) no act,
action, suit or proceeding shall have been threatened, commenced or
taken before or by any domestic or foreign arbitrator, court, tribunal,
governmental agency, regulatory authority, administrative agency,
commission or stock exchange, in Canada, the United States or
elsewhere, and (ii) no law, regulation, rule, policy, directive or
order shall have been proposed, enacted, issued, promulgated, amended
or applied, in the case of each of (i) or (ii):
(i) to cease trade, enjoin, prohibit, challenge or impose limitations or
conditions on the purchase by Brascan of the Trilon Shares or the
right of Brascan to own or exercise full rights of ownership of the
Trilon Shares or the ability of Brascan to complete a Subsequent
Acquisition Transaction; or
5
(ii) which, if Trilon Shares are taken-up and paid for under the Offer,
could in Brascan's sole judgment adversely affect Trilon or Brascan
or any of their respective subsidiaries or the ability of Brascan
to complete a Subsequent Acquisition Transaction;
(e) there shall not exist any prohibition at law against Brascan taking-up
and paying for the Trilon Shares under the Offer or completing a
Subsequent Acquisition Transaction;
(f) there shall not have occurred or arisen (or, if there shall have
previously occurred or arisen, there shall not have been publicly
disclosed or disclosed to Brascan) any Material Adverse Change;
(g) Brascan shall have determined in its sole judgment that no material
property, asset, agreement, right, franchise or license of Trilon or
any of its subsidiaries has been or would be impaired or adversely
affected as a result of the making of the Offer, the taking-up and
paying for Trilon Shares deposited under the Offer, the completion of a
Subsequent Acquisition Transaction or otherwise, which might make it
inadvisable for Brascan to proceed with the Offer or with taking-up and
paying for Trilon Shares deposited under the Offer;
(h) Brascan shall have determined in its sole judgment that there does not
exist any covenant, term or condition in any of the instruments or
agreements to which Trilon or any of its subsidiaries is a party or to
which they or any of their properties or assets are subject that might
make it inadvisable for Brascan to proceed with the Offer or with
taking-up and paying for Trilon Shares under the Offer or completing a
Subsequent Acquisition Transaction (including but not limited to any
covenant, term or condition that may be breached or cause a default or
permit third parties to exercise rights against Trilon or any of its
subsidiaries);
(i) Brascan shall have determined in its sole judgment that neither Trilon
nor any of its subsidiaries has taken any action (including entering
into any agreement or making any commitment), or disclosed any
previously undisclosed action, that might make it inadvisable for
Brascan to proceed with the Offer or with taking-up and paying for
Trilon Shares under the Offer or completing a Subsequent Acquisition
Transaction;
(j) there shall not have occurred any tax change (including any proposal to
amend the Tax Act or any announcement, governmental or regulatory
initiative, issue of an interpretation bulletin, condition, event or
development involving a prospective change) that, in the sole judgment
of Brascan, has or may have an adverse effect on Trilon, Brascan or any
of their respective subsidiaries, on any Subsequent Acquisition
Transaction or on a subsequent sale or disposition of assets of Trilon
or any of its subsidiaries;
(k) there shall not have occurred, developed or come into effect or
existence any event, action, state, condition or occurrence of national
or international consequence which, in Brascan's sole judgment, has
materially and adversely affected, or may materially and adversely
affect, the financial markets in Canada or the United States; and
(l) all outstanding options, rights and warrants, if any, to acquire Trilon
Shares shall have been exercised or cancelled or exchanged for or
converted into options to acquire Brascan Shares on or prior to the
expiry of the Offer on terms satisfactory to Brascan.
The foregoing conditions are for the exclusive benefit of Brascan and may
be asserted by Brascan at any time, regardless of the circumstances giving
rise to such assertion, including any action or inaction by Brascan. Brascan
may waive any of the foregoing conditions, including without limitation the
Minimum Condition, in whole or in part at any time and from time to time,
without prejudice to any other rights which Brascan may have. The failure by
Brascan at any time to exercise any of the foregoing rights will not be deemed
a waiver of any such right and each such right will be deemed an ongoing right
which may be asserted at any time and from time to time. Any determination by
Brascan concerning the events described in the foregoing conditions will be
final and binding upon all parties.
Any waiver of a condition or the withdrawal of the Offer will be effective
upon written notice or other communication confirmed in writing by Brascan to
that effect to the Depositary at its principal office in Toronto. Brascan,
forthwith after giving any such notice, will make a public announcement of
such waiver or withdrawal, will cause the Depositary as soon as practicable
thereafter to notify the Shareholders in the manner set forth in section 10 of
the Offer, "Notice and Delivery", and will provide a copy of the
aforementioned notice to the TSE. If the Offer is
6
withdrawn, Brascan will not be obligated to take up or pay for any Trilon
Shares deposited under the Offer and the Depositary will promptly return all
certificates representing deposited Trilon Shares, Letters of Transmittal,
Notices of Guaranteed Delivery and related documents to the parties by whom
they were deposited at Brascan's expense.
5.Extension and Variation of the Offer
The Offer is open for acceptance until, but not after, the Expiry Time.
Brascan reserves the right, in its sole discretion, at any time and from
time to time while the Offer is open for acceptance, to extend the Deposit
Period or to vary the Offer by giving written notice of such extension or
variation to the Depositary at its principal office in Toronto, and by causing
the Depositary to provide as soon as practicable thereafter a copy of such
notice in the manner set forth in section 10 of this Offer to all holders of
Trilon Shares that have not been taken up prior to the extension or variation.
Brascan shall, as soon as possible after giving notice of an extension or
variation to the Depositary, make a public announcement of the extension or
variation and provide a copy of the notice thereof to the TSE. Any notice of
extension or variation will be deemed to have been given and to be effective
on the day on which it is delivered or otherwise communicated in writing to
the Depositary at its principal office in Toronto.
Where the terms of the Offer are varied, the Offer will not expire before
10 days after the notice of such variation has been delivered to Shareholders,
unless otherwise permitted by applicable law and subject to abridgement or
elimination of that period pursuant to such orders as may be granted by
applicable securities regulatory authorities.
If before the Expiry Time, or after the Expiry Time but before the expiry
of all rights of withdrawal with respect to the Offer, a change occurs in the
information contained in the Offer or the Circular, as amended from time to
time, that would reasonably be expected to affect a decision of a Shareholder
to accept or reject the Offer (other than a change that is not within the
control of Brascan or of an affiliate of Brascan), Brascan will give written
notice of such change to the Depositary at its principal office in Toronto,
and will cause the Depositary to provide as soon as practicable thereafter a
copy of such notice in the manner set forth in section 10 of the Offer, to all
holders of Trilon Shares that have not been taken up under the Offer at the
date of the occurrence of the change. As soon as possible after giving notice
of a change in information to the Depositary, Brascan will make a public
announcement of the change in information and provide a copy of the notice
thereof to the TSE. Any notice of change in information will be deemed to have
been given and to be effective on the day on which it is delivered or
otherwise communicated to the Depositary at its principal office in Toronto.
Notwithstanding the foregoing, the Offer may not be extended by Brascan if
all of the terms and conditions of the Offer, except those waived by Brascan,
have been fulfilled or complied with unless Brascan first takes up and pays
for all Trilon Shares deposited under the Offer and not withdrawn.
During any such extension or in the event of any variation or change in
information, all Trilon Shares previously deposited and not taken up or
withdrawn will remain subject to the Offer and may be accepted for purchase by
Brascan in accordance with the terms hereof, subject to section 8 of this
Offer, "Withdrawal of Deposited Trilon Shares". An extension of the Expiry
Time or a variation of the Offer does not constitute a waiver by Brascan of
its rights under section 4 hereof. An extension of the Deposit Period, a
variation of the Offer or a change in information does not constitute a waiver
by Brascan of its rights under section 4 of the Offer, "Conditions of the
Offer". In the unlikely event that the consideration being offered for the
Trilon Shares under the Offer is increased, the increased consideration will
be paid to all depositing Shareholders whose Trilon Shares are taken up under
the Offer.
6.Payment for Deposited Trilon Shares
If all the conditions referred to under "Conditions of the Offer" have been
fulfilled or waived at the Expiry Time, Brascan will become obligated to take
up and pay for Trilon Shares validly deposited under the Offer and not
withdrawn, not later than 10 days from the Expiry Time. Brascan will be
obligated to pay for Trilon Shares taken up as soon as possible, but in any
event not more than the lesser of three business days after taking up the
Trilon Shares and 10 days after the Expiry Time.
In addition, from May 17, 2002, if all of the terms and conditions attached
to the Offer have been fulfilled or waived, Brascan shall be entitled to take
up and pay for all Trilon Shares deposited under the Offer, subject to
7
applicable laws. Any Trilon Shares deposited pursuant to the Offer after the
first date on which Trilon Shares have been taken up and paid for by Brascan
will be taken up and paid for within 10 days of such deposit.
For the purposes of the Offer, Brascan will be deemed to have taken up and
accepted for payment Trilon Shares validly deposited and not withdrawn
pursuant to the Offer if, as and when Brascan gives oral (subject to
confirmation in writing) or written notice to the Depositary to that effect.
Brascan expressly reserves the right in its sole discretion to delay taking
up and paying for any Trilon Shares or to terminate the Offer and not take up
or pay for any Trilon Shares if any condition specified in section 4 of the
Offer, "Conditions of the Offer", is not satisfied or waived, by giving
written notice thereof or other communication confirmed in writing to the
Depositary at its principal office in Toronto. Brascan also expressly reserves
the right, in its sole discretion and notwithstanding any other condition of
the Offer, to delay taking up and paying for Trilon Shares in order to comply,
in whole or in part, with any applicable law.
Brascan will pay for Trilon Shares validly deposited pursuant to the Offer
and not withdrawn by providing the Depositary with sufficient funds (by bank
transfer or other means satisfactory to the Depositary) for transmittal to
depositing Shareholders and by providing the Depositary with sufficient share
certificates for the Brascan Shares and the Brascan Non-Cumulative Class A
Preference Shares, Series 11 for transmittal to depositing Shareholders. Under
no circumstances will interest accrue or be paid by Brascan or the Depositary
to persons depositing Shares on the purchase price of Trilon Shares purchased
by Brascan, regardless of any delay in making such payment. Notwithstanding
this section, the delivery of share certificates representing the Brascan Non-
Cumulative Class A Preference Shares, Series 11 may be delayed, as set out in
section 1 of the Offer.
The Depositary will act as the agent of persons who have deposited Trilon
Shares in acceptance of the Offer for the purposes of receiving payment from
Brascan and transmitting payment to such persons, and receipt of payment by
the Depositary will be deemed to constitute receipt of payment by persons
depositing Trilon Shares.
Settlement with each Shareholder who has deposited Trilon Shares under the
Offer will be made by the Depositary forwarding a cheque, payable in Canadian
funds, representing the cash and/or forwarding a share certificate
representing the Brascan Non-Cumulative Class A Preference Shares, Series 11
and/or the Brascan Shares to which the depositing Shareholder is entitled, as
the case may be. Subject to the foregoing and unless otherwise directed by the
Letter of Transmittal, cheques and share certificates will be issued in the
name of the registered holder of the Trilon Shares so deposited. Unless the
person depositing the Trilon Shares instructs the Depositary to hold the
cheque and/or share certificates for pick-up by checking the appropriate box
in the Letter of Transmittal, such cheque and/or share certificates will be
forwarded by first class insured mail to such person at the address specified
in the Letter of Transmittal. If no such address is specified, the cheque
and/or share certificates will be sent to the address of the holder as shown
on the register of Shareholders maintained by or on behalf of Trilon. Cheques
and/or share certificates mailed in accordance with this paragraph will be
deemed to be delivered at the time of mailing.
Depositing Shareholders will not be obligated to pay brokerage fees or
commissions if they accept the Offer by depositing their Trilon Shares
directly with the Depositary.
7.Return of Trilon Shares
Any deposited Trilon Shares that are not taken up by Brascan will be
returned, at the expense of Brascan, to the depositing Shareholder as soon as
practicable after the Expiry Time or withdrawal or early termination of the
Offer, by sending certificates representing Trilon Shares not purchased by
first class mail to the address of the depositing Shareholder specified in the
Letter of Transmittal or, if such name and address is not so specified, in
such name and to such address as shown on the share register of Trilon.
8.Withdrawal of Deposited Trilon Shares
Except as otherwise stated in this section 8, all deposits of Trilon Shares
pursuant to the Offer are irrevocable. Unless otherwise required or permitted
by applicable law, any Trilon Shares deposited in acceptance of the Offer may
be withdrawn by or on behalf of the depositing Shareholder:
(a) at any time up to and including 11:59 p.m. (local time) on May 16,
2002;
8
(b) at any time where the Trilon Shares have not been taken up and paid for
by Brascan prior to the receipt by the Depositary of the notice of
withdrawal in respect of such Trilon Shares; or
(c) if the Trilon Shares have not been paid for by Brascan within three
business days after having been taken up; or
(d) at any time before the expiration of 10 days from the date upon which
either:
(i) a notice of change relating to a change which has occurred in the
information contained in the Offer or the Circular, as amended from
time to time, that would reasonably be expected to affect the
decision of a Shareholder to accept or reject the Offer (other than
a change that is not within the control of Brascan or of an
affiliate of Brascan), in the event that such change occurs before
the end of the Deposit Period or after the end of the Deposit Period
but before the expiry of all rights of withdrawal in respect of the
Offer; or
(ii) a notice of variation concerning a variation in the terms of the
Offer (other than a variation consisting solely of an increase in
the consideration offered for the Trilon Shares where the Deposit
Period is not extended for more than 10 days),
is mailed, delivered, or otherwise properly communicated, but subject to
abridgement of that period pursuant to such order or orders as may be
granted by applicable courts or securities regulatory authorities and
only if such deposited Trilon Shares have not been taken up by Brascan
at the date of the notice.
Withdrawals of Trilon Shares deposited pursuant to the Offer must be
effected by notice of withdrawal made by or on behalf of the depositing
Shareholder and must be actually received by the Depositary at the place of
deposit before such Trilon Shares are taken up and paid for. Notice of
withdrawal (i) must be made by a method, including facsimile transmission,
that provides the Depositary with a written or printed copy, (ii) must be
signed by or on behalf of the person who signed the Letter of Transmittal
accompanying, or the Notice of Guaranteed Delivery in respect of, the Trilon
Shares which are to be withdrawn, and (iii) must specify such person's name,
the number of Trilon Shares to be withdrawn, the name of the registered holder
and the certificate number shown on each certificate representing the Trilon
Shares to be withdrawn. Any signature in a notice of withdrawal must be
guaranteed by an Eligible Institution in the same manner as in a Letter of
Transmittal (as described in the instructions and rules set out in such
letter), except in the case of Trilon Shares deposited for the account of an
Eligible Institution. The withdrawal will take effect upon receipt by the
Depositary of the properly completed notice of withdrawal. None of the
Depositary, Brascan or any other person will be under any duty to give
notification of any defect or irregularity in any notice of withdrawal or will
incur any liability for failure to give such notification.
All questions as to the validity (including timely receipt) and form of
notices of withdrawal will be determined by Brascan in its sole discretion,
and such determination will be final and binding.
If Brascan is delayed in taking up or paying for Trilon Shares or is unable
to take up or pay for Trilon Shares for any reason, then, without prejudice to
Brascan's other rights, Trilon Shares deposited under the Offer may be
retained by the Depositary on behalf of Brascan and such Trilon Shares may not
be withdrawn except to the extent that depositing Shareholders are entitled to
withdrawal rights as set forth in this section 8 or pursuant to applicable
law.
Any Trilon Shares withdrawn will be deemed not validly deposited for the
purposes of the Offer, but may be re-deposited at any subsequent time prior to
the end of the Deposit Period by following any of the procedures described in
section 3 of the Offer, "How to Tender Trilon Shares to the Offer".
In addition to the foregoing rights of withdrawal, Shareholders in certain
provinces of Canada are entitled to statutory rights of rescission or to
damages, or both, in certain circumstances. See section 28 of the Circular,
"Statutory Rights".
9.Market Purchases
Subject to applicable law, Brascan reserves the right to and may purchase
Trilon Shares in the market at any time and from time to time prior to the
Expiry Time. If Brascan purchases Trilon Shares other than pursuant to the
Offer while the Offer is outstanding, it will do so through the facilities of
The Toronto Stock Exchange and such purchases will not be made before the
third business day following the date of the Offer. The aggregate number of
Trilon Shares acquired in this manner will not exceed 5% of the number of
outstanding Trilon Shares as of the date of this Offer and
9
Brascan will issue and file a press release forthwith after the close of
business of The Toronto Stock Exchange on each day on which such Trilon Shares
have been purchased. Any Trilon Shares so purchased shall be counted in
determining whether the condition as to the number of Trilon Shares deposited
to the Offer has been fulfilled.
If Brascan purchases any Trilon Shares on The Toronto Stock Exchange while
the Offer is outstanding for a price in excess of that offered pursuant to the
Offer, Brascan will pay such higher amount to each person whose Trilon Shares
are taken up and paid for under the Offer, whether or not such Trilon Shares
have already been taken up, and will immediately so notify the holders of
Trilon Shares. For purposes of this section 9, "Brascan" includes Brascan and
any person or company acting jointly or in concert with Brascan.
Although Brascan has no present intention to sell Trilon Shares taken up
under the Offer, it reserves the right to make or enter into arrangements,
commitments or understandings at or prior to the Expiry Time to sell Trilon
Shares after the Expiry Time.
10.Notice and Delivery
Any notice to be given by Brascan or the Depositary pursuant to the Offer
will be deemed to have been properly given if it is mailed by first class
mail, postage prepaid, to the registered holders of Trilon Shares at their
addresses as shown on the register maintained by or on behalf of Trilon and
will be deemed to have been received on the first business day following the
date of mailing. For this purpose, "business day" means any day other than a
Saturday, Sunday or federal or Ontario statutory holiday in the jurisdiction
to which the notice is mailed. These provisions apply notwithstanding any
accidental omission to give notice to any one or more holders of Trilon Shares
and notwithstanding any interruption of mail services in Canada following
mailing. In the event of any interruption of mail service following mailing,
Brascan intends to make reasonable efforts to disseminate the notice by other
means, such as publication. Except as otherwise required or permitted by law,
if post offices in Canada are not open for the deposit of mail, any notice
which Brascan or the Depositary may give or cause to be given under the Offer
will be deemed to have been properly given and to have been received by
holders of Trilon Shares if it is given to The Toronto Stock Exchange for
dissemination and if it is published (i) once in the National Edition of The
Globe and Mail, and (ii) once, if possible, in daily newspapers of general
circulation in each of the French and English languages in the City of
Montreal, provided that if the National Edition of The Globe and Mail is not
being generally circulated, publication thereof shall be made in The National
Post.
The Offer will be mailed to registered Shareholders or made in such other
manner as is permitted by applicable regulatory authorities and will be
furnished by Brascan to brokers, investment dealers, banks and similar person
whose names, or the names of whose nominees, appear in the register maintained
by or on behalf of Trilon in respect of the Trilon Shares or, if security
position listings are available, who are listed as participants in a clearing
agency's security position listing, for subsequent transmittal to the
beneficial owners of Trilon Shares.
Wherever the Offer calls for documents to be delivered to the Depositary,
such documents will not be considered delivered unless and until they have
been physically received at one of the addresses listed for the Depositary on
the Letter of Transmittal. Wherever the Offer calls for documents to be
delivered to a particular office of the Depositary, such documents will not be
considered delivered unless and until they have been physically received at
the particular office at the address indicated on the Letter of Transmittal or
Notice of Guaranteed Delivery, as applicable.
11.Dividends and Distributions
If, on or after the date of this Offer, Trilon should split, combine or
otherwise change any of the Trilon Shares or its capitalization, or shall
disclose that it has taken any such action, then Brascan may, in its sole
discretion, make such adjustments as it considers appropriate to the purchase
price and other terms of this Offer (including, without limitation, the type
of securities offered to be purchased and the amounts payable therefor) to
reflect such split, combination or other change.
Trilon Shares acquired pursuant to the Offer shall be transferred to
Brascan free and clear of all liens, charges, encumbrances, claims and
equities, together with all rights and benefits arising therefrom including
the right to all dividends, distributions, payments, securities, rights,
assets or other interests which may be declared, paid, issued, distributed,
made or transferred on or after the date hereof on or in respect of the Trilon
Shares. If, on or after April 11, 2002, Trilon should declare or pay any
dividend or declare, make or pay any other distribution or payment on or
10
declare, allot, reserve or issue any securities, rights or other interests
with respect to the Trilon Shares, payable or distributable to holders of
Trilon Shares of record on a date prior to the transfer to the name of Brascan
or its nominees or transferees on Trilon's transfer registers of Trilon Shares
accepted for payment pursuant to this Offer, then (i) in the case of cash
dividends, distributions or payments, the amount of the dividends,
distributions or payments shall be received and held by the depositing holders
of Trilon Shares for the account of Brascan until Brascan pays for such Trilon
Shares, and to the extent that such dividends, distributions or payments do
not exceed the purchase price per Trilon Share payable by Brascan pursuant to
this Offer, the purchase price per Trilon Share payable by Brascan pursuant to
the Offer will be reduced by the amount of any such dividend, distribution or
payment, and (ii) in the case of non-cash dividends, distributions, payments,
rights or other interests, the whole of any such non-cash dividend,
distribution, payment, right or other interest, and in the case of any cash
dividends, distributions or payments in an amount that exceeds the purchase
price per Trilon Share, the whole of any such cash dividend, distribution or
payment, will be received and held by the depositing holder of Trilon Shares
for the account of Brascan and shall be required to be promptly remitted and
transferred by the depositing holder of Trilon Shares to the Depositary for
the account of Brascan, accompanied by appropriate documentation of transfer.
Pending such remittance, Brascan will be entitled to all rights and privileges
as owner of any such dividend, distribution, payment, right or other interest
and may withhold the entire purchase price payable by Brascan pursuant to the
Offer or deduct from the purchase price payable by Brascan pursuant to the
Offer the amount or value thereof, as determined by Brascan in its sole
discretion.
Brascan understands that, in light of the Offer, the board of directors of
Trilon intends to declare a partial dividend of $0.10 per Trilon Share at its
board meeting in April 2002 (to be paid by Trilon at a later date) in lieu of
the regular quarterly dividend of $0.16 per Trilon Share that would
customarily be payable to Shareholders of record in June 2002, which date is
expected to be after the Deposit Period. Brascan understands that the record
date for this partial dividend will be during the Deposit Period and is
intended to provide dividend continuity to Shareholders to the extent they
receive Brascan securities for their Trilon Shares under the Offer.
Accordingly, notwithstanding the foregoing paragraph, Brascan will not reduce
the purchase price for Trilon Shares under the Offer to the extent that
Shareholders receive Brascan Shares or Brascan Non-Cumulative Class A
Preference Shares, Series 11 for their Trilon Shares under the Offer
(including any cash to be paid in lieu of fractions of Brascan Shares or of
Brascan Non-Cumulative Class A Preference Shares, Series 11 and including the
$0.05 per Trilon Share to be paid along with Brascan Non-Cumulative Class A
Preference Shares, Series 11).
12.Other Terms of the Offer
(a) The Offer and all contracts resulting from acceptance hereof shall be
governed by and construed in accordance with the laws of the Province
of Ontario and the laws of Canada applicable therein. Each party to any
agreement resulting from the acceptance of the Offer unconditionally
and irrevocably attorns to the exclusive jurisdiction of the courts of
the Province of Ontario.
(b) No broker, dealer or other person has been authorized to give any
information or make any representation on behalf of Brascan not
contained herein or in the accompanying Circular, and, if given or
made, such information or representation must not be relied upon as
having been authorized.
(c) Brascan, in its sole discretion, shall be entitled to make a final and
binding determination of all questions relating to the interpretation
of the Offer, the Circular, the Letter of Transmittal and the Notice of
Guaranteed Delivery, the validity of any acceptance of the Offer and
the validity of any withdrawals of Trilon Shares.
(d) No Offer is being made to, and no deposits will be accepted from or on
behalf of, Shareholders residing in any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. Brascan may, in its sole
discretion, take such action as it may deem necessary to make the Offer
in any jurisdiction and extend the Offer to Shareholders in any such
jurisdiction.
13.Mail Service Interruption
Notwithstanding the provisions of the Offer, the Circular, the Letter of
Transmittal or the Notice of Guaranteed Delivery, cheques and/or share
certificates in payment for Trilon Shares purchased pursuant to the Offer,
certificates for any Trilon Shares to be returned and other relevant documents
will not be mailed if Brascan determines that delivery thereof by mail may be
delayed. Persons entitled to cheques, certificates and other relevant
documents which are not mailed for the foregoing reason may take delivery
thereof at the office of the Depositary to which the deposited certificates
for Trilon Shares were delivered until such time as Brascan has determined
that delivery by mail will no
11
longer be delayed. Brascan shall provide notice of any such determination not
to mail made under this section as soon as reasonably practicable after the
making of such determination and in accordance with section 10, "Notice and
Delivery". The deposit of cheques and/or share certificates with the
Depositary in such circumstances shall constitute delivery to the persons
entitled thereto and the Trilon Shares shall be deemed to have been paid for
immediately upon such deposit.
14.General
The provisions of the Glossary, the Circular, the Letter of Transmittal and
the Notice of Guaranteed Delivery accompanying the Offer, including the
instructions and rules contained therein, as applicable, form part of the
terms and conditions of the Offer.
The accompanying Circular, together with the documents forming part of the
Offer, constitutes the take-over bid circular required under Canadian
provincial securities legislation with respect to the Offer.
BRASCAN CORPORATION
(Signed) J. Bruce Flatt
President and Chief Executive
Officer
12
CIRCULAR
The following information is supplied with respect to the accompanying
Offer by Brascan to purchase the Trilon Shares. Terms defined in the Offer and
not otherwise defined herein have the same meaning in this Circular. The terms
and conditions of the Offer are incorporated in and form part of this
Circular. Shareholders should refer to the Offer for details of the terms and
conditions of the offer to purchase Trilon Shares, including details as to
payment and withdrawal rights.
The information concerning Trilon contained in the Offer and this Circular
has been taken from or based upon publicly available documents and records on
file with Canadian securities administrators and other public sources.
Although Brascan has no knowledge that would indicate that any statements
contained herein taken from or based on such documents and records are untrue
or incomplete, Brascan does not assume any responsibility for the accuracy or
completeness of the information contained in such documents and records, or
for any failure by Trilon to disclose events which may have occurred or may
affect the significance or accuracy of any such information but which are
unknown to Brascan.
1.Brascan Corporation
Brascan owns, manages and builds businesses which generate sustainable cash
flows. Current operations are largely in the real estate, financial and power
generating sectors. In addition, Brascan holds investments in the resource
sector.
Brascan's goal is to build long-term shareholder value by investing in high
quality assets at attractive values, by actively working to increase returns
on capital invested in these assets, and by continuously pursuing new
opportunities for future growth.
Recent Developments
The following is a summary of significant recent developments affecting
Brascan since January 1, 2001.
On April 2, 2002, Brascan announced its intention to issue $125 million of
8.30% preferred securities due June 30, 2051, subject to the underwriters'
option to purchase an additional $75 million of preferred securities.
On March 12, 2002, Brascan sold a 50% interest in the approximately one
million square foot Exchange Tower office property in downtown Toronto for
$155 million or $85 million net after non-recourse indebtedness on the
property.
On March 8, 2002, Brascan announced an agreement to acquire four
hydroelectric generating stations in northern Ontario with a combined
generating capacity of 488 megawatts from Ontario Power Generation Inc. for
$340 million. Brascan expects this acquisition to close in early May 2002.
On February 1, 2002, Brascan acquired six hydroelectric generating stations
with a combined generating capacity of 126 megawatts and related transmission
facilities in northern Maine for cash consideration of US$156.5 million.
During 2001, Brascan increased its ownership of Nexfor Inc. from 33% to
41%.
On December 20, 2001, Brascan issued $125 million of 8.35% preferred
securities due December 31, 2050.
On December 12, 2001, Brascan issued US$300 million of 8.125% senior notes
due December 15, 2008 in the United States.
On November 1, 2001, an aggregate of 6,950,208 Class A Preference Shares,
Series 8 of Brascan were converted into an equivalent number of Class A
Preference Shares, Series 9 on a one-for-one basis.
On September 17, 2001, Brascan issued 10,000,000 Class A Preference Shares,
Series 10, for gross offering proceeds of $250 million.
In August 2001, Brascan received rating upgrades for its long-term debt to
"A (low)" from "BBB (high)" from Dominion Bond Rating Service Limited ("DBRS")
and to "A-" from "BBB" from Standard & Poor's Rating Service ("S&P"). Also in
August 2001, Brascan's preferred share ratings were increased to "pfd-2(low)"
and "P-2" by DBRS and S&P, respectively.
13
In April 2001, Brascan received approval for a normal course issuer bid to
acquire up to 8,652,276 Brascan Shares, which runs until April 2002. Brascan
intends to file for a renewal of its normal course issuer bid at that time.
In February 2001, Brascan increased its ownership of Great Lakes Power Inc.
from 93% to 100%.
In January 2001, Brascan's ownership of Trilon Financial Corporation was
increased from 65% to 71% as a result of Trilon's repurchasing 14.5 million of
its own Class A Shares. In February 2002, Brascan's interest in Trilon was
diluted to 70% as a result of the exercise of outstanding share purchase
warrants of Trilon which expired on February 28, 2002.
Except as described above, there have been no material changes in the share
and loan capital of Brascan on a consolidated basis since December 31, 2000.
Share Capital
The authorized share capital of Brascan consists of an unlimited number of
Class A Limited Voting Shares ("Brascan Shares"); up to 85,120 Class B Limited
Voting Shares ("Class B Shares"); an unlimited number of Class A Preference
Shares, issuable in series; and an unlimited number of Class AA Preference
Shares, issuable in series. As at April 11, 2002, the following shares of
Brascan were issued and outstanding: 166,369,595 Brascan Shares (net of
111,846,461 Brascan Shares held internally by subsidiaries of Brascan); 85,120
Class B Shares; 19,091 Class A Preference Shares, Series 1; 10,465,100 Class A
Preference Shares, Series 2; 2,000 Class A Preference Shares, Series 3;
4,000,000 Class A Preference Shares, Series 4; 2,600,000 Class A Preference
Shares, Series 5; 4,000,000 Class A Preference Shares, Series 7; 1,049,792
Class A Preference Shares, Series 8; 6,950,208 Class A Preference Shares,
Series 9; and 10,000,000 Class A Preference Shares, Series 10. For a
description of the Brascan Non-Cumulative Class A Preference Shares, Series
11, see section 2, "Description of Brascan Non-Cumulative Class A Preference
Shares, Series 11".
Brascan Shares have the following rights, privileges, restrictions and
conditions:
Ranking. The Brascan Shares rank on a parity with the Class B Shares and
rank after the Class A Preference Shares and the Class AA Preference Shares
with respect to the payment of dividends and the return of capital on the
liquidation, dissolution or winding-up of Brascan. After payment to the
holders of the Class A Preference Shares, Class AA Preference Shares and any
other shares ranking as to dividends prior to the Brascan Shares and the Class
B Shares of the amount or amounts to which they may be entitled, the holders
of the Brascan Shares and the Class B Shares are entitled to receive any
dividend declared by the board of directors of Brascan and to receive the
remaining property of Brascan upon dissolution.
Voting. Other than as provided below, each holder of Brascan Shares is
entitled to notice of and to attend all meetings of shareholders of Brascan
(except meetings at which only holders of another specified class or series of
shares are entitled to vote) and are entitled to cast at any such meeting one
vote per share. Subject to applicable law and in addition to any other
required shareholder approvals, all matters to be approved by shareholders
(other than the election of directors) must be approved by (i) a majority or,
in the case of matters that require approval by a special resolution of
shareholders, at least 66 2/3% of the votes cast by holders of Brascan Shares
who vote in respect of the resolution or special resolution, as the case may
be, and (ii) a majority or, in the case of matters that require approval by a
special resolution of shareholders of Brascan, at least 66 2/3% of the votes
cast by holders of Class B Shares who vote in respect of the resolution or
special resolution, as the case may be.
Election of Directors. In the election of directors of Brascan, holders of
Brascan Shares are entitled to elect one-half of the board of directors of
Brascan, provided that if holders of Class A Preference Shares, Series 1,
Series 2 and Series 3 become entitled to elect two or three directors, as the
case may be, the number of directors to be elected by holders of Brascan
Shares shall be reduced by the number of directors to be elected by holders of
Class A Preference Shares, Series 1, Series 2 and Series 3. The holders of
Class B Shares of Brascan are entitled to elect the other one-half of the
board of directors of Brascan.
Each holder of Brascan Shares has the right to cast a number of votes in
the election of directors of Brascan equal to the number of votes attached to
the Brascan Shares held by the holder multiplied by the number of directors to
be elected by the holders of Brascan Shares. A holder may cast all such votes
in favour of one candidate or distribute such votes among its candidates in
any manner the holder sees fit. If a holder has voted for more than one
candidate without specifying the distribution of votes among such candidates,
the holder will be deemed to have divided the holder's votes equally among the
candidates for whom the holder voted.
14
Principal Shareholders
To Brascan's knowledge, the only persons or corporations which beneficially
own, directly or indirectly, or exercise control or direction over voting
securities of Brascan carrying more than 10% of the votes attached to any
class of outstanding voting securities of Brascan are EdperPartners Limited
("EdperPartners") and its shareholders, who collectively hold, directly and
indirectly, or have options to acquire, approximately 27.1 million Brascan
Shares representing approximately 15% of the Brascan Shares on a fully diluted
basis, and 85,120 Class B Shares, representing all of the Class B Shares of
Brascan. Jack L. Cockwell, J. Bruce Flatt, Lynda C. Hamilton, Robert J.
Harding, David W. Kerr and Allen T. Lambert, who are directors of Brascan, and
Harry A. Goldgut, Edward C. Kress, Brian D. Lawson, Richard J. Legault and
John C. Tremayne, who are officers of Brascan, are shareholders of
EdperPartners.
EdperPartners is a party to an amended and restated Trust Agreement with
Montreal Trust Company of Canada (as trustee for the holders of Brascan
Shares) dated August 1, 1997. The Trust Agreement provides, among other
things, that EdperPartners has agreed not to sell any Class B Shares, directly
or indirectly, pursuant to a take-over bid, unless a concurrent bid is made to
all holders of Brascan Shares. The concurrent offer must be (i) for the same
percentage of Brascan Shares as the percentage of Class B Shares offered to be
purchased from EdperPartners, and (ii) the same in all material respects as
the offer for the Class B Shares. Among other things, the Trust Agreement
permits (i) a sale by EdperPartners of Class B Shares at a price per share
less than 115% of the market price of Brascan Shares and as part of a
transaction involving not more than five persons in the aggregate, and (ii) a
direct or indirect sale of shares of EdperPartners to a purchaser who is or
will become a shareholder of EdperPartners and will not hold more than 20% of
EdperPartners' outstanding shares as a result of the transaction.
Price Range and Trading Volumes for the Brascan Shares
The Brascan Shares trade on the TSE, the Brussels Exchange and, since
December 20, 2000, on the NYSE. There is currently no market for the Brascan
Non-Cumulative Class A Preference Shares, Series 11. Brascan has received
conditional listing approval from The Toronto Stock Exchange for the
additional Brascan Shares and the Brascan Non-Cumulative Class A Preference
Shares, Series 11 to be issued under the Offer. Brascan has also applied to
list the additional Brascan Shares on the NYSE and the Brussels Stock
Exchange.
The Toronto Stock Exchange
The combined volume of trading and price ranges of the Brascan Shares on
the TSE are set forth in the following table for the periods indicated.
Price per share
--------------------------
High Low Average(/1/) Volume
------ ------ ------------ ----------
2002
----
April (to April 5)........................ $34.95 $34.00 $34.22 2,349,591
March (1 to 25)........................... 35.35 33.95 33.04 7,286,276
March (26 to 31).......................... 34.25 31.15 34.26 3,814,131
March..................................... 35.35 31.15 33.46 11,100,407
February.................................. 31.95 27.95 29.95 4,846,399
January................................... 29.95 28.06 28.99 12,110,716
2001
----
December.................................. 29.55 25.75 27.37 6,940,649
November.................................. 28.38 23.40 25.90 7,819,809
October................................... 26.90 23.50 25.79 6,733,331
September................................. 28.71 22.10 26.06 8,496,176
August.................................... 29.04 27.05 28.21 10,064,193
July...................................... 27.80 25.30 26.91 8,511,114
June...................................... 26.75 24.80 25.89 6,706,470
May....................................... 27.45 23.80 25.61 7,139,714
April..................................... 26.20 23.65 25.48 9,269,463
March..................................... 26.30 25.00 25.59 8,313,781
-------
Note:
(1) Volume weighted average of trading prices.
Brascan announced its intention to make an offer to purchase the Trilon
Shares on March 26, 2002. The closing price of the Brascan Shares on the TSE
on March 25, 2002, the last day on which the Trilon Shares traded prior to the
announcement, was $34.05.
15
The New York Stock Exchange
The combined volume of trading and price ranges of the Brascan Shares on
the NYSE are set forth in the following table for the periods indicated.
Price per share
------------------------------
High Low Average(/1/) Volume
-------- -------- ------------ -------
2002
----
April (to April 5)....................... US$21.90 US$21.35 US$21.58 162,200
March (1 to 25).......................... 22.17 21.31 20.81 371,700
March (26 to 31)......................... 21.59 19.56 21.69 95,700
March.................................... 22.17 19.56 21.08 467,400
February................................. 19.90 17.60 18.84 420,600
January.................................. 18.74 17.21 19.18 730,700
2001
----
December................................. 18.29 16.28 17.64 597,600
November................................. 17.48 14.49 16.27 759,600
October.................................. 16.75 14.70 16.27 799,100
September................................ 17.86 14.64 16.61 686,000
August................................... 18.29 17.29 18.20 975,600
July..................................... 17.55 15.98 17.59 917,700
June..................................... 16.71 15.75 16.88 495,300
May...................................... 17.32 14.83 16.97 739,700
April.................................... 16.01 14.78 16.32 227,600
March.................................... 16.02 14.97 16.46 281,700
-------
Note:
(1) Volume weighted average of trading prices.
Brascan announced its intention to make an offer to purchase the Trilon
Shares on March 26, 2002. The closing price of the Brascan Shares on the NYSE
on March 25, 2002, the last day on which the Trilon Shares traded prior to the
announcement, was US$21.50.
Earnings Coverage Ratios
The earnings coverage ratios below include pro forma information giving
effect to the consolidation of the results of Brookfield Properties
Corporation ("Brookfield") since January 1, 2000. Prior to December 31, 2001,
Brookfield was accounted for using the equity method of accounting. The
consolidation of Brookfield had no effect on net income or income per share.
The ratios have been calculated after giving effect to the assumed issuance
of $10 million of Class A Preference Shares, Series 11 pursuant to the Offer
and $125 million in principal amount of 8.30% preferred securities due
June 30, 2051 pursuant to an offering announced by Brascan on April 2, 2002
(see "Brascan Corporation - Recent Developments").
Brascan's dividend requirements on all of its preference shares, after
giving effect to the issuance of the above mentioned securities and adjusted
to a before tax equivalent using an effective tax rate of 28%, amounted to
$69 million for each of the years ended December 31, 2001 and December 31,
2000. Brascan's interest requirements for the year ended December 31, 2001 and
December 31, 2000 amounted to $266 million and $280 million (pro forma basis -
$724 million and $667 million), respectively. Brascan's earnings before
interest and income tax for the year ended December 31, 2001 and December 31,
2000 were $570 million and $1,088 million (pro forma basis -$1,157 million and
$1,597 million), respectively, which are 1.7 and 3.1 times (pro forma basis -
1.5 and 2.2 times) Brascan's aggregate preference share dividend and interest
requirements for the respective periods.
Brascan's earnings from continuing operations before interest and income
tax for the year ended December 31, 2001 and December 31, 2000 were $570
million and $683 million (pro forma basis - $1,157 million and
$1,192 million), respectively, which are 1.7 and 2.0 times (pro forma basis -
1.5 and 1.6 times) Brascan's aggregate preference share dividend and interest
requirements for the respective periods.
Interest on Brascan's convertible notes for the years ended December 31,
2001 and December 31, 2000 were $5 million and $6 million, respectively, the
inclusion of which has a negligible effect on the ratios.
16
Auditors, Transfer Agent and Registrar
The auditors of Brascan are Deloitte & Touche LLP, Chartered Accountants,
Suite 1400, BCE Place, 181 Bay Street, Toronto, Ontario M5J 2V1. The transfer
agent and registrar for the Brascan Shares is CIBC Mellon Trust Company of
Canada, P.O. Box 7010, Adelaide Street Postal Station, Toronto, Ontario M5C
2W9.
2.Description of Brascan Non-Cumulative Class A Preference Shares, Series 11
Certain Provisions of the Class A Preference Shares of Brascan as a Class
The following is a summary of certain provisions attaching to or affecting
the Class A Preference Shares of Brascan as a class.
Series
The Class A Preference Shares of Brascan may be issued from time to time in
one or more series. The board of directors of Brascan will fix the number of
shares in each series and the provisions attached to each series before issue.
Priority
The Class A Preference Shares of Brascan rank senior to the Class AA
Preference Shares of Brascan, the Brascan Shares, the Class B Limited Voting
Shares of Brascan and other shares ranking junior to the Class A Preference
Shares with respect to priority in the payment of dividends and in the
distribution of assets in the event of the liquidation, dissolution or
winding-up of Brascan, whether voluntary or involuntary, or in the event of
any other distribution of assets of Brascan among its shareholders for the
purpose of winding up its affairs. Each series of Class A Preference Shares
ranks on a parity with every other series of Class A Preference Shares with
respect to priority in the payment of dividends and in the distribution of
assets in the event of the liquidation, dissolution or winding-up of Brascan,
whether voluntary or involuntary, or in the event of any other distribution of
assets of Brascan among its shareholders for the purpose of winding up its
affairs.
Shareholder Approvals
Brascan shall not delete or vary any preference, right, condition,
restriction, limitation or prohibition attaching to the Class A Preference
Shares as a class or create preference shares ranking in priority to or on
parity with the Class A Preference Shares except by special resolution passed
by at least 66 2/3% of the votes cast at a meeting of the holders of the Class
A Preference Shares duly called for that purpose, in accordance with the
provisions of the articles of Brascan.
Each holder of Class A Preference Shares of Brascan entitled to vote at a
class meeting of holders of Class A Preference Shares, or at a joint meeting
of the holders of two or more series of Class A Preference Shares, has
one vote in respect of each $25.00 of the issue price of each Class A
Preference Share held by such holder.
Certain Provisions of the Brascan Non-Cumulative Class A Preference Shares,
Series 11 as a Series
The following is a summary of certain provisions attaching to or affecting
the Brascan Non-Cumulative Class A Preference Shares, Series 11 as a series.
No Brascan Non-Cumulative Class A Preference Shares, Series 11 will be issued
unless Shareholders elect in the aggregate to receive at least the Minimum
Series 11 Amount in issue price of these shares when tendering to the Offer.
Issue Price
The Brascan Non-Cumulative Class A Preference Shares, Series 11 will have
an issue price of $25.00 per share.
Dividends
The holders of the Brascan Non-Cumulative Class A Preference Shares, Series
11 will be entitled to receive fixed non-cumulative preferential cash
dividends, if, as and when declared by the board of directors of Brascan, in
an amount per share per annum equal to $1.375 (representing a coupon rate of
5.5%), accruing daily from the date of issue (expected to be the date Brascan
pays for Trilon Shares taken up under the Offer), payable quarterly on the
last day of March, June, September and December in each year. The first such
dividend will be payable on the later of: (a) the
17
date of a certificate of amendment under the OBCA in respect of articles of
amendment creating the Brascan Non-Cumulative Class A Preference Shares,
Series 11, and (b) September 30, 2002 and will be pro-rated to the number of
days between the earliest date of payment under the Offer and the date of
payment for the first dividend.
Redemption
The Brascan Non-Cumulative Class A Preference Shares, Series 11 are not
redeemable before June 30, 2009. On or after this date, but subject to
applicable law and to the provisions described under "Certain Provisions of
the Brascan Non-Cumulative Class A Preference Shares, Series 11 as a Series -
Restrictions on Dividends and Retirement and Issue of Shares", Brascan may,
at its option, at any time redeem all, or from time to time any part, of the
outstanding Brascan Non-Cumulative Class A Preference Shares, Series 11, by
the payment of an amount in cash for each such share so redeemed of $25.75 if
redeemed before June 30, 2010, of $25.50 if redeemed on or after June 30, 2010
but before June 30, 2011, of $25.25 if redeemed on or after June 30, 2011, but
before June 30, 2012, and of $25.00 thereafter plus, in each case, all
declared and unpaid dividends up to but excluding the date fixed for
redemption.
Notice of any redemption will be given by Brascan not less than 30 days and
not more than 60 days prior to the date fixed for redemption. If less than all
the outstanding Brascan Non-Cumulative Class A Preference Shares, Series 11
are at any time to be redeemed, the shares to be redeemed will be selected in
such manner as Brascan may determine.
Conversion at the Option of Brascan
The Brascan Non-Cumulative Class A Preference Shares, Series 11 will not be
convertible at the option of Brascan prior to June 30, 2009. On or after this
date, Brascan may, subject to applicable law and any requirement to obtain
regulatory relief, convert all, or from time to time any part, of the
outstanding Brascan Non-Cumulative Class A Preference Shares, Series 11 into
that number of Brascan Shares determined (per Brascan Non-Cumulative Class A
Preference Share, Series 11) by dividing the then applicable redemption price,
together with all declared and unpaid dividends up to but excluding the date
fixed for conversion, by the greater of $2.00 or 95% of the then Current
Brascan Market Price. Fractional Brascan Shares will not be issued on any
conversion of Brascan Non-Cumulative Class A Preference Shares, Series 11, but
in lieu thereof Brascan will make cash payments.
Notice of any conversion will be given by Brascan not less than 30 days and
not more than 60 days prior to the date fixed for conversion. If less than all
the outstanding Brascan Non-Cumulative Class A Preference Shares, Series 11
are at any time to be converted, the shares to be converted will be selected
in such manner as Brascan may determine.
Upon exercise by Brascan of its right to convert Brascan Non-Cumulative
Class A Preference Shares, Series 11 into Brascan Shares, Brascan reserves the
right not to issue Brascan Shares to any person whose address is in, or whom
Brascan or its transfer agent has reason to believe is a resident of, any
jurisdiction outside Canada, to the extent that such issue would require
compliance by Brascan with the securities or other laws of such jurisdiction.
Conversion at the Option of the Holder
Subject to applicable law and the rights of Brascan described below, on and
after December 31, 2013, each Brascan Non-Cumulative Class A Preference Share,
Series 11 will be convertible at the option of the holder on the last day of
each of March, June, September and December in each year on at least 30 days
notice (which notice shall be irrevocable) into that number of Brascan Shares
determined by dividing $25.00, together with all declared and unpaid dividends
up to but excluding the date fixed for conversion, by the greater of $2.00 or
95% of the then Current Brascan Market Price. Fractional Brascan Shares will
not be issued on any conversion of Brascan Non-Cumulative Class A Preference
Shares, Series 11, but in lieu thereof Brascan will make cash payments.
Upon exercise of the conversion privilege by the holder of Brascan Non-
Cumulative Class A Preference Shares, Series 11, Brascan reserves the right
not to issue Brascan Shares to any person whose address is in, or whom Brascan
or its transfer agent has reason to believe is a resident of, any jurisdiction
outside Canada, to the extent that such issue would require compliance by
Brascan with the securities or other laws of such jurisdiction.
Brascan, subject to the provisions described under "Certain Provisions of
the Brascan Non-Cumulative Class A Preference Shares, Series 11 as a Series -
Restrictions on Dividends and Retirement and Issue of Shares", as applicable,
may by notice given not later than 20 days before the date fixed for
conversion to all holders who have
18
given a conversion notice, either (i) redeem on the first business day after
the date fixed for conversion all or any part of the Brascan Non-Cumulative
Class A Preference Shares, Series 11 forming the subject matter of the
applicable conversion notice, or (ii) cause the holder of such Brascan Non-
Cumulative Class A Preference Shares, Series 11 to sell on the first business
day after the date fixed for conversion all or any part of such Brascan Non-
Cumulative Class A Preference Shares, Series 11 to another purchaser or
purchasers in the event that a purchaser or purchasers willing to purchase all
or any part of such Brascan Non-Cumulative Class A Preference Shares, Series
11 is or are found. Any such redemption or purchase shall be made by the
payment of an amount in cash of $25.00 per share, together with all declared
and unpaid dividends up to but excluding the date fixed for redemption or
purchase. The Brascan Non-Cumulative Class A Preference Shares, Series 11 to
be so redeemed or purchased shall not be converted on the date set forth in
the conversion notice.
If Brascan elects to redeem or arrange for the purchase of any Brascan Non-
Cumulative Class A Preference Shares, Series 11 that are the subject of a
conversion notice ("Subject Shares"), Brascan shall, at least 20 days prior to
the conversion date, give notice to all holders who have given a conversion
notice to Brascan, stating:
(a) the number of Subject Shares to be redeemed by Brascan;
(b) the number of Subject Shares to be sold to another purchaser; and
(c) the number of Subject Shares to be converted into Brascan Shares,
such that all of the Subject Shares will be redeemed, purchased or converted
on the first business day after the date fixed for conversion and that the
proportion of the Subject Shares which are either redeemed, purchased or
converted on that conversion date shall, to the extent practicable, be the
same for each holder delivering a conversion notice.
Purchase for Cancellation
Subject to applicable law and to the provisions described under "Certain
Provisions of the Brascan Non-Cumulative Class A Preference Shares, Series 11
as a Series - Restrictions on Dividends and Retirement and Issue of Shares"
below, Brascan may at any time purchase (if obtainable) for cancellation the
whole or any part of the Brascan Non-Cumulative Class A Preference Shares,
Series 11 at the lowest price or prices at which in the opinion of the board
of directors of Brascan such shares are obtainable.
Rights on Liquidation
In the event of the liquidation, dissolution or winding-up of Brascan or
any other distribution of assets of Brascan among its shareholders for the
purpose of winding-up its affairs, the holders of the Brascan Non-Cumulative
Class A Preference Shares, Series 11 will be entitled to receive $25.00 per
share, together with all declared and unpaid dividends up to but excluding the
date fixed for payment, before any amount is paid or any assets of Brascan are
distributed to the holders of any shares ranking junior as to capital to the
Brascan Non-Cumulative Class A Preference Shares, Series 11. The holders of
the Brascan Non-Cumulative Class A Preference Shares, Series 11 will not be
entitled to share in any further distribution of the assets of Brascan.
Restrictions on Dividends and Retirement and Issue of Shares
So long as any of the Brascan Non-Cumulative Class A Preference Shares,
Series 11 are outstanding, Brascan will not, without the approval of the
holders of the Brascan Non-Cumulative Class A Preference Shares, Series 11:
(a) declare, pay or set apart for payment any dividends (other than stock
dividends payable in shares of Brascan ranking as to capital and
dividends junior to the Brascan Non-Cumulative Class A Preference
Shares, Series 11) on shares of Brascan ranking as to dividends junior
to the Brascan Non-Cumulative Class A Preference Shares, Series 11;
(b) except out of the net cash proceeds of a substantially concurrent issue
of shares ranking as to return of capital and dividends junior to the
Brascan Non-Cumulative Class A Preference Shares, Series 11, redeem or
call for redemption, purchase or otherwise pay off or retire any shares
of Brascan ranking as to capital junior to the Brascan Non-Cumulative
Class A Preference Shares, Series 11;
(c) redeem or call for redemption, purchase or otherwise retire for value
less than all of the Brascan Non-Cumulative Class A Preference Shares,
Series 11 then outstanding;
19
(d) except pursuant to any purchase obligation, sinking fund, retraction
privilege or mandatory redemption provisions attaching thereto, redeem
or call for redemption, purchase or otherwise pay off or retire any
Class A Preference Shares, ranking as to the payment of dividends or
return of capital on a parity with the Brascan Non-Cumulative Class A
Preference Shares, Series 11; or
(e) issue any additional Brascan Non-Cumulative Class A Preference Shares,
Series 11 or any shares ranking as to dividends or return of capital
prior to or on a parity with the Brascan Non-Cumulative Class A
Preference Shares, Series 11, except for an issue of Brascan Non-
Cumulative Class A Preference Shares, Series 11 pursuant to the Offer,
any Compulsory Acquisition or any Subsequent Acquisition Transaction,
unless, in each such case, all declared and unpaid dividends up to and
including the dividend payable for the last completed period for which
dividends were payable on the Brascan Non-Cumulative Class A Preference
Shares, Series 11 and on all other shares of Brascan ranking prior to or on a
parity with the Brascan Non-Cumulative Class A Preference Shares, Series 11
with respect to the payment of dividends have been declared paid or set apart
for payment.
Shareholder Approvals
The approval of all amendments to the rights, privileges, restrictions and
conditions attaching to the Brascan Non-Cumulative Class A Preference Shares,
Series 11 as a series and any other approval to be given by the holders of the
Brascan Non-Cumulative Class A Preference Shares, Series 11 may be given by a
resolution carried by an affirmative vote of at least 66 2/3% of the votes
cast at a meeting at which the holders of a majority of the outstanding
Brascan Non-Cumulative Class A Preference Shares, Series 11 are present or
represented by proxy or, if no quorum is present at such meeting, at an
adjourned meeting at which the holders of Brascan Non-Cumulative Class A
Preference Shares, Series 11 then present would form the necessary quorum. At
any meeting of holders of Brascan Non-Cumulative Class A Preference Shares,
Series 11 as a series, each such holder shall be entitled to one vote in
respect of each Class A Preference Share, Series 11 held.
Voting Rights
The holders of the Brascan Non-Cumulative Class A Preference Shares, Series
11 will not (except as otherwise provided by law and except for meetings of
the holders of Class A Preference Shares as a class and meetings of the
holders of Brascan Non-Cumulative Class A Preference Shares, Series 11 as a
series) be entitled to receive notice of, attend, or vote at, any meeting of
shareholders of Brascan unless and until Brascan shall have failed to pay
eight quarterly dividends on the Brascan Non-Cumulative Class A Preference
Shares, Series 11, whether or not consecutive and whether or not such
dividends have been declared and whether or not there are any monies of
Brascan properly applicable to the payment of dividends. In that event, until
such time as Brascan pays the whole amount of a quarterly dividend, the
holders of the Brascan Non-Cumulative Class A Preference Shares, Series 11
will be entitled to receive notice of and to attend each meeting of Brascan's
shareholders other than any meetings at which only holders of another
specified class or series are entitled to vote, and to one vote for each Class
A Preference Share, Series 11 held, provided that in respect of the election
of directors, the holders of Brascan Non-Cumulative Class A Preference Shares,
Series 11 will vote with holders of Brascan Shares and, in certain
circumstances, with the holders of certain other series of the Class A
Preference Shares in the election of one-half of the board of directors (less
the number of directors which the holders of the Class A Preference Shares,
Series 1, Class A Preference Shares, Series 2 and Class A Preference Shares,
Series 3 may be entitled to elect). The voting rights of the holders of the
Brascan Non-Cumulative Class A Preference Shares, Series 11 shall forthwith
cease upon payment by Brascan of the whole amount of a quarterly dividend on
the Brascan Non-Cumulative Class A Preference Shares, Series 11 subsequent to
the time such voting rights first arose.
Brascan's articles provide that each holder of shares entitled to vote in
an election of directors has the right to cast a number of votes equal to the
number of votes attached to the shares held by the holder of shares multiplied
by the number of directors to be elected. The holder of shares may cast all
such votes in favour of one candidate or distribute them among the candidates
in any manner the holder of shares sees fit. Where the holder of shares has
voted for more than one candidate without specifying the distribution of votes
among such candidates, the holder of shares shall be deemed to have divided
his votes equally among the candidates for whom the holder of shares voted.
Subject to applicable law and in addition to any other required shareholder
approvals, Brascan's articles also require that all matters to be approved by
shareholders (other than the election of directors) must be approved
separately by the holders of the Brascan Shares and by the holders of the
Brascan Class B Limited Voting Shares.
20
Tax on Dividends
Brascan will elect, in the manner and within the time provided under Part
VI.1 of the Tax Act, to pay or cause payment of the tax under Part VI.1 at a
rate such that the corporate holders of Brascan Non-Cumulative Class A
Preference Shares, Series 11 will not be required to pay tax under Part IV.1
of the Tax Act on dividends received on such shares.
3.OPSEU Strike
As a result of a strike by the Ontario Public Service Employees Union
("OPSEU"), the provision of government services in Ontario has been disrupted,
including the processing of amendments to the articles of corporations
incorporated in Ontario, including Brascan and Trilon. In order to create the
Brascan Non-Cumulative Class A Preference Shares, Series 11, Brascan must file
and receive a certificate of amendment in respect of articles of amendment
creating the Brascan Non-Cumulative Class A Preference Shares, Series 11. As a
result of the strike, Brascan has no assurances that it will be able to create
the Brascan Non-Cumulative Class A Preference Shares, Series 11 prior to
taking up and paying for the Trilon Shares tendered to the Offer. However,
upon conclusion of the strike and the resumption of normal government
services, Brascan anticipates being able to create the Brascan Non-Cumulative
Class A Preference Shares, Series 11, with effect on a date prior to taking up
and paying for the Trilon Shares.
In the event that Brascan is unable to secure a certificate of amendment
under the OBCA in respect of articles of amendment creating the Brascan Non-
Cumulative Class A Preference Shares, Series 11 as a result of the strike by
Ontario government employees prior to taking up and paying for Trilon Shares
under the Offer, a Shareholder who elects to receive Brascan Non-Cumulative
Class A Redeemable Preference Shares, Series 11 will be entitled to receive
those preference shares as at the date upon which Brascan pays for Trilon
Shares tendered by that Shareholder. However, notwithstanding the foregoing
and sections 6 and 10 of the Offer, share certificates representing Brascan
Non-Cumulative Class A Preference Shares, Series 11 will not be delivered to
Shareholders until such time as Brascan receives a certificate of amendment
under the OBCA in respect of articles of amendment creating the Brascan Non-
Cumulative Class A Preference Shares, Series 11. Brascan will seek to secure
this certificate immediately upon the strike ending. The TSE has conditionally
approved for listing the Brascan Shares and the Brascan Non-Cumulative Class A
Preference Shares, Series 11 issuable in connection with the Offer. The TSE
will post these securities for trading when all conditions imposed by the TSE
have been met, including in respect of the listing of the Brascan Non-
Cumulative Class A Preference Shares, Series 11 when they are fully
transferable. The transferability of the Brascan Non-Cumulative Class A
Preference Shares, Series 11 may be adversely affected until such time as
Brascan receives the certificate of amendment described above.
4.Trilon Financial Corporation
Trilon was continued under the laws of Ontario by Certificate and Articles
of Continuance dated February 8, 1994. The articles of Trilon were
subsequently amended to change the number of its directors.
Trilon is a financial services company that provides asset management and
merchant banking services. Trilon's clients include governments, institutions,
corporations and high net-worth individuals. Trilon also provides select
business services and is active in the capital markets. Trilon focuses its
activities on industry sectors that require substantial amounts of capital.
These sectors include real estate, natural resources, energy and financial
services.
Trilon's operations are grouped under four core businesses: merchant
banking, business services, capital markets and asset management. The merchant
banking group provides merchant banking loans and makes merchant banking
investments and a majority of these comprise acquisition bridge loans made to
small and medium sized companies to facilitate their growth initiatives. The
business services group provides residential home-related services to
corporations and institutions. These fee-based services include relocations,
move management, home appraisals and transaction closing services. Trilon's
capital markets group provides financial advisory, property brokerage and
securities underwriting services. Property brokerage is provided through
Trilon's Royal LePage division, a leading broker in Canada in both the
commercial and residential markets. Trilon also invests its own capital in
higher-yielding fixed income and equity securities. Trilon's asset management
group, directly and indirectly through Trilon's associates, manages assets for
institutional and other investors. Included among the assets managed are the
assets within the Tricap Restructuring Fund, launched in late 2001, and the
assets in the Trilon Opportunity Fund, which invests in new and emerging
technologies.
21
Recent Developments
In December 2001, Trilon completed the first closing, and in March 2002 the
second closing, of the Tricap Restructuring Fund. The Fund has over $415
million committed to make equity and debt investments in under-performing
companies which require financial and/or operational restructuring. Trilon has
committed $200 million to the Fund.
Share Capital
Trilon's authorized capital consists of:
. an unlimited number of Class I Preferred Shares, issuable in series, the
first series of which consists of 6,000,000 Floating Rate Class I
Preferred Shares Series A;
. an unlimited number of Class II Preferred Shares, issuable in series,
the first series of which consists of 3,500,000 Class II Cumulative
Redeemable Convertible Preferred Shares Series One, the second series
of which consists of 1,000,000 Class II Preferred Shares Series Two, the
third series of which consists of 4,000,000 Class II Preferred Shares
Series Three and the fourth series of which consists of 4,000,000
Class II Preferred Shares Series Four;
. an unlimited number of preferred shares designated as Class III
Preferred Shares Series One, the second series of which consists of
1,330,200 Class III Preferred Shares Series Two and the third series of
which consists of 4,000,000 Class III Preferred Shares Series Three; and
. an unlimited number of Class A Shares of Trilon and an unlimited number
of Class B Non-Voting Shares of Trilon.
At April 11, 2002, the following shares were issued and outstanding:
6,000,000 Class I Preferred Shares Series A, 665,000 Class II Preferred Shares
Series Two, 3,999,000 Class II Preferred Shares Series Three, 4,000,000 Class
II Preferred Shares Series Four, 5,000,000 Class III Preferred Shares Series
One, 482,888 Class III Preferred Shares Series Two, 103,745,836 Class A Shares
and 47,917,647 Class B Non-Voting Shares.
Trilon Shares have the following rights, privileges, restrictions and
conditions:
Conversion. The Class B Non-Voting Shares are convertible on a one-for-one
basis into Class A Shares, up to that number of Class B Shares equal to the
lesser of: (a) all the Class B Shares held, and (b) that number of Class B
Shares which, on exercise of the conversion right, would result in that
holder, together with holders of Class A Shares which are its affiliates,
holding that number of Class A Shares that is one Class A Share less than 50%
of the outstanding Class A Shares.
Dividends. Subject to the prior rights of the holders of Class I, II and
III Preferred Shares and any other senior ranking shares outstanding from time
to time, holders of Class B Non-Voting Shares have a right to receive fixed,
preferential, non-cumulative quarterly cash dividends of $0.03 per share. If
in any quarter, after providing for the full quarterly dividend on the Class B
Non-Voting Shares, any moneys of Trilon properly available for the payment of
dividends remain, all or any part of those moneys may be applied to dividends
on the Class A Shares, provided that if in that quarter dividends aggregating
$0.03 per share have been paid or declared and set aside for payment on Class
A Shares, any and all further dividends declared in that quarter shall be
declared and paid in equal or equivalent amounts per share on all Class A
Shares and all Class B Shares then outstanding without preference or priority.
Ranking. Subject to the prior rights of holders of Class I Preferred
Shares, Class II Preferred Shares and Class III Preferred Shares and any other
shares of Trilon ranking senior to the Trilon Shares, all Trilon Shares share
equally in the property and assets of Trilon in the event of the liquidation,
dissolution or winding-up of Trilon or any other distribution of the assets of
Trilon.
Voting. Holders of Class A Shares are entitled to vote at all meetings of
shareholders of Trilon, other than meetings at which holders of only a
specified class or series may vote. Holders of Class B Non-Voting Shares have
no right to vote generally.
5.Background to the Offer
Brascan has owned a significant interest in Trilon since Trilon was
established as a public company in 1982. In January 2001, when Trilon
repurchased 14.5 million of its Class A Shares pursuant to a substantial
issuer bid, Brascan's controlling interest in Trilon increased from 65% to 71%
of the Trilon Shares (subsequently decreased to 70% as a result of the
exercise of outstanding share purchase warrants of Trilon). As of April 11,
2002, Brascan holds
22
58,214,553 Class A Shares of Trilon, representing approximately 56% of the
number of Class A Shares outstanding. Brascan also holds 47,897,344 Class B
Non-Voting Shares of Trilon, each of which is convertible one-for-one into
Class A Shares of Trilon.
Management and the boards of directors of both Brascan and Trilon have
discussed the potential combination of the two companies on numerous occasions
over the past several years, given that the companies' business plans and
activities are highly complementary to each other.
Brascan has recently stated that its business strategy includes, among
other objectives, acquiring 100% ownership of certain of its operating
businesses. In August 2001, preliminary discussions took place between Brascan
and Trilon regarding a potential transaction between the two companies. These
discussions ended in October 2001, as it was determined at the time that a
transaction was unlikely to proceed in the short term, largely as a result of
the impact on the financial markets of the events of September 11, 2001. In
March 2002, senior executives of Brascan approached senior executives of
Trilon to re-engage discussions concerning a merger transaction. These
discussions were concluded on March 25, 2002, at which point the proposed
transaction was submitted to the boards of directors of each of Trilon and
Brascan for their consideration and the board of directors of Brascan
authorized management of Brascan to proceed with its plans to conclude a
merger between Trilon and Brascan.
On March 26, 2002, Brascan announced by press release its intention to
acquire all of the Trilon Shares not already held by Brascan.
The Independent Committee
Effective August 22, 2001, the board of directors of Trilon (the "Trilon
Board") appointed a special committee of directors (the "Independent
Committee") who are independent of Brascan and Management for the purposes of
exploring the possibility of engaging in a merger transaction with Brascan.
William A. Dimma, A. Gordon Craig, Susan E. Crocker, Patrick J. Keenan, Donald
C. Lowe and David R. McCamus were each appointed to the Independent Committee.
The Independent Committee appointed William A. Dimma as its Chair.
Independent Legal and Financial Advisors
At the time of its formation, the Independent Committee engaged Osler,
Hoskin & Harcourt LLP as its legal counsel to assist the Independent Committee
in discharging its responsibilities and to provide the Independent Committee
with advice concerning its duties and the conduct of its meetings.
On September 6, 2001, the Independent Committee engaged TD Securities to
serve as financial advisor to the Independent Committee and, if required, to
prepare and deliver the Valuation and Fairness Opinion. The Independent
Committee satisfied itself that TD Securities was a qualified and independent
advisor and competent to provide the financial services required by the
Independent Committee. In October 2001, the Independent Committee adjourned
its initial deliberations for the reasons set out above.
Immediately following the announcement by Brascan of its intention to make
the Offer, the board of directors reconvened the Independent Committee to
review the Offer. The Independent Committee requested that both Osler, Hoskin
& Harcourt LLP and TD Securities continue their services to the Independent
Committee and to complete the work previously undertaken.
Deliberations of the Independent Committee
During the course of its deliberations, the Independent Committee received
a presentation from management of Brascan with respect to the Offer.
Management of Brascan was asked to provide and did provide an explanation as
to why, in their opinion, the Offer was in the best interests of Trilon and
fair to Shareholders other than Brascan and its affiliates ("minority
Shareholders"). Detailed discussions were then held with Management concerning
the impact of the Offer on Trilon and its stakeholders.
Representatives of TD Securities attended substantially all of the
Independent Committee's meetings and provided financial advice with respect to
the Offer. From September 6, 2001 to April 4, 2002, TD Securities proceeded to
gather and review the financial information necessary for the preparation of
the Valuation and Fairness Opinion. The Independent Committee conducted a
detailed review with TD Securities of the analysis and methodologies
underlying the Valuation and Fairness Opinion. The Independent Committee's
members satisfied themselves that the methodology and assumptions were
appropriate in the circumstances. The Independent Committee also discussed
with TD Securities the results of its due diligence meetings with Management.
23
On April 4, 2002, the Independent Committee received orally from TD
Securities a valuation of the Trilon Shares prepared in compliance with Rule
61-501 and Policy Q-27. The written valuation sets out a range of fair market
values for the Trilon Shares as of April 4, 2002 of $15.65 to $17.45 per
Trilon Share. Further, the valuation sets out a range of values for the
Brascan Shares as of April 4, 2002 of $33.76 to $34.06 per Brascan Share and a
range of values for the Brascan Non-Cumulative Class A Preference Shares,
Series 11 as of April 4, 2002 of $24.79 to $25.21. TD Securities also provided
the Independent Committee with its fairness opinion in which it concluded that
in its opinion, as of April 4, 2002, the consideration offered under the Offer
is fair, from a financial point of view, to the minority Shareholders. A
summary of the Valuation and Fairness Opinion is provided in section 7 of this
Circular.
On April 4, 2002, the Independent Committee unanimously concluded that the
Offer is in the best interests of Trilon and is fair from a financial point of
view to the minority Shareholders based both on the Valuation and Fairness
Opinion and the following additional considerations:
(a) the value of the consideration being offered is in the upper range of
the valuation of the Trilon Shares prepared by TD Securities Inc.;
(b) while the value of the consideration being offered represents a nominal
premium to the trading price immediately prior to the announcement of
the Offer, the value does represent a 20% premium to the price Trilon's
Class A Shares traded at 3 months ago, and a 42% premium to the price
at which Trilon repurchased Class A Shares under a substantial issuer
bid completed 15 months ago;
(c) the premium implied by the consideration being offered is attractive in
light of Trilon's asset base, which consists primarily of a portfolio
of financial assets and offers limited opportunity to generate
incremental value relative to its underlying value;
(d) Shareholders are being offered alternative forms of consideration
designed to suit their individual needs. Shareholders can elect to
receive their payment 100% in Brascan Shares or 100% in cash subject to
proration. Furthermore, Shareholders can elect to receive their payment
in the form of Brascan Non-Cumulative Class A Preference Shares, Series
11 without limit so that Shareholders can both defer capital gains
taxes and increase the yield on the securities received. Brascan Non-
Cumulative Class A Preference Shares, Series 11 will pay a dividend of
$1.375 per share per annum, payable quarterly, representing a dividend
yield of 5.5% per annum; and
(e) Brascan owns 70% of the common equity of the Corporation. As a result,
no alternative value maximizing transaction can occur without the co-
operation and consent of Brascan. Brascan regards its investment in
Trilon as one of its principal operating business units and does not
contemplate a sale or divestiture. Accordingly, it is highly unlikely
that there will be an alternative transaction available to
Shareholders.
Shareholders are urged to read the Valuation and Fairness Opinion in its
entirety. As indicated in the Valuation and Fairness Opinion, the Valuation
and Fairness Opinion must be considered as a whole and selecting portions of
such analysis or the factors considered by it, without considering all
analyses and factors together, could create a misleading view of the process
underlying the Valuation and Fairness Opinion.
Recommendation of the Independent Committee
On April 4, 2002, after considering all of these factors and after having
met a total of 11 times, the Independent Committee unanimously concluded that
in the circumstances, the Offer was fair to the minority Shareholders and it
was in the best interests of Trilon for the Trilon Board to recommend that
minority Shareholders accept the Offer. At the meeting of the Trilon Board
held on April 4, 2002, the Independent Committee recommended to the Trilon
Board that they recommend that the minority Shareholders accept the Offer.
The board of directors of Trilon approved the report of the Independent
Committee and accepted the recommendation of the Independent Committee
(Jeffrey Blidner, Jack Cockwell, Allen Lambert, George Myhal and Timothy Price
abstaining from voting). See also the discussion of the deliberations of the
Independent Committee and the Trilon board of directors in the Directors'
Circular.
6.Prior Valuations
To the knowledge of Brascan and its directors and senior officers, there
are no prior valuations of Trilon, its material assets or its securities made
in the 24 months preceding the date of this Offer.
24
7.Valuation and Fairness Opinion
Under the provisions of provincial securities laws respecting take-over
bids, where a take-over bid is an "insider bid", the offeror is required,
unless otherwise exempted, to have a valuation of the target company prepared
by a qualified and independent valuer based on techniques that are appropriate
in the circumstances, after considering all relevant assumptions, that arrives
at an opinion as to a value or range of values for the participating
securities.
The following section summarizes the Valuation and Fairness Opinion,
describing the basis of the computations utilized to determine the valuation
contained therein, the scope of the review made, the relevant factors and
their values and the key assumptions on which the valuation is based. The
following summary is qualified in its entirety by, and should be read in
conjunction with, the Valuation and Fairness Opinion. A copy of the Valuation
and Fairness Opinion is available for inspection during business hours at the
registered and principal office of Brascan located at Suite 4400, BCE Place,
181 Bay Street, Toronto, Ontario, M5J 2T3, and copies of the Valuation and
Fairness Opinion may be obtained without charge upon written request to the
Secretary of Brascan at the same address and is attached as a schedule to the
Directors' Circular.
Engagement
The Independent Committee initially approached TD Securities regarding a
potential financial advisory assignment in August 2001, and TD Securities was
formally engaged by the Independent Committee pursuant to an engagement
agreement (the "Engagement Agreement") dated September 6, 2001. In October
2001, the Independent Committee informed TD Securities that a potential
transaction with Brascan was unlikely to proceed at that time, in large part
as a result of the state of the financial markets. Following the public
announcement by Brascan of its intention to acquire the Trilon Shares not
already owned by it on March 26, 2002, the Independent Committee requested
that TD Securities continue to provide it with financial advisory services and
complete the work previously undertaken.
The terms of the Engagement Agreement provide that TD Securities will
receive a fee of $600,000 for its services and is to be reimbursed for its
reasonable out-of-pocket expenses. In accordance with the requirements of Rule
61-501 and Policy Q-27, such fees and expenses will be paid by Brascan. In
addition, Trilon has agreed to indemnify TD Securities, in certain
circumstances, against certain expenses, losses, claims, actions, damages and
liabilities incurred in connection with the provision of its services. The fee
payable to TD Securities is not contingent in whole or in part on the success
of the Offer or on the conclusions reached in the Valuation and Fairness
Opinion.
Engagement of TD Securities as an Independent Valuer
TD Securities is a Canadian investment banking firm with operations in a
broad range of activities, including corporate and government finance, mergers
and acquisitions, equity and fixed income sales and trading, investment
management and investment research. TD Securities has participated in a
significant number of transactions involving public and private companies and
has extensive experience in preparing valuations and fairness opinions.
Neither TD Securities, nor any of its affiliates is an insider, associate
or affiliate (as those terms are used in the Policies) of Trilon, Brascan or
any of their respective affiliates (collectively, the "Interested Parties").
Except as financial advisor to the Independent Committee, neither TD
Securities nor any of its affiliates is an advisor to any of the Interested
Parties with respect to the Offer.
During the 24 months preceding the engagement by the Independent Committee,
TD Securities has provided various financial advisory services in connection
with unrelated transactions, and has participated in various other securities
offerings and financial transactions involving Brascan and certain of its
associates and affiliates. TD Securities is an investor in certain investment
funds managed by Trilon. The Toronto-Dominion Bank ("TD Bank"), the parent
company of TD Securities, is a lender pursuant to certain credit facilities
involving Brascan and certain of its associates and affiliates.
TD Securities acts as a trader and dealer, both as principal and agent, in
major financial markets and, as such, may have and may in the future have
positions in the securities of any Interested Party and, from time to time,
may have executed or may execute transactions on behalf of such companies or
other clients for which it may have received or may receive compensation. As
an investment dealer, TD Securities conducts research on securities and may,
in the ordinary course of its business, provide research reports and
investment advice to its clients on investment matters, including matters with
respect to the Offer, Trilon or other Interested Parties.
25
The fees paid to TD Securities in connection with the mandates outlined
above, together with the fees payable to TD Securities pursuant to the
Engagement Agreement, are not financially material to TD Securities. No
understandings or agreements exist between TD Securities and either Trilon,
Brascan or any Interested Party with respect to future financial advisory or
investment banking business. TD Securities may in the future, in the ordinary
course of its business, perform financial advisory or investment banking
services for Trilon, Brascan or any Interested Party, and TD Bank may provide
banking services to Trilon, Brascan or any Interested Party.
Scope of Review
In preparing the Valuation and the Fairness Opinion, TD Securities held
discussions with the Independent Committee, various members of Management and
the auditors of Trilon; reviewed certain publicly available information,
financial statements and information, projections, schedules of outstanding
shares and options, indemnities, credit agreements, transaction documents and
non-public information relating to Trilon, its subsidiaries and business
segments and Brascan; reviewed information relating to the business,
operations, financial performance and, where applicable, stock market data and
credit rating and research publications relating to Trilon, its subsidiaries
and business segments, Brascan and other selected comparable companies; and
carried out other analyses and investigative exercises, all of which are more
specifically described in the Valuation and Fairness Opinion attached as an
exhibit to the Directors' Circular.
General Assumptions and Limitations
With the Independent Committee's acknowledgement and agreement as provided
for in the Engagement Agreement, TD Securities has relied upon the accuracy
and completeness of all data and other information obtained by it from public
sources or provided to it by Trilon, Brascan and their respective personnel,
advisors, or otherwise, including the representations contained in
certificates dated April 4, 2002, provided by senior officers of both Trilon
and Brascan (collectively, the "Information"). The Valuation and Fairness
Opinion are conditional upon such accuracy and completeness. Subject to the
exercise of professional judgment, and except as expressly described in the
Valuation and Fairness Opinion, TD Securities has not attempted to verify
independently the accuracy or completeness of any of the Information.
With respect to the budgets, forecasts, projections or estimates provided
to TD Securities and used in its analyses, TD Securities notes that projecting
future results is inherently subject to uncertainty. TD Securities has
assumed, however, that such budgets, forecasts, projections and estimates were
prepared using the assumptions identified therein which, in the opinion of
Trilon, are (or were at the time of preparation and continue to be) reasonable
in the circumstances.
The Valuation and Fairness Opinion has been provided for the use of the
Independent Committee and the board of directors of Trilon and is not intended
to be, and does not constitute, a recommendation that any shareholder of
Trilon tender Trilon Shares to the Offer. The Valuation and Fairness Opinion
may not be used by any other person or relied upon by any other person other
than the Independent Committee and the board of directors of Trilon without
the express prior written consent of TD Securities. The Valuation and Fairness
Opinion is rendered as of April 4, 2002 (the "Valuation Date"), on the basis
of securities markets, economic and general business and financial conditions
prevailing on that date and the condition and prospects, financial and
otherwise, of Trilon, Brascan and their respective affiliates as they were
reflected in the Information provided to TD Securities. Any changes therein
may affect the Valuation and Fairness Opinion and, although TD Securities
reserves the right to change or withdraw the Valuation and Fairness Opinion in
such event, it disclaims any undertaking or obligation to advise any person of
any such change that may come to its attention, or update the Valuation and
Fairness Opinion after the Valuation Date. In preparing the Valuation and
Fairness Opinion, TD Securities was not authorized to solicit, and did not
solicit, interest from any other party with respect to the acquisition of, or
any business combination or other extraordinary transaction involving, Trilon,
nor did TD Securities negotiate with any party in connection with such a
transaction involving Trilon.
The preparation of a valuation and fairness opinion is a complex process
and is not necessarily amenable to partial analysis or summary description. TD
Securities believes that its analyses must be considered as a whole and that
selecting portions of the analyses or the factors considered by it, without
considering all factors and analyses together, could create an incomplete view
of the process underlying the Valuation and Fairness Opinion. Each Shareholder
should read the Valuation and Fairness Opinion in its entirety.
26
Definition of Fair Market Value
For purposes of the formal valuation of Trilon Shares, fair market value is
defined as the monetary consideration that, in an open and unrestricted
market, a prudent and informed buyer would pay a prudent and informed seller
each acting at arm's length with the other and under no compulsion to act. TD
Securities has made no downward adjustment to the fair market value of the
Trilon Shares to reflect the liquidity of the Trilon Shares, the effect of the
Offer or the fact that the Trilon Shares held by minority Shareholders do not
form part of a controlling interest.
Trilon Valuation Methodology
The formal valuation of the Trilon Shares is based upon techniques and
assumptions that TD Securities considers appropriate in the circumstances for
the purposes of arriving at an opinion as to the range of fair market value of
the Trilon Shares. Given that Trilon is active in a number of different
business segments, TD Securities believes that a segmented approach is the
most appropriate method to use in valuing Trilon. As a result, TD Securities'
approach to determine the fair market value of the Trilon Shares was the Net
Asset Value ("NAV") approach which involves attributing values to Trilon's
assets and liabilities on a segmented basis. This approach reflects the
different risks, growth prospects and earnings contribution of each of
Trilon's business segments and the various assets within those segments. TD
Securities believes that the NAV approach is particularly relevant for Trilon
since a high percentage of Trilon's assets are financial in nature rather than
assets of operating businesses. Except where noted in the Valuation and
Fairness Opinion, the valuation approach arrives at a going concern, en bloc
sale value of the Trilon Shares.
In preparing the formal valuation of the Trilon Shares, TD Securities
relied primarily upon three valuation methodologies:
1. asset value analysis;
2. discounted cash flow ("DCF") analysis; and
3. comparable precedent transactions analysis.
Asset Value Analysis
All material financial assets within Trilon were valued individually on a
mark-to-market basis. Publicly traded assets were valued via quoted market
prices based on volume-weighted average trading prices for the 20 trading days
ended April 3, 2002. Private investments were valued based on TD Securities'
estimates of the amounts at which the instruments could be exchanged in a
transaction between knowledgeable and willing parties and/or by using
comparable publicly-traded securities as proxies. Longer-term loans were
valued based on discounting cash flows receivable under the existing terms of
the loans at a rate that reflects refinancing the loans under current market
conditions, that is, at rates reflecting the current cost of capital and risk
in receiving the corresponding cash flows. Loans with near-term maturities
were valued based on TD Securities' view on the probability of return of the
outstanding principal or current market rates to extend the term of these
loans by one year.
Cash flows not related to investment income were valued using comparable
precedent transactions analysis. These cash flows primarily consisted of any
fee streams (including underwriting and advisory fees, reinsurance fees and
asset management fees) and participation gains less operating costs (primarily
salaries) specific to the segment.
DCF Analysis
The Brokerage & Business Services business segment was valued using a DCF
approach. The DCF approach reflects the growth prospects and risks inherent in
the business by taking into account the amount, timing and relative certainty
of projected unlevered free cash flows expected to be generated by the
business. The DCF approach requires that certain assumptions be made
regarding, among other things, future unlevered after-tax free cash flows,
discount rates and terminal values. The possibility that some of the
assumptions will prove to be inaccurate is one factor involved in the
determination of the discount rates used in establishing a range of values.
Comparable Precedent Transactions Analysis
The comparable precedent transactions approach consists of selecting
appropriate value benchmarks based on recently completed transactions of a
comparable nature specific to each business segment, in which there was
sufficient public information to derive valuation multiples, and applying
these value benchmarks to the appropriate Trilon metrics to determine values
for each business segment. The transaction multiples are based on arms-length
transactions of
27
businesses that are similar in size, operating characteristics, risk profile
and asset type, among others, to Trilon's activities in specific segments.
Net Asset Value Approach
Although Trilon currently reports its financial results in four business
segments, Trilon was separated into five business segments for the purposes of
the NAV Approach: Asset Management, Merchant Banking, Investment Banking
(member of the Capital Markets reporting group), Commercial Financing (member
of the Capital Markets reporting group) and Brokerage & Business Services
(member of the Capital Markets and Business Services reporting groups). TD
Securities believes that for valuation purposes, Investment Banking, Brokerage
& Business Services and Commercial Finance are disparate businesses and should
be analyzed and valued separately.
The NAV approach aggregates a value for Trilon by separately considering
each operating and financial asset, whose individual values are estimated
through the application of the methodology considered by TD Securities to be
most appropriate in the circumstances, net of obligations, corporate costs and
liabilities. In addition to the assets of the five business segments outlined
above, there are an additional five components to the NAV analysis:
1. other assets and liabilities;
2. debt and preferred shares of Trilon;
3. stock options;
4. tax pools; and
5. capitalized corporate general and administrative ("G&A") expenses.
TD Securities considered the financial assets held by Trilon as at December
31, 2001, the most recent date of financial reporting, and adjusted the
holdings for material acquisitions, divestitures, or refinancings of assets
known to have occurred during 2002 up until the Valuation Date. All financial
assets were valued as at the Valuation Date based on the current mark-to-
market values, with the exception of securities of Trilon or Brascan. Any
Trilon or Brascan securities held by Trilon as well as obligations of Trilon
were valued at the 20-day volume-weighted average trading price as at March
25, 2002, the last trading day before the announcement by Brascan of its
intention to acquire the Trilon Shares not already owned by it, to remove the
possible effect of the announcement on the trading prices of the securities.
The range of values of the Trilon Shares resulting from the NAV approach was
$15.65 to $17.45 per Trilon Share.
Trilon Valuation Conclusion
Based upon and subject to the foregoing, TD Securities is of the opinion
that, as of the Valuation Date, the fair market value of the Trilon Shares is
in the range of $15.65 to $17.45 per Trilon Share.
Brascan Share Valuation Methodology
In assessing the value of the Brascan Shares being received by Shareholders
other than Brascan and its affiliates as Brascan Share consideration under the
Offer, TD Securities has relied on the market trading approach. Since
Shareholders other than Brascan and its affiliates receiving Brascan Shares
will be receiving a minority position in Brascan and will not be able to
effect a sale of 100% of Brascan, TD Securities concluded that it was not
appropriate to consider methodologies that are based on the assumption of a
change of control transaction involving Brascan. TD Securities has not
prepared an en bloc valuation of the Brascan Shares.
Brascan Share Valuation Conclusion
Based upon and subject to the foregoing, TD Securities is of the opinion
that, as of the Valuation Date, the value of the Brascan Shares is $33.76 to
$34.06 per share.
Brascan Non-Cumulative Class A Preference Shares, Series 11 Valuation
Methodology
In assessing the value of the Brascan Non-Cumulative Class A Preference
Shares, Series 11 being received by Shareholders other than Brascan and its
affiliates as Brascan preference share consideration under the Offer,
TD Securities has relied on the comparable market trading approach. On this
basis, an appropriate dividend rate for the Brascan Non-Cumulative Class A
Preference Shares, Series 11 would fall in a range of 5.40% to 5.60%.
28
Brascan Non-Cumulative Class A Preference Share, Series 11 Valuation
Conclusion
Based upon and subject to the foregoing, TD Securities is of the opinion
that, as of the Valuation Date, the value of the Brascan Non-Cumulative Class
A Preference Shares, Series 11 is $24.79 to $25.21 per share.
Fairness Opinion Factors Considered
In considering the fairness of the consideration, from a financial point of
view, to the Shareholders other than Brascan and its affiliates, TD Securities
principally considered and relied upon the following:
(i) an assessment of the value of the consideration to be received pursuant
to the Offer;
(ii) a comparison of the value per Trilon Share of the consideration to be
received pursuant to the Offer to the range of fair market values as
determined under the formal valuation of the Trilon Shares; and
(iii) a comparison on a per Trilon Share basis of the value of the
consideration to be received pursuant to the Offer to the trading
price of the Trilon Class A Shares prior to the announcement by
Brascan of its intention to make the Offer.
Value of the Consideration
The value of the consideration to be received under the Offer depends on
the form of consideration selected by each Shareholder other than Brascan and
its affiliates and on the resulting pro ration. The implied values under the
three alternatives available to Shareholders other than Brascan and its
affiliates are outlined below:
Alternative Consideration per Trilon Share Implied Value
----------- ------------------------------ ---------------------
Cash Consideration........ $17.00 cash $16.90(/1/)
Brascan Class A Share
Consideration............ 0.5 Brascan Shares $16.88 to $17.03(/2/)
Brascan Preference Share 0.678 Brascan Non-Cumulative $16.86 to $17.14(/3/)
Consideration............ Class A Preference Shares,
Series 11 plus $0.05 cash
-------
(1) Adjusted for foregoing the $0.10 Trilon partial dividend if the Cash
Consideration option is selected.
(2) Based on a value of $33.76 to $34.06 per Brascan Share, as determined in
the formal valuation of the Brascan Shares.
(3) Based on a value of $24.79 to $25.21 per Brascan Non-Cumulative Class A
Preference Share, Series 11, as determined in the formal valuation of the
Brascan Non-Cumulative Class A Preference Shares, Series 11, plus $0.05
cash.
Depending on the combination of securities selected by the Shareholders
other than Brascan and its affiliates in aggregate, there is a range of
outcomes possible including certain individual Shareholders other than Brascan
and its affiliates being subject to pro ration. Regardless of the outcome,
based on the foregoing, TD Securities is of the opinion that the implied value
of the consideration is in the range of $16.86 to $17.14 per Trilon Share.
Comparison of the Value per Trilon Share Under the Offer to the Formal
Valuation of the Trilon Shares
The value per Trilon Share of the consideration to be received pursuant to
the Offer of $16.86 to $17.14 is within the range of fair market value of the
Trilon Shares of $15.65 to $17.45.
Comparison of the Value per Trilon Share Under the Offer to the Trading
Price
The value per Trilon Share of the consideration under the Offer represents
a nominal premium of approximately 3% to the $16.50 market price of the Trilon
Class A Shares on March 25, 2002, the last trading day prior to the
announcement of Brascan's intention to acquire the Trilon Shares not already
owned by it.
TD Securities believes that the following considerations are relevant in
comparing the value per Trilon Share of the consideration under the Offer to
the pre-announcement trading price:
1. Trilon's asset base consists primarily of a portfolio of financial
assets. Financial assets, due to their nature, offer limited opportunity
to generate incremental value, either from additional revenues or from
cost reduction, in excess of their underlying value. As a result, any
potential en bloc acquiror of Trilon would be willing to pay a lower
than average premium over the pre-announcement market price of the
Trilon Class A Shares.
29
2. Based in part on recent public comments by Brascan senior management,
there has been speculation among equity market participants that Brascan
may move to acquire the Trilon Shares it does not already own.
TD Securities believes that this has increased the market trading price
of Trilon Class A Shares above the price at which they would trade in
the absence of such speculation. As a result, the premium over the pre-
announcement trading price of the Trilon Class A Shares that the value
of the consideration pursuant to the Offer represents is decreased.
3. Trilon Shares offer a current dividend yield of approximately 4%. This
dividend is higher than the dividend available on most common equity
securities in Canada. Many public equity investors view this dividend to
be an attractive aspect of the Trilon Class A Shares. As a result, the
market trading price of the Trilon Class A Shares is not indicative
solely of Trilon's underlying net asset value, but also reflects its
relatively high dividend yield. In the current market environment, TD
Securities believes that the dividend yield increases the market trading
price of the Trilon Shares above the price at which they would trade in
the absence of such dividend. However, a potential en bloc acquiror of
Trilon would not be willing to pay a premium for such a dividend yield.
Fairness Conclusion
Based upon and subject to the foregoing, it is the opinion of TD Securities
that, as at the Valuation Date, the consideration under the Offer is fair,
from a financial point of view, to the Shareholders other than Brascan and
its affiliates.
8.Purpose of the Offer and Brascan's Plans for Trilon
Brascan has an ongoing strategy of owning 100% of certain of its operating
businesses. The purpose of the Offer is to increase Brascan's interest in
Trilon from the current 70% level and, if the conditions to the Offer are
satisfied, to allow Brascan to own 100% of the Trilon Shares.
If the Offer is accepted by holders of not less than 90% of the outstanding
Trilon Shares (other than Trilon Shares held by Brascan, its affiliates and
its associates on the date of the Offer), Brascan may seek to acquire all
Trilon Shares not deposited under the Offer pursuant to a compulsory
acquisition. Brascan may also seek to acquire all Shares not deposited under
the Offer pursuant to a subsequent transaction between Trilon and Brascan.
Both types of transactions are more particularly described under section 21 of
this Circular, "Acquisition of Trilon Shares not Deposited." However, Brascan
reserves the right to not propose a compulsory acquisition or a subsequent
acquisition transaction, or to propose a subsequent acquisition transaction on
terms not described herein. In any case, Trilon will continue to be a company
with publicly traded preferred shares and public debt outstanding.
If the Offer is successful, Brascan expects that Trilon will continue to
carry on its current business activities as a subsidiary of Brascan. In
particular, Trilon will focus on expanding its asset management, merchant
banking, business services and capital markets activities. Trilon will be
managed from a financial perspective as a self-sustaining operation with
continuing corporate governance practices and a continued emphasis on
maintaining or improving its current high credit ratings.
Brascan will integrate the Trilon management team with its own from an
operating perspective. This integration will enhance Trilon's close working
relationships with Brascan's operating businesses and resources investments,
which provide Trilon with an important competitive advantage in conducting its
financial operations. In addition, Trilon believes that its operating profile
will be enhanced by being a fully integrated operating business of Brascan.
There would also be modest cost and administrative benefits available by
privatizing the publicly listed Trilon Shares, should Brascan acquire 100% of
the Trilon Shares.
9.Brascan's Comments on the Offer
Brascan believes strongly that it is in the interests of Shareholders to
tender to the Offer. Shareholders should accept the Offer for the following
reasons:
. Trilon directors recommend acceptance of the Offer - The board of
directors of Trilon, including the members of the Independent Committee
established to review the Offer, unanimously recommends that
Shareholders tender their Trilon Shares to the Offer.
30
. Independent fairness opinion supports the Offer - TD Securities, the
independent financial advisors to the Independent Committee, has
provided its written opinion that the consideration to be paid by
Brascan is fair, from a financial point of view, to Trilon's minority
shareholders.
. Independent valuation of the Trilon shares supports the Offer - The
value of the consideration being offered is in the upper range of the
valuation of the Trilon Shares prepared by TD Securities, which
determined that the value of the Trilon Shares is in a range of $15.65
to $17.45 per share.
. Trilon officers and directors intend to accept the Offer - The directors
and senior officers of Trilon have advised that they intend to tender
their Trilon Shares to the Offer.
. The Offer price represents a premium over previous trading prices -
While the value of the consideration being offered represents a modest
premium to the trading price immediately prior to the Offer being
announced, the value represents a 20% premium to the price Trilon's
Class A Shares traded at 3 months ago, and a 42% premium to the price at
which Trilon repurchased Class A Shares under a substantial issuer bid
completed 15 months ago.
. Flexible consideration to meet Shareholder objectives - Shareholders are
being offered alternative forms of consideration designed to suit their
individual needs. Shareholders can elect to receive their payment 100%
in Brascan Shares or 100% in cash, subject to pro ration. Furthermore,
Shareholders can elect to receive their payment in the form of Brascan
Non-Cumulative Class A Preference Shares, Series 11, without limit, so
that Shareholders can both defer capital gains taxes and increase the
yield on the securities received. Brascan Non-Cumulative Class A
Preference Shares, Series 11 will pay a dividend of $1.375 per share per
annum representing a dividend yield of 5.5% per annum.
. Brascan Shares represent underlying value in excess of the transaction
price - Shareholders electing to receive payment in Brascan Shares will
receive Brascan Shares based on a valuation of $34.00 per Brascan Share
herein. Based on publicly disclosed information regarding Brascan,
management of Brascan believes that, as of December 31, 2001, the
underlying value of Brascan was $42.90 per share.
. Brascan Shares provide shareholders with greater liquidity than Trilon
Shares - The market capitalization of Trilon's public float is $775
million as at the date of the Offer, whereas the market capitalization
of Brascan's public float is $4.8 billion. Furthermore, the average
daily trading volume of Trilon's Class A Shares was $1.4 million during
the three month period prior to the offer being made, compared with
Brascan's average daily trading volume of $12.2 million over the same
period. In addition, Trilon is listed only in Toronto, while Brascan is
listed only on both the Toronto and New York Stock Exchanges.
. Brascan owns additional high quality businesses - Brascan owns a number
of high-quality businesses in addition to Trilon, including some of the
highest-quality real estate in North America, such as BCE Place in
Toronto and The World Financial Center in New York, as well as one of
the lowest cost power generation businesses in North America.
Shareholders electing to receive Brascan Shares will own an interest in
these businesses in addition to continuing to own an interest in
Trilon's financial services business.
. Brascan and Trilon are stronger as a combined entity - Brascan believes
that, together as one merged entity, Trilon and Brascan will be stronger
financially and operationally. Brascan believes that Trilon and Brascan
will together be able to create even greater value by combining
resources as the two companies move forward.
10.Holdings of Securities of Trilon
As of the date hereof, Brascan and its affiliates beneficially own,
directly or indirectly, or exercise control or direction over securities of
Trilon as follows:
Percentage
Number Designation Ownership
------ ----------- ----------
58,214,553 Class A Shares.......................................... 56.1%
47,897,344 Class B Non-Voting Shares............................... 99.9%
235,000 Floating Rate Class I Preferred Shares Series A......... 3.9%
242,600 Class II Preferred Shares Series Three.................. 6.1%
1,150,000 Class II Preferred Shares Series Four................... 28.8%
5,000,000 Class III Preferred Shares Series One................... 100.0%
482,888 Class III Preferred Shares Series Two................... 100.0%
31
The following table sets out the approximate number of Trilon Shares that
each director and senior officer of Brascan has advised are beneficially
owned, directly or indirectly, or subject to control or direction by that
person at the date of this Circular:
% of Total % of Total
Outstanding Trilon Class A Outstanding
Trilon Class A Trilon Class A Shares Trilon Class A
Name Office Shares Held Shares Options Held Share Options
---- ------ -------------- -------------- -------------- --------------
James J. Blanchard...... Director -- -- -- --
Lord Black of Director -- -- -- --
Crossharbour...........
Roberto P. Cezar de Director -- -- -- --
Andrade................
Jack L. Cockwell(/1/)... Co-Chairman and Director 10,694 (less than)0.1% -- --
John P. Curtin, Jr...... Director -- -- -- --
Alan V. Dean............ Senior Vice-President -- -- -- --
and Secretary
Hon. J. Trevor Eyton.... Director -- -- -- --
J. Bruce Flatt.......... President and Chief -- -- -- --
Executive Officer and
Director
Julia E. Foster......... Director -- -- -- --
Harry A. Goldgut........ Senior Vice-President, -- -- -- --
Power Generation
James K. Gray........... Director -- -- -- --
Lynda C. Hamilton....... Director -- -- -- --
Robert J. Harding....... Chairman and Director -- -- -- --
David W. Kerr........... Director -- -- -- --
Edward C. Kress......... Executive Vice-President -- -- -- --
Allen T. Lambert(/1/)... Director and Group 515,320 0.5% 110,000 1.8%
Chairman, Financial
Services
Craig J. Laurie......... Vice-President, Finance -- -- 15,000 0.2%
Brian D. Lawson(/1/).... Executive Vice-President -- -- 440,000 7.2%
and Chief Financial
Officer
Richard J. Legault...... Senior Vice-President, -- -- -- --
Business Development
Philip B. Lind.......... Director -- -- -- --
Hon. Roy MacLaren....... Director -- -- -- --
Cyrus Madon(/1/)........ Vice-President, 40,600 (less than)0.1% 200,000 3.3%
Corporate Development
Saul Shulman............ Director -- -- -- --
Jack Sidhu(/1/)......... Vice-President, Capital -- -- 60,000 1.0%
Markets
George S. Taylor........ Director -- -- -- --
John C. Tremayne(/1/)... Senior Vice-President -- -- 273,000 4.5%
and Treasurer
Katherine C. Vyse....... Vice-President, Investor -- -- -- --
Relations and
Communications
------- ---- --------- ----
TOTAL................... 566,614 0.6% 1,098,000 18.0%
======= ==== ========= ====
-------
Note:
(1) These individuals are also directors and/or officers of Trilon.
Each of the above directors and senior officers exercising control or
direction over Trilon Shares has advised Brascan that he or she intends to
tender his or her Trilon Shares to the Offer.
32
The following table sets out the approximate number of Trilon Shares that
each director and senior officer of Trilon, other than those listed above as
directors or officers of Brascan, has advised are beneficially owned, directly
or indirectly, or subject to control or direction by that person at the date
of this Circular:
% of Total % of Total
Outstanding Trilon Outstanding
Trilon Class A Trilon Class A Class A Share Trilon Class A
Name Office Shares Held Shares Options Held Share Options
---- ------ -------------- -------------- ------------- --------------
Colum P. Bastable....... Managing Partner, -- -- 200,000 3.3%
Commercial Property
Services
Jeffrey M. Blidner...... Vice-Chairman 162,600 0.2% 470,000 7.7%
A. Gordon Craig......... Director 1,000 (less than)0.1% 5,000 (less than)0.1%
Susan E. Crocker........ Director -- -- 5,000 (less than)0.1%
Bryan K. Davis.......... Vice-President and Chief -- -- 104,500 1.7%
Financial Officer
Simon P. Dean........... Managing Partner, 100,000 0.1% 295,000 4.8%
Business Services
William A. Dimma........ Director 22,013 (less than)0.1% 5,000 (less than)0.1%
Dr. Sy Eber............. Director 1,000 (less than)0.1% 5,000 (less than)0.1%
J. Peter Gordon......... Managing Partner, -- -- 250,000 4.1%
Restructuring Services
Karen Kain.............. Director -- -- 5,000 (less than)0.1%
Patrick J. Keenan....... Director 1,000 (less than)0.1% 5,000 (less than)0.1%
Brian G. Kenning........ Managing Director, -- -- 240,000 3.9%
Forest Products
Trevor D. Kerr.......... Vice-President and -- -- 91,000 1.5%
Secretary
Frank N.C. Lochan....... Managing Partner, 309,342 0.3% 307,061 5.1%
Commercial Financing
Donald C. Lowe.......... Director 25,000 (less than)0.1% 5,000 (less than)0.1%
Terrance A. Lyons....... Managing Partner, Mining -- -- 240,000 3.9%
Kelly Marshall.......... Vice-President Corporate -- -- 85,000 1.4%
Finance
David R. McCamus........ Director 5,000 (less than)0.1% 2,000 (less than)0.1%
George E. Myhal......... President and Chief 607,271 0.6% 650,000 10.7%
Executive Officer and
Director
Sam J.B. Pollock........ Managing Partner, 106,400 0.1% 540,000 8.9%
Merchant Banking
Timothy R. Price(/1/)... Chairman and Director 1,000 (less than)0.1% 140,000 2.3%
Bruce K. Robertson...... Managing Partner, 53,500 (less than)0.1% 356,500 5.9%
Asset Management
--------- ---- --------- ----
TOTAL................... 1,395,126 1.3% 4,006,061 65.9%
========= ==== ========= ====
-------
Note:
(1) Mr. Price also holds indirectly 2,000 Class I Preferred Shares Series A.
Each of the above directors and senior officers exercising control or
direction over Trilon Shares has advised Brascan that he or she intends to
tender his or her Trilon Shares to the Offer.
33
Apart from the foregoing, to the knowledge of the directors and senior
officers of Brascan, after reasonable inquiry, no securities of Trilon are
owned, directed or controlled by any associate or affiliate of Brascan or by
any director or senior officer of Brascan or any associate of them or by any
person or company who holds more than 10% of any class of equity securities of
Brascan, or by any person or company acting jointly or in concert with
Brascan. Reference is made to section 9 of the Offer with respect to the
purchase of Trilon Shares in the market by Brascan.
11.Acceptance of the Offer
Except as set forth in the previous section, Brascan has no knowledge
regarding whether any holders of Trilon Shares will accept the Offer.
12.Trading in Securities of Trilon
No securities of Trilon have been traded during the six-month period
preceding the date of the Offer by Brascan, by directors or senior officers of
Brascan or, to the knowledge of the directors and senior officers of Brascan,
after reasonable inquiry, by (i) associates or affiliates of Brascan (other
than Trilon and its subsidiaries), (ii) any associate of any director or
senior officer of Brascan, (iii) any person or company who holds more than 10%
of any class of equity securities of Brascan, or (iv) any person or company
acting jointly or in concert with Brascan.
On November 28, 2000, Trilon announced its intention to purchase up to
5,796,781 Class A Shares or approximately 5% of the number of outstanding
Class A Shares in the ordinary course through the facilities of the TSE over
the next 12 months under a normal course issuer bid. Trilon acquired 138,300
Class A Shares pursuant to that normal course issuer bid at a weighted average
price of $12.97 per Class A Share. Trilon did not renew this normal course
issuer bid for 2001-2002.
13.Commitments to Acquire Trilon Shares
No commitments to acquire any Trilon Shares have been made by Brascan or,
to the knowledge of the directors and senior officers of Brascan, after
reasonable inquiry, by (i) any associate of such directors or senior officers,
(ii) any person or company who beneficially owns, or exercises control or
direction over, more than 10% within a class of equity securities of Brascan,
or (iii) any person or company acting jointly or in concert with Brascan.
14.Arrangements, Agreements or Understandings
There are no arrangements or agreements made or proposed to be made between
Brascan and any of the directors or senior officers of Trilon and no payments
or other benefits are proposed to be made or given by way of compensation for
loss of office or to such directors or senior officers remaining in or
retiring from office. There are no contracts, arrangements or understandings,
formal or informal, between Brascan and any security holder of Trilon with
respect to the Offer or between Brascan and any person or company with respect
to any securities of Trilon in relation to the Offer.
There is no soliciting dealer in connection with the Offer.
15.Effect of the Offer on Market and Listings
The purchase of Trilon Shares by Brascan pursuant to the Offer will reduce
the number of Trilon Shares that might otherwise trade publicly and may reduce
the number of holders of Trilon Shares and, depending on the number of Trilon
Shares purchased, could adversely affect the liquidity and market value of the
remaining Trilon Shares held by the public.
The rules and regulations of The Toronto Stock Exchange (the "TSE")
establish certain criteria which, if not met, could lead to the delisting of
the Trilon Shares from the TSE. Among such criteria are the number of
Shareholders, the number of Trilon Shares publicly held and the aggregate
market value of the Trilon Shares publicly held. Depending upon the number of
Trilon Shares purchased pursuant to the Offer, it is possible the Trilon
Shares would fail to meet the criteria for continued listing on the TSE. If
this were to happen, the Trilon Shares could be delisted and this could, in
turn, adversely affect the market or result in a lack of an established market
for the Trilon Shares.
34
The published guidelines of the TSE indicate that such exchange would consider
delisting a class of shares listed thereon if, among other criteria, there
were less than 500,000 freely-tradeable, publicly held shares or if there were
fewer than 150 board lot holders.
If the Trilon Shares were delisted from the TSE, it is possible that they
would be traded in the over-the-counter market and that price quotations for
the Trilon Shares would be reported in Canada through the Canadian over-the-
counter automated trading system. The extent of the public market for the
Trilon Shares and the availability of such quotations would, however, depend
upon the number of Shareholders at such time, the interest in maintaining a
market in the Trilon Shares on the part of brokerage houses and other factors.
If Brascan acquires the Trilon Shares not deposited under the Offer
pursuant to a compulsory acquisition or a Subsequent Acquisition Transaction,
the Trilon Shares will be delisted from the TSE. See section 21 of this
Circular, "Acquisition of Trilon Shares not Deposited."
The preferred shares of Trilon which are currently listed on public stock
exchanges will continue to be listed on those stock exchanges and the listing
of those shares will not be affected by the Offer.
16.Source of Funds
If all outstanding Trilon Shares are deposited under the Offer, the amount
of cash required by Brascan to purchase all Trilon Shares will be no more than
$388 million. Brascan expects that fees and expenses associated with the Offer
will be $350,000, plus the cost of the valuation prepared by TD Securities of
$600,000. These amounts will be funded by existing cash resources of Brascan.
17.Price Range and Trading Volume of Trilon Shares
The Trilon Class A Shares are traded on the TSE. The combined volume of
trading and price ranges of the Trilon Class A Shares on the TSE are set forth
in the following table for the periods indicated.
Price per share
--------------------------
High Low Average(/1/) Volume
------ ------ ------------ ----------
2002
----
April (to April 5)........................ $17.40 $16.95 $17.15 4,061,359
March (1 to 25)........................... 18.10 17.00 16.61 1,763,732
March (26 to 31).......................... 17.97 16.00 17.62 18,961,693
March..................................... 18.10 16.00 17.53 20,725,425
February.................................. 16.21 15.20 15.93 2,433,163
January................................... 16.10 15.00 15.50 1,267,739
2001
----
December.................................. 15.50 13.85 14.50 1,595,667
November.................................. 14.15 13.30 13.99 1,452,817
October................................... 13.99 13.25 13.62 956,350
September................................. 14.48 12.90 13.53 1,271,594
August.................................... 14.10 12.75 13.42 1,417,167
July...................................... 13.04 12.75 12.91 984,415
June...................................... 13.50 12.80 13.06 1,796,010
May....................................... 13.50 12.95 13.16 1,291,551
April..................................... 13.60 12.80 13.18 1,105,510
March..................................... 14.10 12.50 13.18 1,736,452
-------
Note:
(1) Volume weighted average of trading prices.
Brascan announced its intention to make the Offer on March 26, 2002. The
closing price of the Trilon Shares on the TSE on March 25, 2002, the last day
on which the Trilon Shares traded prior to the announcement, was $16.50.
35
18.Previous Distributions
Based on publicly available information, Brascan believes that the
following distributions of Trilon Shares were effected during the previous
five completed fiscal years of Trilon:
Number of
Trilon Class A
Year Description Shares Distribution Price
---- ----------- -------------- ------------------
1997 Exercise of stock options.............................. 633,700 $1.90
Dividend reinvestment plan issuances................... 16,925 9.36
1998 Exercise of stock options.............................. 662,499 1.87
Dividend reinvestment plan issuances................... 11,094 11.61
Conversion of Trilon Class B Non Voting Shares......... 1,999,015 3.76
1999 Exercise of stock options.............................. 375,000 3.02
Dividend reinvestment plan issuances................... 25,268 9.72
2000 Exercise of stock options.............................. 685,000 3.90
Dividend reinvestment plan issuances................... 31,651 7.11
Exercise of stock options.............................. 45,000 4.15
Exercise of warrants................................... 730 11.25
Management Share Purchase Plan issuances............... 162,600 9.23
2001 Exercise of warrants................................... 174,169 11.25
Exercise of stock options.............................. 10,000 5.00
Exercise of stock options.............................. 66,439 6.60
Dividend reinvestment plan issuances................... 13,756 13.39
2002 Exercise of warrants................................... 3,104,491 11.25
19.Dividend Record of Trilon
Based on publicly available information, Brascan believes that Trilon's
policy is to pay a quarterly dividend of $0.16 per share on both the Class A
Shares and the Class B Non-Voting Shares. The quarterly dividend on the Class
A Shares was set in December 2000, when Trilon raised its quarterly dividend
rate from $0.14 per Class A share to its current level. Brascan also
understands that the board of directors of Trilon intends to declare a partial
dividend of $0.10 per Trilon Share in April 2002. See section 11 of the Offer,
"Dividends and Distributions".
20.Depositary
Brascan has engaged the Depositary for the receipt of certificates
representing Trilon Shares and related Letters of Transmittal and Notices of
Guaranteed Delivery deposited under the Offer and for the payment for Trilon
Shares purchased by Brascan pursuant to the Offer. The Depositary will receive
reasonable and customary compensation from Brascan for its services in
connection with the Offer, will be reimbursed for certain out-of-pocket
expenses and will be indemnified against certain liabilities, including
liabilities under securities laws, and expenses in connection therewith.
21.Acquisition of Trilon Shares not Deposited
Compulsory Acquisition
Section 188 of the OBCA permits an offeror to acquire the shares not
tendered to an offer for shares of a particular class of shares of a
corporation if, within 120 days after the date of the offer, the offer is
accepted by the holders of not less than 90% of the shares to which the offer
relates, other than shares held at the date of the offer by or on behalf of
the offeror or its affiliates or associates (as such terms are defined in the
OBCA).
If, within 120 days after the date hereof, the Offer has been accepted by
holders of not less than 90% of the issued and outstanding Trilon Shares,
other than Trilon Shares held on the date of the Offer by or on behalf of
Brascan or its affiliates or associates (as such terms are defined in the
OBCA), and Brascan acquires such deposited Trilon Shares, Brascan may acquire
the remainder of the Trilon Shares on the same terms as such Trilon Shares
were acquired under the Offer, pursuant to the provisions of section 188 of
the OBCA (a "Compulsory Acquisition"). In determining whether or not 90% of
the outstanding Trilon Shares have been acquired under the Offer, any Trilon
Shares acquired
36
by Brascan during the course of the Offer are included in the number of
outstanding Trilon Shares but excluded from the number of Trilon Shares
acquired under the Offer.
To exercise such statutory right, Brascan must give notice (a "Compulsory
Acquisition Notice") to each holder of Trilon Shares who did not accept the
Offer (and to each person who subsequently acquires any such Trilon Shares)
(in each case a "Dissenting Offeree") of such proposed acquisition on or
before the earlier of 60 days from the Expiry Time and 180 days from the date
of the Offer. Within 20 days of giving a Compulsory Acquisition Notice,
Brascan must pay or transfer to Trilon the consideration Brascan would have
had to pay to the Dissenting Offerees if they had elected to accept the Offer,
to be held in trust for the Dissenting Offerees. In accordance with section
188 of the OBCA, within 20 days after receipt of a Compulsory Acquisition
Notice, each Dissenting Offeree must send the certificate(s) representing the
Trilon Shares held by such Dissenting Offeree to Trilon, and may elect either
to transfer such Trilon Shares to Brascan on the terms of the Offer or to
demand payment of the fair value of such Trilon Shares held by such holder by
so notifying Brascan. If a Dissenting Offeree has elected to demand payment of
the fair value of such Trilon Shares, Brascan may apply to a court having
jurisdiction to hear an application to fix the fair value of such Trilon
Shares of the Dissenting Offeree. If Brascan fails to apply to such court
within 20 days after it made the payment or transferred the consideration to
Trilon referred to above, the Dissenting Offeree may then apply to the court
within a further period of 20 days to have the court fix the fair value. If
there is no such application by the Dissenting Offeree within such period, the
Dissenting Offeree will be deemed to have elected to transfer such Trilon
Shares to Brascan on the terms of the Offer. Any judicial determination of the
fair value of the Trilon Shares could be more or less than the amount paid
pursuant to the Offer.
The foregoing is a summary only. See section 188 of the OBCA for the full
text of the relevant statutory provisions. Section 188 of the OBCA is complex
and may require strict adherence to notice and timing provisions, failing
which such rights may be lost or altered. Shareholders who wish to be better
informed about those provisions of the OBCA should consult their legal
advisors.
Subsequent Acquisition Transaction
If Brascan takes up and pays for Trilon Shares validly deposited under the
Offer and the foregoing statutory right of acquisition is not available,
Brascan may, within 120 days of the Expiry Time, seek to cause a meeting of
Shareholders to be called to consider an amalgamation, capital reorganization
or other transaction involving Trilon and Brascan and/or one or more
affiliates of Brascan or Trilon (a "Subsequent Acquisition Transaction") for
the purpose of acquiring all Trilon Shares not acquired by Brascan pursuant to
the Offer. The timing and details of any such transaction will necessarily
depend on a variety of factors, including the number of Trilon Shares acquired
pursuant to the Offer.
Rule 61-501 and Policy Q-27 may deem certain types of Subsequent
Acquisition Transactions to be "going private transactions" if such Subsequent
Acquisition Transactions would result in the interest of the holder of Trilon
Shares (the "affected securities") being terminated without the consent of the
holder. Rule 61-501 and Policy Q-27 provide that, unless exempted, a
corporation proposing to carry out a going private transaction is required to
prepare a valuation of the affected securities (and any non-cash consideration
being offered therefor) and provide to the holders of the affected securities
a summary of such valuation. Brascan intends to rely on any exemption
available or to seek waivers pursuant to Rule 61-501 and Policy Q-27 exempting
Trilon and Brascan or one or more of its affiliates, as appropriate, from the
valuation requirements of Rule 61-501 and Policy Q-27. For an independent
valuation of the Trilon Shares in these circumstances, Shareholders should
consult the Valuation and Fairness Opinion prepared by TD Securities which
accompanies this Offer.
Depending on the nature and terms of the Subsequent Acquisition
Transaction, the provisions of the OBCA may require the approval of at least
66 2/3% of the votes cast by holders of the outstanding Trilon Shares at a
meeting duly called and held for the purpose of approving the Subsequent
Acquisition Transaction. Rule 61-501 and Policy Q-27 would also require that,
in addition to any other required security holder approval, in order to
complete a going private transaction, the approval of a simple majority of the
votes cast by "minority" shareholders of the affected securities must be
obtained. If, however, following the Offer, Brascan and its affiliates are the
registered holders of 90% or more of the Trilon Shares at the time the
Subsequent Acquisition Transaction is initiated, the requirement for minority
approval would not apply to the transaction if an enforceable appraisal right
or substantially equivalent right is made available to minority shareholders.
37
In relation to the Offer and any going private transaction, the "minority"
shareholders will be, unless an exemption is available or discretionary relief
is granted by applicable securities regulatory authorities, all Shareholders
other than Brascan or any related party of Brascan, including affiliates of
Brascan, directors or senior officers of Brascan and of affiliates of Brascan
or any person or company acting jointly or in concert with Brascan or any of
their respective directors or senior officers in connection with the Offer or
any subsequent going private transaction. Rule 61-501 and Policy Q-27 also
provide that Brascan may treat Trilon Shares acquired pursuant to the Offer as
"minority" shares and to vote them, or to consider them voted, in favour of
such going private transaction if, among other things, the consideration per
security in the going private transaction is at least equal in value to and in
the same form as the consideration paid under the Offer. Brascan currently
intends that the consideration offered under any Subsequent Acquisition
Transaction proposed by it would be identical to the consideration offered
under the Offer and Brascan intends to cause Trilon Shares acquired under the
Offer to be voted in favour of any such transaction and to be counted as part
of any minority approval required in connection with any such transaction.
Any such Subsequent Acquisition Transaction may also result in Shareholders
having the right to dissent in respect thereof and demand payment of the fair
value of their Trilon Shares. The exercise of such right of dissent, if
certain procedures are complied with by the holder, could lead to a judicial
determination of fair value required to be paid to such dissenting Shareholder
for its Trilon Shares. The fair value so determined could be more or less than
the amount paid per Trilon Share pursuant to such transaction or pursuant to
the Offer.
The details of any such Subsequent Acquisition Transaction, including the
timing of its implementation and the consideration to be received by the
minority holders of Trilon Shares, would necessarily be subject to a number of
considerations, including the number of Trilon Shares acquired pursuant to the
Offer. There can be no assurance that any such transaction will be proposed
or, if proposed, effected.
Shareholders should consult their legal advisors for a determination of
their legal rights with respect to a Subsequent Acquisition Transaction.
Shareholders should also see section 22 "Canadian Federal Income Tax
Considerations", for a discussion of the tax considerations to Shareholders in
the event of a Subsequent Acquisition Transaction.
Certain judicial decisions may be considered relevant to any going private
transaction that may be proposed or effected subsequent to the expiry of the
Offer. Canadian courts have, in a few instances prior to the adoption of
Rule 61-501 and Policy Q-27, granted preliminary injunctions to prohibit
transactions involving certain going private transactions. The current trend
in both legislation and Canadian jurisprudence is toward permitting going
private transactions to proceed, subject to evidence of procedural and
substantive fairness in the treatment of minority shareholders.
While the foregoing reflects the present intention of Brascan, there can be
no assurance that any transaction of the foregoing nature or other
transactions will be proposed by Brascan or consummated or, if proposed, as to
whether the terms thereof will be less favourable or more favourable to
persons then holding Trilon Shares than the terms of the Offer.
22.Canadian Federal Income Tax Considerations
In the opinion of Torys LLP, counsel to Brascan, the following summary
fairly presents the principal consequences under the Tax Act generally
applicable to Shareholders who dispose of their Trilon Shares pursuant to the
Offer or pursuant to certain transactions described in section 21 of this
Circular, "Acquisition of Trilon Shares not Deposited". The summary is based
upon the current provisions of the Tax Act, the regulations thereunder and
counsel's understanding of the current administrative practices of the CCRA.
This summary takes into account all specific proposals to amend the Tax Act
and the regulations that have been publicly announced by the Minister of
Finance (Canada) prior to the date hereof (the "Tax Proposals"), but does not
otherwise take into account or anticipate any changes in law, whether by
judicial, governmental or legislative decision or action, or changes in
administrative practices of the CCRA. No assurances can be given that the Tax
Proposals will be enacted as proposed, if at all. This summary does not take
into account the tax legislation of any province or territory of Canada or any
non-Canadian jurisdiction. Provisions of provincial income tax legislation
vary from province to province in Canada and in some cases differ from federal
income tax legislation.
38
The Tax Act contains certain provisions relating to securities held by
certain financial institutions (the "mark-to-market rules"). This summary does
not take into account the mark-to-market rules and Shareholders that are
financial institutions for the purpose of those rules should consult their own
tax advisers.
The following summary is of a general nature only and is not intended to
be, nor should it be construed to be, legal or tax advice to any particular
Shareholder. Accordingly, Shareholders should consult their own tax advisers
with respect to their particular circumstances.
Residents of Canada
The following summary is applicable to Shareholders who are resident in
Canada, who hold their Trilon Shares as capital property and will hold the
Brascan Non-Cumulative Class A Preference Shares, Series 11 and the Brascan
Shares as capital property and who deal at arm's length with Brascan and
Trilon. Trilon Shares, Brascan Non-Cumulative Class A Preference Shares,
Series 11 and Brascan Shares will generally constitute capital property to a
holder thereof unless the holder holds such Trilon Shares, Brascan Non-
Cumulative Class A Preference Shares, Series 11 or Brascan Shares in the
course of carrying on a business of trading or dealing in securities or
otherwise as part of a business of buying and selling securities or has
acquired such Trilon Shares, Brascan Non-Cumulative Class A Preference Shares,
Series 11 or Brascan Shares in a transaction or transactions considered to be
an adventure in the nature of trade. Shareholders who do not hold their shares
as capital property should consult their own tax advisors regarding their
particular circumstances, as the following summary does not apply to such
shareholders.
Exchange of Trilon Shares for Cash Only
A holder whose Trilon Shares are taken up and paid for under the Offer who
receives cash only will realize a capital gain (or capital loss) to the extent
that the proceeds received for such Trilon Shares, net of any reasonable costs
of disposition, exceed (or are less than) the adjusted cost base to the holder
of such Trilon Shares. The general tax treatment of capital gains and losses
is discussed below under the heading "Taxation of Capital Gains and Losses".
Exchange of Trilon Shares for Brascan Non-Cumulative Class A Preference
Shares, Series 11 Only or for Brascan Shares Only
Where a Shareholder exchanges Trilon Shares and receives no consideration
other than Brascan Shares or Brascan Non-Cumulative Class A Preference Shares,
Series 11 and, in either case, cash received in lieu of a fraction of a
Brascan Share or a Brascan Non-Cumulative Class A Preference Share, Series 11,
as the case may be, except where the Shareholder has, in the holder's return
of income for the taxation year in which the exchange occurs, included in
computing the holder's income for that year any portion of the gain or loss,
otherwise determined, from the disposition of Trilon Shares, the holder will
be considered to have disposed of such Trilon Shares for proceeds of
disposition equal to the adjusted cost base to the holder of such Trilon
Shares immediately before the exchange and to have acquired the Brascan Shares
or the Brascan Non-Cumulative Class A Preference Shares, Series 11, as the
case may be, at a cost for tax purposes equal to that amount (less any cash
received in lieu of a fraction of a Brascan Share or of a Brascan Non-
Cumulative Class A Preference Share, Series 11). No election forms are
required to be filed for Shareholders to achieve this tax deferral. For
Brascan Shares, the cost for tax purposes will be averaged with the adjusted
cost base to such holder of any other Brascan Shares held by the holder at the
time as capital property.
In the event that the Minimum Series 11 Amount condition is met and a
Shareholder elects to receive Brascan Non-Cumulative Class A Preference
Shares, Series 11 on the exchange, the foregoing will apply only if the
Shareholder has elected to forego the $0.05 in cash per Trilon Share; rather,
the section entitled "Exchange of Trilon Shares for Cash and Brascan Shares
and/or Brascan Non-Cumulative Class A Preference Shares, Series 11 or for
Brascan Shares and Brascan Non-Cumulative Class A Preference Shares, Series
11" will apply.
Certain Shareholders who have acquired their Trilon Shares on the exercise
of employee stock options of Trilon may be able to continue to defer the
inclusion in their income of the stock option benefit resulting from such
exercise after they have disposed of their Trilon Shares under the Offer so
long as they receive only Brascan Shares or Brascan Non-Cumulative Class A
Preference Shares, Series 11 on the exchange (having foregone the $0.05 in
cash per Trilon Share).
39
Exchange of Trilon Shares for Cash and Brascan Shares and/or Brascan Non-
Cumulative Class A Preference Shares, Series 11 or for Brascan Shares and
Brascan Non-Cumulative Class A Preference Shares, Series 11
No Election under Section 85 of the Tax Act
Subject to the availability of the joint election referred to below, a
Shareholder who exchanges Trilon Shares for (a) cash (including cash received
as a result of the application of the Maximum Share Consideration condition
under the terms of the Offer or as a result of no Brascan Non-Cumulative Class
A Preference Shares, Series 11 being issued because of the Minimum Series 11
Amount condition not being met, but excluding cash in lieu of a fraction of a
Brascan Share or Brascan Non-Cumulative Class A Preference Share, Series 11)
and Brascan Shares and/or Brascan Non-Cumulative Class A Preference Shares,
Series 11, or for (b) Brascan Shares and Brascan Non-Cumulative Class A
Preference Shares, Series 11, will be considered to have disposed of such
Trilon Shares for proceeds of disposition equal to the sum of (i) any cash
received by such Shareholder, including any cash received in lieu of
fractional shares, and (ii) the fair market value as at the time of
acquisition of any Brascan Shares and/or Brascan Non-Cumulative Class A
Preference Shares, Series 11 acquired by such Shareholder on the exchange. As
a result, the Shareholder will in general realize a capital gain (or capital
loss) to the extent that such proceeds of disposition, net of any reasonable
costs of disposition, exceed (or are less than) the adjusted cost base to the
Shareholder of such Trilon Shares. The cost to a holder of any Brascan Shares
and/or Brascan Non-Cumulative Class A Preference Shares, Series 11 acquired on
the exchange will be equal to the fair market value of those shares as at the
time of acquisition, such cost of Brascan Shares to be averaged with the
adjusted cost base to that holder of any other Brascan Shares held by the
holder at the time as capital property. The general tax treatment of capital
gains and losses is discussed below under the heading "Taxation of Capital
Gains and Losses".
Election under Section 85 of the Tax Act
An "Eligible Holder" (as defined below) who exchanges Trilon Shares for (a)
cash (including cash received as a result of the application of the Maximum
Share Consideration condition under the terms of the Offer or as a result of
no Brascan Non-Cumulative Class A Preference Shares, Series 11 being issued
because of the Minimum Series 11 Amount condition not being met) and Brascan
Shares and/or Brascan Non-Cumulative Class A Preference Shares, Series 11, or
for (b) Brascan Shares and Brascan Non-Cumulative Class A Preference Shares,
Series 11, may make a joint election with Brascan pursuant to subsection 85(1)
of the Tax Act (or, in the case of a Shareholder that is a partnership,
pursuant to subsection 85(2) of the Tax Act) and thereby obtain a full or
partial tax deferred "rollover" for Canadian income tax purposes, depending on
the "Elected Amount" (as defined below) and the adjusted cost base to the
holder of the Trilon Shares at the time of the exchange. So long as, at the
time of the exchange, the adjusted cost base to an Eligible Holder of the
holder's Trilon Shares equals or exceeds the amount of any cash received on
the exchange by such holder, the Eligible Holder may elect so as to not
realize a capital gain for the purposes of the Tax Act on the exchange. For
this purpose, an "Eligible Holder" means a holder of Trilon Shares (i) who is
a resident of Canada for the purposes of the Tax Act, other than any such
holder who is exempt from tax under the Tax Act, or (ii) which is a
partnership which owns Trilon Shares if one or more of its members would be an
Eligible Holder if such member held such Trilon Shares directly. The "Elected
Amount" means the amount selected by an Eligible Holder to be the proceeds of
disposition of the Trilon Shares in his or her election made pursuant to
section 85 of the Tax Act.
In order to make an election, an Eligible Holder must ensure that two
signed copies of the necessary election forms are returned in accordance with
the procedures set out in the tax instruction letter on or before 90 days
after the Expiry Time duly completed with the details of the number of Trilon
Shares transferred and the applicable Elected Amounts for the purposes of such
elections. The relevant tax forms may be obtained from the CCRA (or the
applicable provincial tax authority). Subject to the election forms complying
with the provisions of the Tax Act (or applicable provincial income tax law),
the forms will be returned to such holders, signed by Brascan, for filing by
the holder with the CCRA (or the applicable provincial tax authority).
The relevant tax election form is CCRA form T2057 (or, in the event that
the Trilon Shares are held as partnership property, CCRA form T2058). For
Eligible Holders required to file in Quebec, Quebec form TP-518V (or, in the
event that the Trilon Shares are held as partnership property, Quebec form TP-
529V) will also be required. A tax instruction letter may be obtained from the
Depositary by checking the appropriate box on the Letter of Transmittal and
submitting the Letter of Transmittal in accordance with the procedures set out
in section 3 of the Offer. The relevant tax forms may be obtained from the
CCRA (or the applicable provincial tax authority). An Eligible Holder
interested in making an election should indicate that intention in the Letter
of Transmittal accompanying the Offer and this
40
Circular in the space provided therein and a tax instruction letter will be
sent to such holder. Holders who elect to receive only Brascan Shares or only
Brascan Non-Cumulative Class A Preference Shares, Series 11 in exchange for
Trilon Shares should note that they may receive cash, and thus may wish to make
an election in that event, as a result of the application of the Maximum Share
Consideration condition under the terms of the Offer or as a result of no
Brascan Non-Cumulative Class A Preference Shares, Series 11 being issued
because of the Minimum Series 11 Amount condition not being met.
Where Trilon Shares are held in joint ownership and two or more of the co-
owners wish to elect, one of the co-owners designated for that purpose should
file the designation and a copy of the CCRA election form T2057 (and where
applicable, the corresponding Quebec form with the Quebec taxation authorities)
for each co-owner along with a list of all co-owners electing, which list
should contain the address and social insurance number or tax account number of
each co-owner. Where the Trilon Shares are held as partnership property, a
partner designated by the partnership must file one copy of CCRA election form
T2058 on behalf of all members of the partnership (and where applicable, the
corresponding Quebec form in duplicate with the Quebec taxation authorities).
Such CCRA election form T2058 (and Quebec form, if applicable) must be
accompanied by a list containing the name, address, social insurance number or
tax account number of each partner as well as a letter signed by each partner
authorizing the designated partner to complete and file the form.
In general, where an election is made, the Elected Amount must comply with
the following rules:
(a) the Elected Amount may not be less than the amount of cash received by
such holder on the exchange;
(b) the Elected Amount may not be less than the lesser of the adjusted cost
base to the holder of the holder's Trilon Shares exchanged, determined
immediately before the time of the exchange, and the fair market value
of the Trilon Shares at that time; and
(c) the Elected Amount may not exceed the fair market value of the Trilon
Shares at the time of the exchange.
Where a Shareholder and Brascan make an election, the tax treatment to the
holder generally will be as follows:
(a) the Shareholder's Trilon Shares will be deemed to have been disposed of
for proceeds of disposition equal to the Elected Amount;
(b) if the proceeds of disposition of the Trilon Shares are equal to the
aggregate of the adjusted cost base to the Shareholder of the
Shareholder's Trilon Shares, determined immediately before the
exchange, and any reasonable costs of disposition, no capital gain or
capital loss will be realized by the Shareholder;
(c) to the extent that the proceeds of disposition of the Trilon Shares
exceed (or are less than) the aggregate of the adjusted cost base
thereof to the Shareholder and any reasonable costs of disposition, the
Shareholder will in general realize a capital gain (or capital loss);
and
(d) the cost of the Brascan Shares (subject to averaging rules contained in
the Tax Act) or Brascan Non-Cumulative Class A Preference Shares,
Series 11 received on the exchange will be equal to the amount, if any,
by which the Elected Amount exceeds any cash received on the exchange.
Where both Brascan Shares and Brascan Non-Cumulative Class A Preference
Shares, Series 11 are received, such cost will be allocated first to
the Brascan Non-Cumulative Class A Preference Shares, Series 11 up to
the fair market value of such shares, and the balance to the Brascan
Shares.
Brascan will make an election under section 85 of the Tax Act (and the
corresponding provisions of any applicable provincial tax legislation) only
with an Eligible Holder, and at the amount selected by the Eligible Holder
subject to the limitations set out in the Tax Act (and any applicable
provincial tax legislation). Brascan will not be responsible for the proper
completion or filing of any election and the Eligible Holder will be solely
responsible for the payment of any late filing penalty. Brascan agrees only to
execute any properly completed election and to forward such election by mail
(within 60 days after the receipt thereof) to the Eligible Holder. With the
exception of execution of the election by Brascan, compliance with the
requirements for a valid election will be the sole responsibility of the
Eligible Holder making the election. Accordingly, neither Brascan nor the
Depositary will be responsible or liable for taxes, interest, penalties,
damages or expenses resulting from the failure by anyone to deliver any
election in accordance with the procedures set out in the tax instruction
letter, to properly complete any election or to properly file it within the
time prescribed and in the form prescribed under the Tax Act (or the
corresponding provisions of any applicable provincial tax legislation).
41
In order for the CCRA (and where applicable the Ministere du Revenu du
Quebec) to accept a tax election without a late filing penalty being paid by
an Eligible Holder, the election must be received by such revenue authorities
on or before the day that is the earliest of the days on or before which
either Brascan or the Eligible Holder is required to file an income tax return
for the taxation year in which the exchange occurs. Brascan's taxation year is
scheduled to end December 31, 2002. Thus, where the exchange occurs in 2002,
the tax election will, in the case of an Eligible Holder who is an individual,
generally have to be received by the revenue authorities by April 30, 2003
(being generally the last day for filing the tax returns for the 2002 taxation
year of individuals). Eligible Holders other than individuals are urged to
consult their own advisers as soon as possible respecting the deadlines
applicable to their own particular circumstances. However, regardless of such
deadline, the tax election forms of an Eligible Holder must be received in
accordance with the procedures set out the tax instruction letter no later
than 90 days after the Expiry Time. Because Brascan has agreed to execute and
return the election to the Eligible Holder within 60 days of its receipt in
accordance with the procedures set out the tax instruction letter, to avoid
late filing penalties certain Eligible Holders may be required to forward
their tax election forms to the Depositary before that date.
Any Eligible Holder who does not ensure that a duly completed election has
been received in accordance with the procedures set out in the tax instruction
letter on or before 90 days after the Expiry Time will not be able to benefit
from the rollover provisions of the Tax Act (or the corresponding provisions
of any applicable provincial tax legislation). Accordingly, all Eligible
Holders who wish to enter into an election with Brascan should give their
immediate attention to this matter. The instructions for requesting a tax
instruction letter are set out in the Letter of Transmittal. Eligible Holders
are referred to Information Circular 76-19R3 and Interpretation Bulletin IT-
291R2 issued by the CCRA for further information respecting the election.
Eligible Holders wishing to make the election should consult their own tax
advisers. A holder who does not make a valid election under subsection 85(1)
or subsection 85(2), as applicable, of the Tax Act may realize a taxable
capital gain. The comments herein with respect to such elections are provided
for general assistance only. The law in this area is complex and contains
numerous technical requirements.
Taxation of Brascan Non-Cumulative Class A Preference Shares, Series 11
Disposition of Brascan Non-Cumulative Class A Preference Shares, Series 11
A holder who disposes of or is deemed to dispose of Brascan Non-Cumulative
Class A Preference Shares, Series 11 (either on redemption or otherwise) will
generally realize a capital gain (or sustain a capital loss) to the extent
that the proceeds of disposition, net of any reasonable costs of disposition,
exceed (or are less than) the Shareholder's adjusted cost base of the Brascan
Non-Cumulative Class A Preference Shares, Series 11 so disposed of.
The amount of any deemed dividend arising on the redemption or acquisition
by Brascan of Brascan Non-Cumulative Class A Preference Shares, Series 11 will
not generally be included in computing the proceeds of disposition to a holder
for purposes of computing the capital gain or capital loss arising on the
disposition of the Brascan Non-Cumulative Class A Preference Shares, Series
11.
Dividends on Brascan Non-Cumulative Class A Preference Shares, Series 11
Dividends (including deemed dividends) received on the Brascan Non-
Cumulative Class A Preference Shares, Series 11 by an individual will be
included in the individual's income and generally will be subject to the
gross-up and dividend tax credit rules normally applicable to taxable
dividends received from taxable Canadian corporations.
Dividends (including deemed dividends) received on the Brascan Non-
Cumulative Class A Preference Shares, Series 11 by a corporation other than a
"specified financial institution" as defined in the Tax Act will be included
in computing the corporation's income and will generally be deductible in
computing the taxable income of the corporation.
Dividends (including deemed dividends) received on the Brascan Non-
Cumulative Class A Preference Shares, Series 11 by a corporation which is a
specified financial institution will be included in computing the
corporation's income and will generally be deductible in computing the taxable
income of the corporation provided that the Brascan Non-Cumulative Class A
Preference Shares, Series 11 are not "term preferred shares", as defined in
the Tax Act, at the time the dividends are received or, if they are term
preferred shares, such shares were not acquired by the specified financial
institution in the ordinary course of the business carried on by it. A Brascan
Non-Cumulative Class A Preference Share, Series 11 will not be a "term
preferred share" to a specified financial institution where such share is
42
listed on a prescribed stock exchange in Canada and the specified financial
institution, alone or together with persons with whom it does not deal at
arm's length within the meaning of the Tax Act, does not receive dividends
(including deemed dividends) in respect of more than 10% of the issued and
outstanding Brascan Non-Cumulative Class A Preference Shares, Series 11.
Shareholders that are specified financial institutions should consult with
their own tax advisors as to whether the Brascan Non-Cumulative Class A
Preference Shares, Series 11 will be considered to be term preferred shares.
The Brascan Non-Cumulative Class A Preference Shares, Series 11 are
"taxable preferred shares" as defined in the Tax Act. The terms of the Brascan
Non-Cumulative Class A Preference Shares, Series 11 require Brascan to make
the necessary election under Part VI.1 of the Tax Act so that corporate
holders will not be subject to tax under Part IV.1 of the Tax Act on dividends
received (or deemed to be received) on the Brascan Non-Cumulative Class A
Preference Shares, Series 11.
A "private corporation", as defined in the Tax Act, or any other
corporation controlled by or for the benefit of an individual (other than a
trust) or a related group of individuals (other than trusts), will generally
be liable to pay refundable tax under Part IV of the Tax Act of 33 1/3% on
dividends received (or deemed to be received) on the Brascan Non-Cumulative
Class A Preference Shares, Series 11 to the extent such dividends are
deductible in computing its taxable income.
Redemption of Brascan Non-Cumulative Class A Preference Shares, Series 11
If Brascan redeems or otherwise acquires Brascan Non-Cumulative Class A
Preference Shares, Series 11, other than by a purchase in the open market in
the manner in which shares are normally purchased by a member of the public in
the open market or by reason of conversion of the Brascan Non-Cumulative Class
A Preference Shares, Series 11 into Brascan Shares, the holder will be deemed
to have received a dividend equal to the amount, if any, paid by Brascan in
excess of the paid-up capital (as determined for purposes of the Tax Act) of
such shares at such time. The aggregate amount that can be added to the paid-
up capital of the Brascan Non-Cumulative Class A Preference Shares, Series 11
issued under the Offer is limited under the Tax Act, and it is not possible to
determine at this time what the paid-up capital of a Brascan Non-Cumulative
Class A Preference Share, Series 11 will be. It is possible that such paid-up
capital will be less than the redemption price of a Brascan Non-Cumulative
Class A Preference Share, Series 11. Shareholders who are contemplating
electing to receive Brascan Non-Cumulative Class A Preference Shares,
Series 11 when tendering to the Offer should consult their own tax advisers.
Generally, the difference between the amount paid by Brascan and the amount of
the deemed dividend will be treated as proceeds of disposition for the
purposes of computing the capital gain or capital loss arising on the
disposition of such shares. In the case of a corporate shareholder, it is
possible that in certain circumstances all or part of the deemed dividend may
be treated as proceeds of disposition and not a dividend.
Conversion of Brascan Non-Cumulative Class A Preference Shares, Series 11
The exercise by a holder of the right to convert such holder's Brascan Non-
Cumulative Class A Preference Shares, Series 11 into Brascan Shares or the
conversion of the Brascan Non-Cumulative Class A Preference Shares, Series 11
into Brascan Shares at the option of Brascan will be deemed not to constitute
a disposition of such Brascan Non-Cumulative Class A Preference Shares, Series
11 and will not give rise to a capital gain or capital loss. The cost to the
holder of the Brascan Shares issued on such conversion will, subject to
averaging rules contained in the Tax Act, be the adjusted cost base to such
holder of such Brascan Non-Cumulative Class A Preference Shares, Series 11
immediately before such conversion.
Under the current administrative practice of the CCRA, a holder of Brascan
Non-Cumulative Class A Preference Shares, Series 11 who receives cash not
exceeding $200 in lieu of a fractional share will have the option of
recognizing the capital gain or capital loss arising on the disposition of the
fractional share in computing the holder's income for the taxation year in
which the conversion occurs or, alternatively, of reducing the adjusted cost
base of the Brascan Shares received at the time of the conversion by the
amount of cash received by the holder.
The fair market value of Brascan Shares received on conversion determined
at the time of receipt in respect of declared and unpaid dividends will be
included in a holder's income as a dividend and, subject to the averaging
rules contained in the Tax Act, will be the cost to the holder of such Brascan
Shares.
43
Taxation of Capital Gains and Losses
A Shareholder who, as described above, realizes a capital gain or a capital
loss on the disposition of Trilon Shares, Brascan Non-Cumulative Class A
Preference Shares, Series 11 or Brascan Shares, as the case may be, will
generally be required to include in income one half of any such capital gain
("taxable capital gain") and may apply one half of any such capital loss
("allowable capital loss") against taxable capital gains in accordance with
the detailed rules in the Tax Act. Allowable capital losses in excess of
taxable capital gains may 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 year in accordance with the detailed
rules of the Tax Act.
If the Shareholder is a corporation or a partnership or trust of which a
corporation is a partner or a beneficiary, any capital loss realized on the
disposition of any such shares may be reduced by the amount of certain
dividends previously received in accordance with detailed provisions of the
Tax Act in that regard. Shareholders should consult their tax advisers for
specific information regarding the application of these provisions.
A "Canadian-controlled private corporation" (as defined in the Tax Act) may
be liable to pay an additional 6 2/3% refundable tax on certain investment
income, including taxable capital gains.
The realization of a capital gain or loss by an individual (including most
trusts) may affect the individual's liability for alternative minimum tax
under the Tax Act.
Compulsory Acquisition
As described in section 21 of this Circular, "Acquisition of Trilon Shares
not Deposited - Compulsory Acquisition", Brascan may, in certain
circumstances, acquire Trilon Shares pursuant to section 188 of the OBCA. The
tax consequences to a shareholder of a disposition of Trilon Shares in such
circumstances generally will be as described above depending upon the
consideration received by the Shareholder for the Shareholder's Trilon Shares
but Shareholders whose Trilon Shares may be so acquired should consult their
own tax advisers in this regard.
Subsequent Acquisition Transaction
If the compulsory acquisition provisions of section 188 of the OBCA are not
utilized, other means of acquiring the remaining issued and outstanding Trilon
Shares may be proposed. The tax treatment of a Subsequent Acquisition
Transaction described above under "Acquisition of Shares Not Deposited -
Subsequent Acquisition Transaction" to a Shareholder may be materially less
favourable than would apply if Trilon Shares are sold to Brascan under the
Offer and will depend upon the exact manner in which the Subsequent
Acquisition Transaction is carried out. Shareholders should consult their own
tax advisers for advice with respect to the income tax consequences to them of
having their Shares acquired pursuant to a Subsequent Acquisition Transaction.
This summary does not describe the tax consequences of any such transaction to
a shareholder.
Non-Residents of Canada
The following summary is generally applicable to a Shareholder who, at all
relevant times, for the purpose of the Tax Act and any applicable income tax
treaty is neither resident nor deemed to be resident in Canada and who does
not use or hold, and is not deemed by the Tax Act to use or hold, Trilon
Shares, Brascan Non-Cumulative Class A Preference Shares, Series 11 or Brascan
Shares in connection with carrying on a business in Canada and whose shares do
not otherwise constitute "taxable Canadian property" under the Tax Act (a
"Non-Resident Holder"). Generally, shares of a Non-Resident Holder will not be
"taxable Canadian property" of the Non-Resident Holder unless, at any time
during the five year period immediately preceding the disposition, 25% or more
of the issued shares of any class of the relevant corporation were held by the
Non-Resident Holder, persons with whom the Non-Resident Holder did not deal at
arm's length, or the Non-Resident Holder together with persons with whom he
did not deal at arm's length. For this purpose, a person will be considered to
own any shares in respect of which such person has an interest or option or
other right to acquire. Non-Resident Holders should consult their own tax
advisers for advice with respect to any foreign tax consequences.
Realization of Capital Gains (or Capital Losses)
No tax will be payable on any capital gains realized by a Non-Resident
Holder whose Trilon Shares are taken up and paid for under the Offer or
acquired under the statutory compulsory acquisition provisions hereinbefore
described.
44
A Non-Resident Holder also will not be subject to tax under the Tax Act in
respect of any capital gain realized on the disposition of Brascan Non-
Cumulative Class A Preference Shares, Series 11 or of Brascan Shares, as the
case may be.
Non-Resident Holders should consult their own tax advisers with respect to
the Canadian tax consequences, including the effects thereon of the provisions
of any income tax treaty between Canada and the Non-Resident Holder's
jurisdiction of residence, of disposing of "taxable Canadian property" if,
based on the above summary, their shares are or may be "taxable Canadian
property".
Dividends
Dividends (including deemed dividends) received on the Brascan Shares or
the Brascan Non-Cumulative Class A Preference Shares, Series 11 by Non-
Resident Holders will be subject to Canadian withholding tax at the rate of
25% unless the rate is reduced under the provisions of an applicable tax
treaty.
Depending on the exact manner in which a Subsequent Acquisition Transaction
is carried out, where Trilon Shares are acquired pursuant to a Subsequent
Acquisition Transaction, a dividend may be deemed to be received on such
Trilon Shares. Non-Resident Holders should consult their own advisers for
advice with respect to the income tax consequences to them of having their
Trilon Shares acquired pursuant to a Subsequent Acquisition Transaction.
The Canadian federal income tax consequences set forth above are for
general information only. Holders of Trilon Shares are urged to consult their
own tax advisers to determine the particular tax effects to them of the Offer.
23.Interest of Persons in the Matters Related to the Offer
Except as disclosed herein, no director or senior officer of Trilon nor any
associate or affiliate of any of the foregoing persons, nor any person who
beneficially owns or exercises control or direction over more than 10% of the
outstanding Class A Shares has any material interest, direct or indirect, by
way of beneficial ownership of securities or otherwise in any matter related
to the Offer. The following are the principal interests of insiders in matters
related to the Offer:
. EdperPartners and its shareholders, collectively hold, directly and
indirectly, or have options to acquire, approximately 27.1 million
Brascan Shares representing 15% of the Brascan Shares on a fully diluted
basis (net of Brascan Shares held internally by Brascan's subsidiaries),
and 85,120 Class B Limited Voting Shares of Brascan, representing all of
the Class B Limited Voting Shares of Brascan. Jack L. Cockwell,
Jeffrey M. Blidner, George E. Myhal, Brian D. Lawson, Trevor D. Kerr,
Allen T. Lambert, Frank N.C. Lochan, Bruce K. Robertson, Sam J.B.
Pollock, Timothy R. Price and John C. Tremayne, who are directors and/or
officers of Trilon, are also shareholders of EdperPartners.
. On the Effective Date, holders of options granted under Trilon's MSOP
(other than for directors of Trilon who are not also officers of Trilon,
whose options will accelerate and vest, and other than for option
holders who are no longer officers or employees of Trilon or its
affiliates) will exchange their options for options to acquire Brascan
Shares under Brascan's management share option plan. The exercise price
of the options to acquire Brascan Shares will be equal to two times the
exercise price of the option to acquire Class A Shares and one Brascan
replacement option (each exercisable for one Brascan Share) will be
granted by Brascan for every two options of Trilon held. The vesting and
term of the options will be unchanged. The exchange ratio between the
existing options and the replacement Brascan options is based on the
terms of the Brascan Share consideration available in the Offer. An
aggregate of 5,089,061 options are outstanding and held by senior
officers and directors.
. On the Effective Date, units under Trilon's MDSUP will become a number
of units under Brascan's management deferred share unit plan equal to
one-half the number of units held under the MDSUP. An executive who
holds units will receive additional units as dividends are paid on the
Brascan Shares on the same basis as if dividends were reinvested
pursuant to Brascan's dividend reinvestment plan and the cash value of
the new units when redeemed will be equivalent to the market value of an
equivalent number of Brascan Shares at the time of cessation of
employment with Trilon. The exchange ratio between the existing units
and the replacement units is based on the terms of the Brascan Share
consideration available in the Offer.
45
. On the Effective Date, Trilon Shares issued by Trilon under its MSPP and
held by the trustee of the MSPP will be deposited pursuant to the Offer.
The consideration received will be held by the trustee of the MSPP and
applied towards the loans granted pursuant to the MSPP. An aggregate of
162,600 Trilon Shares are held by one officer and director.
24.Material Changes and Other Information
Brascan has no information which indicates any material change in the
affairs of Trilon since the date of the last published annual financial
statements of Trilon. Brascan has no knowledge of any other matter that has
not previously been generally disclosed but which would reasonably be expected
to affect the decision of Shareholders to accept or reject the Offer.
Brascan's plans or proposals to seek to effect certain material changes in
the affairs of Trilon are set out under "Purpose of the Offer and Brascan's
Plans for Trilon".
25.Documents Incorporated by Reference Regarding Brascan
The following documents of Brascan filed with the securities commission or
similar authority in each of the provinces and territories of Canada are
specifically incorporated by reference in this Circular:
(a) the Annual Information Form of Brascan dated May 15, 2001;
(b) management's discussion and analysis for the year ended December 31,
2001, included as pages 17 through 44 of the 2001 Annual Report of
Brascan;
(c) the audited comparative consolidated financial statements of Brascan
and the notes thereto for the financial year ended December 31, 2001,
together with the report of the auditors thereon, found at pages 45
through 67 of the 2001 Annual Report of Brascan; and
(d) the Management Information Circular of Brascan dated February 28, 2002
in connection with the 2002 Annual Meeting of Shareholders, other than
the sections entitled "Report of the Management Resources and
Compensation Committee", "Performance Graph" and "Corporate
Governance".
Any documents of Brascan of the type referred to above (excluding
confidential material change reports) together with any material change
reports filed with a securities commission or similar regulatory authority in
Canada on or after the date of this Circular and prior to the Expiry Time
shall be deemed to be incorporated by reference into this Circular.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of the Offer to the extent that a statement contained in the
Offer or Circular, or in any other subsequently filed document which also is
or is deemed to be incorporated by reference in the Offer or Circular,
modifies or supersedes that statement. The making of a modifying or
superseding statement shall not be deemed an admission for any purpose 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 the light of the circumstances in which it
was made. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of the Offer and the
Circular.
46
26.Eligibility for Investment
At the date of issue pursuant to the Offer, the Brascan Shares and the
Brascan Non-Cumulative Class A Preference Shares, Series 11 received as part
of the consideration in the Offer will be eligible investments, as at such
date, under, or their purchase would not be prohibited by, the statutes listed
below (and, where applicable, the regulations thereunder), in each case
subject to the general investment provisions thereof and, in certain cases,
subject to the prudent investor requirements thereof and additional
requirements relating to investment or lending policies, procedures or goals.
Insurance Companies Act (Canada) Pension Benefits Act (Ontario)
Pension Benefits Standards Act, an Act respecting insurance
1985 (Canada) (Quebec) (for an insurer, as
Trust and Loan Companies Act defined herein, incorporated
(Canada) under the laws of the province of
Financial Institutions Act Quebec, other than a guarantee
(British Columbia) fund corporation, an insurance
Alberta Heritage Savings Trust fund or a mutual association)
Fund Act (Alberta) an Act respecting trust companies
Employment Pension Plans Act and savings companies (Quebec)
(Alberta) (for a trust company investing
Insurance Act (Alberta) its own funds and deposits it
Loan and Trust Corporations Act receives and a savings company
(Alberta) investing its own funds)
The Pension Benefits Act Supplemental Pension Plans Act
(Manitoba) (Quebec)
The Pension Benefits Act, 1992
(Saskatchewan)
Loan and Trust Corporations Act
(Ontario)
Subject to the qualifications and assumptions discussed under the heading
"Canadian Federal Income Tax Considerations", the Brascan Shares and the
Brascan Non-Cumulative Class A Preference Shares, Series 11 will also be
qualified investments under the Income Tax Act (Canada) (the "Tax Act") for
trusts governed by registered retirement savings plans, registered retirement
income funds, registered education savings plans and deferred profit sharing
plans (collectively, the "Deferred Income Plans"). The Brascan Shares and the
Brascan Non-Cumulative Class A Preference Shares, Series 11 do not constitute
"foreign property" for the purposes of the Tax Act for Deferred Income Plans
and other persons subject to tax under Part XI of the Tax Act.
27.Interests of Experts
Torys LLP, counsel to Brascan, has provided legal advice upon certain
corporate and securities law matters in connection with the Offer. As of April
11, 2002, the partners and associates of Torys LLP beneficially owned,
directly or indirectly, less than 1% of the outstanding securities of any
class of securities of Brascan.
28.Statutory Rights
Securities legislation in certain of the provinces and territories of
Canada provides holders of Trilon Shares with, in addition to any other rights
they may have at law, rights of rescission or to damages, or both, if there is
a misrepresentation in a circular or a notice that is required to be delivered
to the holders of Trilon Shares. However, such rights must be exercised within
prescribed time limits. Holders of Trilon Shares should refer to the
applicable provisions of the securities legislation of their province or
territory for particulars of those rights or consult with a lawyer.
29.Documents Filed as Part of the United States Registration Statement
A registration statement on Form F-8 (the "Registration Statement") has
been filed with the Securities and Exchange Commission of the United States
(the "SEC") under the Securities Act of 1933, as amended, relating to the
Offer. The following documents have been filed with the SEC as part of the
Registration Statement of which the Offer is part, insofar as called for by
the SEC's Form F-8: (i) the letter to Shareholders from the President and
Chief Executive Officer of Brascan; (ii) the Offer and the Circular; (iii) the
documents listed in the Circular as incorporated by reference herein; (iv) the
Directors' Circular; (v) the Valuation and Fairness Opinion; (vi) the form of
the Letter of Transmittal; (vii) the form of Notice of Guaranteed Delivery;
(viii) consents of accountants, counsel and financial advisors; and
(ix) powers of attorney pursuant to which amendments to the Registration
Statement may be signed.
Copies of these documents may be obtained on request without charge from
the Secretary of Brascan, 181 Bay Street, Suite 4400, P.O. Box 762, Toronto,
Ontario, Canada M5J 2T3, (416) 363-9491.
47
30.Consents
CONSENT OF COUNSEL
TO: British Columbia Securities Commission
Alberta Securities Commission
Saskatchewan Securities Commission
Manitoba Securities Commission
Ontario Securities Commission
Commission des valeurs mobilieres du Quebec
Office of the Administrator of Securities, New Brunswick
Nova Scotia Securities Commission
Director of Corporations, Department of Justice, Prince Edward Island
Securities Commission of Newfoundland
Registrar of Securities, Northwest Territories
Registrar of Securities, Yukon Territories
Registrar of Securities, Government of Nunavut
(collectively, the "Canadian Securities Administrators")
AND TO: The directors of Brascan Corporation
We hereby consent to the reference to our opinion contained under "Canadian
Federal Income Tax Considerations" in the Circular accompanying the Offer
dated April 11, 2002 made by Brascan Corporation to the holders of Class A
Shares and Class B Non-Voting Shares of Trilon Financial Corporation.
Dated: April 11, 2002
(Signed) Torys LLP
CONSENT OF TD SECURITIES INC.
TO:All Canadian Securities Administrators
AND TO:The directors of Brascan Corporation
Dear Sirs:
Re: Trilon Financial Corporation
We refer to the Offer and accompanying Circular (the "Bid") dated April 11,
2002 of Brascan Corporation relating to an offer to purchase the Class A
Shares and Class B Non-Voting Shares of Trilon Financial Corporation.
Reference is made to a valuation and fairness opinion dated April 9, 2002
of the Class A Shares and Class B Non-Voting Shares of Trilon Financial
Corporation and the Class A Limited Voting Shares and the Class A Preference
Shares, Series 11 of Brascan Corporation provided by this firm to the
independent members of the board of directors of Trilon Financial Corporation.
We hereby consent to the inclusion of a summary of our valuation and
fairness opinion and the references thereto in the Bid and its distribution to
shareholders of Trilon Financial Corporation as provided for in the Bid. In
providing such consent, except as may be required by securities laws, we do
not intend that any person other than the board of directors of Trilon
Financial Corporation rely upon such valuation and fairness opinion.
Dated: April 11, 2002 Yours truly,
(Signed) TD Securities Inc.
48
APPROVAL AND CERTIFICATE OF BRASCAN CORPORATION
The contents of the Offer and the Circular (including all schedules thereto
which are incorporated therein by reference) have been approved, and the
sending, communication or delivery thereof to the Shareholders has been
authorized by, the board of directors of Brascan. The foregoing contains no
untrue statement of a material fact and does not omit to state a material fact
that is required to be stated or that is necessary to make a statement not
misleading in the light of the circumstances in which it was made. In
addition, the foregoing does not contain any misrepresentation likely to
affect the value or the market price of the Class A Shares and Class B Non-
Voting Shares of Trilon Financial Corporation which are the subject of the
Offer.
DATED: April 11, 2002
(Signed) J. Bruce Flatt (Signed) Brian D. Lawson
President and Chief Executive Officer Executive Vice-President and
Chief Financial Officer
On behalf of the Board of Directors
(Signed) Jack L. Cockwell (Signed) Robert J. Harding
Director Director
49
The Depositary for the Offer is CIBC Mellon Trust Company
Offices of the Depositary
Telephone: (416) 643-5500
Toll-Free: 1-800-387-0825
Inquiries by email:
inquiries@cibcmellon.com
Toronto:
By Mail: By Hand or Courier:
P.O. Box 1036 199 Bay Street
Adelaide Street Postal Commerce Court West
Station Securities Level
Toronto, ON Toronto, ON
M5C 2K4 M5L 1G9
Montreal: Calgary:
By Hand or Courier: By Hand or Courier:
2001 University Street 600 The Dome Tower
Floor 16 333 - 7th Avenue S.W.
Montreal, PQ Floor 6
H3A 2A6 Calgary, AB
T2P 2Z1
Vancouver:
By Hand or Courier:
1066 West Hastings Street
Suite 1600
Vancouver, BC
V6E 3X1
Any questions and requests for assistance may be directed by Shareholders to
the Depositary at the telephone numbers and locations set out above.
PART II
INFORMATION NOT REQUIRED TO BE
DELIVERED TO OFFEREES OR PURCHASERS
INDEMNIFICATION
Under the Business Corporations Act (Ontario), Brascan Corporation (the
"Registrant") may indemnify a present or former director or officer or a person
who acts or acted at the Registrant's request as a director or officer of
another body corporate of which such Registrant is or was a shareholder or
creditor, and his or her heirs and legal representatives, against all costs,
charges and expenses, including an amount paid to settle an action or satisfy a
judgment, reasonably incurred by him or her in respect of any civil, criminal or
administrative action or proceeding to which he or she is made a party by reason
of being or having been a director or officer of the Registrant or such other
body corporate, as the case may be, provided that such person acted honestly and
in good faith with a view to the best interests of the Registrant and, in the
case of a criminal or administrative action or proceeding that is enforced by a
monetary penalty, such person had reasonable grounds for believing that his or
her conduct was lawful. Such indemnification may be made in connection with an
action by or on behalf of the Registrant or such other body corporate, as the
case may be, to procure a judgment in its favor only with court approval. A
director or officer referred to above is entitled to indemnification from the
Registrant as a matter of right if he or she was substantially successful on the
merits in his or her defense of the action or proceeding and fulfilled the
conditions set forth above.
In accordance with the Business Corporations Act (Ontario), the board of
directors of the Registrant approved a resolution (the "Resolution") dated
August 1, 1997 providing for the following:
(i) the Registrant shall indemnify a director or officer of the
Registrant, a former director or officer of the Registrant or a person
who acts or acted at the Registrant's request as a director or officer
of a body corporate of which the Registrant is or was a shareholder or
creditor, and his or her heirs and legal representatives, against all
costs, charges and expenses, including an amount paid to settle an
action or satisfy a judgment, reasonably incurred by him or her in
respect of any civil, criminal or administrative action or proceeding
to which he or she is made a party by reason of being or having been a
director or officer of the Registrant or such body corporate (except
in respect of an action by or on behalf of the Registrant or such body
corporate to procure a judgment in its favor), if,
(a) he or she acted honestly and in good faith with a view to the
best interests of the Registrant, and
(b) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, he or she had reasonable
grounds for believing that his or her conduct was lawful;
(ii) the Registrant shall, with the prior approval of the court having
jurisdiction, indemnify a person referred to in (i) above in respect
of an action by or on behalf of the Registrant or such body corporate
to procure a judgment in its favor, to which he or she is made a party
by reason of being or having been a director or an officer of the
Registrant or such body
II-1
corporate against all costs, charges and expenses reasonably incurred
by him or her in connection with such action if he or she fulfills
the conditions set out in paragraphs (i)(a) and (b) above; and
(iii) notwithstanding anything in (i) and (ii) above, a person referred to
in (i) above shall be indemnified by the Registrant in respect of all
costs, charges and expenses reasonably incurred by him or her in
connection with the defense of any civil, criminal or administrative
action or proceeding to which he or she is made a party by reason of
being or having been a director or officer of the Registrant or body
corporate, if the person seeking indemnity,
(a) was substantially successful on the merits in his or her defense
of the action or proceeding, and
(b) fulfills the conditions set out in paragraphs (i)(a) and (b)
above.
Nothing in the by-laws or resolutions of the Registrant limits the right of any
person entitled to claim indemnity apart from the indemnity provided pursuant to
the Resolution.
The Registrant maintains a policy of directors' and officers' liability
insurance, under which, the Registrant and certain of its associated companies
(collectively, the "Organization") is reimbursed for indemnity payments made to
directors or officers as required or permitted by law or under provisions of its
by-laws as indemnity for losses, including legal costs arising from acts, errors
or omissions committed by directors and officers during the course of their
duties as such. This insurance also provides coverage to individual directors
and officers without any deductible if they are not indemnified by the
Organization. The insurance coverage for directors and officers has certain
exclusions including, but not limited to, those acts determined to be
deliberately fraudulent or dishonest or to have resulted in personal profit or
advantage. The cost of such insurance is borne by the Organization.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers or
persons controlling the Registrant pursuant to the foregoing provisions, the
Registrant has been informed that in the opinion of the U.S. Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.
II-2
EXHIBITS
The following exhibits have been filed as part of this Registration Statement.
Exhibit
Number Description
------ -----------
3.1 Letter to Shareholders of Trilon Financial Corporation dated April 8,
2002 from the President and Chief Executive Officer of the Registrant.
3.2 Letter of Transmittal and Election Form to be completed by registered
holders of shares of Trilon Financial Corporation.
3.3 Notice of Guaranteed Delivery and Election Form.
3.4 Directors' Circular prepared by the board of directors of Trilon
Financial Corporation dated April 11, 2002
3.5 Valuation and Fairness Opinion of TD Securities Inc. to the
Independent Committee as to the fair market value of the Trilon Shares
and the opinion of TD Securities Inc. as to whether the consideration
to be received in the Offer is fair, from a financial point of view,
to the shareholders of Trilon Financial Corporation other than Brascan
Corporation and its affiliates dated as of April 9, 2002 (included as
Schedule A to Exhibit 3.4 to this Registration Statement).
3.6 Management Information Circular of Brascan Corporation dated February
28, 2002 in connection with the 2002 Annual Meeting of Shareholders,
other than the sections entitled "Report of the Management Resources
and Compensation Committee", "Performance Graph" and "Corporate
Governance."
3.7 Annual Information Form of Brascan Corporation dated May 15, 2001
(incorporated herein by reference to the Registrant's annual report on
Form 40-F/A dated May 21, 2001, file no. 033-97038).
3.8 Management's Discussion and Analysis of the financial results of
Brascan Corporation for the fiscal year ended December 31, 2001,
included as pages 17 through 44 of the 2001 Annual Report of Brascan
Corporation (incorporated herein by reference to the Registrant's
annual report on Form 40-F filed April 3, 2002, file no. 033-97038).
3.9 Audited Comparative Consolidated Financial Statements of Brascan
Corporation and the notes thereto for the fiscal year ended December
31, 2001, together with the report of the auditors thereon, found at
pages 45 through 67 of the 2001 Annual Report of Brascan Corporation
(incorporated herein by reference to the Registrant's annual report on
Form 40-F filed April 3, 2002, file no. 033-97038).
4.1 Consent of Torys LLP (included in Part I of this Registration
Statement).
II-3
4.2 Consent of TD Securities Inc. (included in Part I of this Registration
Statement).
4.3 Consent of Deloitte & Touche LLP (included in Part I of this
Registration Statement).
5.1 Powers of Attorney (set forth on the signature pages of this
Registration Statement).
5.2 Form F-X (incorporated herein by reference to the Registrant's
appointment of agent for service of process and undertaking on Form F-
X filed November 26, 2001, file no. 333-14130).
II-4
PART III
UNDERTAKINGS AND CONSENT TO SERVICE OF PROCESS
Item 1. Undertakings.
(a) Registrant undertakes to make available, in person or by
telephone, representatives to respond to inquiries made by the U.S. Securities
and Exchange Commission (the "Commission") staff, and to furnish promptly, when
requested to do so by the Commission staff, information relating to the
securities registered pursuant to this Registration Statement on Form F-8 or to
transactions in said securities.
(b) Registrant further undertakes to disclose in the United States,
on the same basis as it is required to make such disclosure pursuant to any
applicable Canadian federal and/or provincial or territorial law, regulation or
policy, information regarding purchases of the Registrant's securities or of the
subject issuer's securities during the exchange offer. Such information shall be
set forth in amendments to this Form.
Item 2. Consent to Service of Process.
(a) Registrant has filed with the Securities and Exchange Commission
a written irrevocable consent and power of attorney on Form F-X.
III-1
POWER OF ATTORNEY
Brascan Corporation and each person whose signature appears below hereby
appoints Brian D. Lawson and J. Bruce Flatt as attorneys-in-fact with full power
of substitution, severally, to execute in the name and on behalf of Brascan
Corporation 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 Registration Statement with
the U.S. Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Toronto, Province of Ontario, Country of Canada on
the 11/th/ day of April, 2002.
BRASCAN CORPORATION
/s/ Alan V. Dean
By:------------------------------
Name: Alan V. Dean
Title: Senior Vice President and
Secretary
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ J. Bruce Flatt President and Chief Executive April 11, 2002
------------------------------- Officer and Director
J. Bruce Flatt (Principal Executive Officer)
/s/ Brian D. Lawson Executive Vice-President and April 11, 2002
------------------------------- Chief Financial Officer
Brian D. Lawson (Principal Financial Officer)
/s/ Craig J. Laurie Vice-President, Finance April 11, 2002
------------------------------- (Principal Accounting Officer)
Craig J. Laurie
/s/ Roberto P. Cezar de Andrade Director April 11, 2002
-------------------------------
Roberto P. Cezar de Andrade
/s/ Conrad M. Black
------------------------------- April 11, 2002
Lord Black of Crossharbour Director
------------------------------- April __, 2002
James J. Blanchard Director
/s/ Jack L. Cockwell
------------------------------- April 11, 2002
Jack L. Cockwell Co-Chairman and Director
------------------------------- April __, 2002
John P. Curtin, Jr. Director
/s/ J. Trevor Eyton
------------------------------- April 11, 2002
The Honourable J. Trevor Eyton, O.C. Director
/s/ Julia E. Foster
------------------------------- April 11, 2002
Julia E. Foster Director
/s/ James K. Gray
------------------------------- April 11, 2002
James K. Gray, O.C. Director
/s/ Lynda C. Hamilton
------------------------------- April 11, 2002
Lynda C. Hamilton Director
/s/ Robert J. Harding
------------------------------- April 11, 2002
Robert J. Harding, FCA Chairman and Director
/s/ David W. Kerr
------------------------------- April 11, 2002
David W. Kerr Director
/s/ Allen T. Lambert
------------------------------- April 11, 2002
Allen T. Lambert, O.C. Director
/s/ Philip B. Lind
------------------------------- April 11, 2002
Philip B. Lind Director
/s/ Roy MacLaren
------------------------------- April 11, 2002
The Honourable Roy MacLaren, P.C. Director
/s/ Saul Shulman
------------------------------- April 11, 2002
Saul Shulman, Q.C. Director
------------------------------- April __, 2002
George S. Taylor Director
AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of Section 6(a) of the Securities Act of 1933,
the Authorized Representative has duly caused this Registration Statement to be
signed on its behalf by the undersigned, solely in its capacity as the duly
authorized representative of Brascan Corporation in the United States, on April
11, 2002.
TORYS LLP
(Authorized Representative)
By: /s/ Andrew J. Beck
-----------------------
Andrew J. Beck
Partner
EXHIBITS
Exhibit
Number Description
------ -----------
3.1 Letter to Shareholders of Trilon Financial Corporation dated April 8
2002 from the President and Chief Executive Officer of the Registrant.
3.2 Letter of Transmittal and Election Form to be completed by registered
holders of shares of Trilon Financial Corporation.
3.3 Notice of Guaranteed Delivery and Election Form.
3.4 Directors' Circular prepared by the board of directors of Trilon
Financial Corporation dated April 11, 2002
3.5 Valuation and Fairness Opinion of TD Securities Inc. to the
Independent Committee as to the fair market value of the Trilon Shares
and the opinion of TD Securities Inc. as to whether the consideration
to be received in the Offer is fair, from a financial point of view,
to the shareholders of Trilon Financial Corporation other than Brascan
Corporation and its affiliates dated as of April 9, 2002 (included as
Schedule A to Exhibit 3.4 to this Registration Statement).
3.6 Management Information Circular of Brascan Corporation dated February
28, 2002 in connection with the 2002 Annual Meeting of Shareholders,
other than the sections entitled "Report of the Management Resources
and Compensation Committee", "Performance Graph" and "Corporate
Governance."
3.7 Annual Information Form of Brascan Corporation dated May 15, 2001
(incorporated herein by reference to the Registrant's annual report on
Form 40-F/A dated May 21, 2001, file no. 033-97038).
3.8 Management's Discussion and Analysis of the financial results of
Brascan Corporation for the fiscal year ended December 31, 2001,
included as pages 17 through 44 of the 2001 Annual Report of Brascan
Corporation (incorporated herein by reference to the Registrant's
annual report on Form 40-F filed April 3, 2002, file no. 033-97038).
3.9 Audited Comparative Consolidated Financial Statements of Brascan
Corporation and the notes thereto for the fiscal year ended December
31, 2001, together with the report of the auditors thereon, found at
pages 45 through 67 of the 2001 Annual Report of Brascan Corporation
(incorporated herein by reference to the Registrant's annual report on
Form 40-F dated filed April 3, 2002, file no. 033-97038).
4.1 Consent of Torys LLP (included in Part I of this Registration
Statement).
4.2 Consent of TD Securities Inc. (included in Part I of this Registration
Statement).
4.3 Consent of Deloitte & Touche LLP (included in Part I of this
Registration Statement).
5.1 Powers of Attorney (set forth on the signature pages of this
Registration Statement).
5.2 Form F-X (incorporated herein by reference to the Registrant's
appointment of agent for service of process and undertaking on Form F-
X filed November 26, 2001, file no. 333-14130).
E-1