On June 23, OPTI Canada Inc., a Calgary-based oil company announced the filing of a preliminary short form prospectus in connection with a public offering of shares. While the TSX will "generally accept notice of distributions by way of prospectus", under Section 606 of the TSX Company Manual, the TSX may apply the provisions respecting private placements, such as requiring securityholder approval, if the offering price of the shares falls below a certain discount to the market price. In deciding whether to apply the private placement provisions, the TSX will consider factors such as: the method of distribution; the participation of insiders; the number of placees; the offering price; and the economic dilution.
On June 25, OPTI announced that the TSX had decided to exercise its discretion to apply the private placement rules as the offering price fell below the permissible discount. While OPTI believed it impractical to conduct a shareholders meeting, it was successful in going forward with the public offering subsequent to an increase in the offering price, coupled with a decrease in the market price of its shares.