ARCHIVED -  Letter

Sent by e-mail: mfusca@stornoway.com
Martha Fusca
President
Stornoway Communications Limited Partnership
105 Gordon Baker Road
Suite 800

Dear Ms. Fusca,

Subject: 2012-0705-1: Application to obtain a broadcasting licence and a mandatory distribution order under section 9(1)(h) of the Broadcasting Act for a specialty service to be known as FUSION.

The additional documentation filed on 1 February 2013 by Stornoway Communications Limited Partnership (Stornoway LP) results in a change in the ownership structure for the undertaking Fusion.

This additional documentation proposes a new corporation to be incorporated, that we understand to be Stornoway Communications Limited Partnership, Mark Curry and Jim Meekison (OBCI) (Stornoway LP (OBCI)), as the licensee. As staff is currently not able to determine eligibility of the new proposed licensee, please provide the following additional and/or explanatory information solely related to the additional information filed.

The information requested herein should be filed electronically at the latest on 2 April 2013 at noon and a paper copy should be filed at the latest on the morning of the 23 April 2013 Public Hearing, prior to its commencement.

When Stornoway LP (OBCI) files the information the morning of Tuesday 23 April 2013, in addition to its electronic filing, Stornoway LP (OBCI) is to provide 20 copies of this information to the Hearing Secretary.

Nota Bene

Filing of revised information
1. When filing additional documentation and information, please ensure that the information you file:

1. corresponds to the Commission’s record, or;
2. is presented in a redline version clearly identifying the amended information, along with a clean copy of the information.

Confidentiality
2. As a reminder, please note that should you request any document to be filed as confidential, you will need to file a full version of the document as well as an abridged version along with reasons supporting your request for confidentiality.

Questions relating to the additional information submitted on 1 February 2013

Appendix D
3. Section A, Table 3.2 of Appendix D provides for a total of Class A shares held by Stornoway Communications Limited Partner Inc. (Stornoway Inc.), Mark Curry and Jim Meekison (i.e. each holding 4,999,999 shares, or a total of 14,999,997) which is higher than the total of issued and outstanding shares as indicated in table 3.1 (i.e. total of 4,999,997). Please file a revised Appendix D.

4. Appendix D as filed notes that Stornoway LP (OBCI) would not have a managing committee and does not provide for a board of directors, whereas the draft articles of incorporation show that Stornoway LP (OBCI) is intended to be a corporation and provide for a possible board of directors composed of three members.

Therefore, please:

• file the names, officer position held, residential addresses and citizenship of all the members of the board by filing a revised Appendix D, or;
• explain how Stornoway LP (OBCI) would be managed and controlled without a managing committee or a board of directors.

Compliance with the Direction to the CRTC (Ineligibility of Non-Canadians) (the ‘Direction’)
5. The draft By-laws currently do not provide for mechanisms ensuring compliance at all times with the Direction. Further, the application does not provide for a managing committee or a board of directors for Stornoway LP (OBCI), and therefore does not address all the elements of the Direction. Therefore, please:

1. advise whether you would amend Stornoway LP (OBCI)’s draft By-laws so that they include formal mechanisms ensuring compliance with the Direction at all times and provide for a managing committee or a board of directors for Stornoway LP (OBCI).
2. commit to a date of filling for the amended draft By-laws as soon as possible and for the executed By-laws within 12 months of the date of the decision.

Casting Vote
6. The draft By-laws of Stornoway LP (OBCI) states that the members of the board are elected at the shareholders’ meeting, at which the quorum is effectively set at two out of three shareholders. As the chairman of the meeting is not entitled to a casting vote, please explain what mechanisms have been put in place in the event of a tie vote.

Control of Stornoway LP (OBCI)
7. The current proposed By-laws do not contain clear mechanisms explaining how the control of the licensee will be exercised. Further, the information that was provided in Appendices 2A and 2B of Appendix F (i.e. the ownership charts) does not correspond to the information that was provided in Appendix D. Please file:

1. a control statement simply stating how the control of Stornoway LP (OBCI) will be exercised, and;
2. any documents supporting that statement (i.e. revised By-laws, Shareholders’ Agreement, Voting Agreement, etc.).

Identification of the shareholders
8. In Appendix D, Stornoway Inc. is listed as a shareholder for Stornoway LP (OBCI) whereas it is not listed in any of the Appendices of Appendix F.

1. As Stornoway Inc. does not exist in the Commission’ records, please confirm whether it is in fact a new corporation or if there has been a change in the ownership structure of the initial proposed licensee for this application (i.e. Stornoway LP).
   1. In the event it is a new corporation, please file all of its corporate documents (i.e. By-laws, Shareholders’ Agreement, Voting Agreement, etc.).
   2. In the event the ownership structure of the initial proposed licensee for this application has been changed, please detail those changes and file all necessary supporting documentation or an application for a change in control.
2. Please confirm which of Stornoway Inc. or Stornoway LP (or whether both of them) is (are) to hold shares in Stornoway LP (OBCI).
3. Further, please confirm whether Stornoway LP is still currently part of the ownership structure of the initial proposed licensee for this application and if it still would be following the incorporation of Stornoway LP (OBCI).

Financing
9. In the application documents, Stornoway LP (OBCI) indicates that Canaccord Genuity Corp. (Canaccord) is currently providing half of the financing of Stornoway LP (OBCI). Please:

1. indicate what collateral Canaccord will receive in exchange for its significant contribution to the financing and provide the supporting financing documents;
2. explain how it will be involved in the operations of Stornoway LP (OBCI), and;
3. confirm whether it is a Canadian as per the Direction. If so, please file all corporate documents for Canaccord as it is an important investor.

Please repeat each question in your reply letter. Your reply letter and all supporting documents should be added to your application and made available for public examination.

Your documents must be submitted electronically using the secured service My CRTC Account (Partner Log In or GCKey) and be accompanied by the “Broadcasting and Telecom Cover page” located on this web page. Information on the submission of applications to the Commission is available on the following web page: Submitting applications and other documents to the CRTC using My CRTC Account).

In the Description box, please repeat the “subject” line for all related correspondence concerning this matter.

Should you require further information concerning this application or these questions, please do not hesitate to contact me.

Yours truly,

Marie-Claire Bouthillier
Ownership & Acquisitions
A/ Senior corporate analyst
Canadian Radio-television and Telecommunications Commission
marie-claire.bouthillier@crtc.gc.ca
Telephone : 819-997-4692
Facsimile : 819-994-0218

Date modified:

2013-03-22