58 LEXPERT MAGAZINE
|
JULY/AUGUST 2016
| IN-HOUSE ADVISOR: NATIONAL SECURITY REVIEWS |
unspecified national security concerns. "I
was stunned," says Beauregard. "I was in
total shock."
His next call was to then-CEO Pierre
Blouin, who did not blow a gasket. He may
have been too dazed. "I think we were all
just profoundly surprised and shocked."
Beauregard says as recently as three years
ago, transactions involving a foreign buyer
or investor that fell under the Investment
Canada Act were routinely stickhandled by
acquirer's counsel.
Dany Assaf, who was advising acquirer
Accelero, did everything he was supposed
to. He travelled to Ottawa for "several
normal-course meetings" with Industry
Canada to discuss any potentially prob-
lematic issues. Security was never raised,
says Assaf, who now co-chairs the competi-
tion and foreign investment review practice
at Torys LLP in Toronto. "ere were no
indications in the meetings that there was
any concern."
at made the rejection of the Allstream
acquisition on security grounds that much
more difficult to understand, he says.
If the lawyers were shocked, Sawiris was
livid. "I am finished with Canada," he said
at the time. "It's totally unacceptable to
have foreign investors waste their time and
money, hold their capital captive, and then
come up with a comment like that."
MTS was not thrilled either, having
spent "considerable resources" on the deal,
says Beauregard.
Shuli Rodal, a partner at Osler, Hoskin
& Harcourt LLP in Toronto, says in the
past couple of years "people have really no-
ticed an uptick in the use of national securi-
ty review and it's a lot of really small things.
"In the first couple of years aer the
provisions came into effect [in 2009] there
were very few national security reviews and
now, from our own experience and what
you hear from people who practise in the
area, we're seeing more.
"It's too early to say whether under the
Harper administration there was more of
an interest in these types of issues. Wheth-
er that will continue under the Trudeau
government we don't yet know."
Behind the scenes – with the Harp-
er government still in power – MTS didn't
give up on a possible sale. But this time,
Beauregard decided to handle the situation
completely differently.
He took an approach he feels every in-
house counsel whose client company may
deal with a prospective foreign buyer or
investor should pay close attention to: He
decided MTS itself would work with In-
dustry Canada (since renamed Innovation,
Science and Economic Development Can-
ada, or ISED) right from day one.
e thing is, it's an approach that may
run contrary to what some external lawyers
are telling their clients.
Traditionally, when a company is work-
ing on a transaction, its legal advisors on
Bay Street will advise management not
to engage with regulators at all until they
know exactly what it is they are selling. e
process has historically been perceived as
preparing for an us-versus-them war.
e notion of going to the regulator to
say: "Hey, this is what we're thinking, can
you help guide us through that?" was – and
to some lawyers still is – a spectacularly ill-
conceived idea.
But the old model that regulatory ap-
proval needs to be antagonistic "is a broken
model," says Beauregard, a former vice-
president, law, mergers and acquisitions at
BCE-Bell Canada and partner at Davies
Ward Phillips & Vineberg LLP.
So when MTS went to sell Allstream
the second time, Beauregard went directly
to the relevant officials not just early, but
oen. Oen because, behind the scenes,
MTS had lined up a small cotillion of in-
terested financial and strategic buyers from
multiple countries.
Far from keeping it secret from ISED,
Beauregard worked with the department
to help narrow the field. "We were open
all along about the entire range of poten-
tial buyers, and they were able to provide
PAUL BEAUREGARD
>
MANITOBA TELECOM SERVICES
We were open [with
Innovation, Science and
Economic Development
Canada] all along about the
entire range of potential
buyers, and they were able
to provide us, without knowing
that there would be
a successful acquirer,
guidance that helped shape
our thinking in terms of who
ought to be in that field
of potential bidders.
PHOTO:
SHUTTERSTOCK
