Tribunal File No. CT-9812 r---CO=M=PE=TIR=ON~ ~TRI-BU-NA~L --.... q THE COMPETITION TRIBUNAL TRJBUNAL OE lA CONCURRENa p R tDEC: 8 . 0 1998 0 IN THE MATI'ER OF THE COMPETmON ACT, R.S.C. 1 as. u RfGl)TRAR I . . - REGIS TlAIRE c.C-34, as amended, and the Competition Tribunal R s, OTT- - r·-- T SOR/94-290, as amended (the "Rule~'); . . A\f'IA, ONT.# 3 1 AND IN THE MATTER OF an Inquiry pursuant to section 10(1)(b) of the Competltlon Act relating to the proposed acqulsttlon of ICG Propane tnc. by Superior Propane Inc.;
AND IN THE MAl TER OF an Application by the Director of Investigation and Research for an interim order pursuant to section 100 of the Competition Act. BETWEEN: THE DIRECTOR OF INVESTIGATION ANO RESEARCH 0 Applicant SUPERIOR PROPANE INC., PETRO-CANADA lNC., THE CHANCELLOR HOLDINGS CORPORATION and ICG PROPANE 1NC.
Respondents AFFIDAVIT OF PETER D. JONES 0 I, PETER D. JONES. of the City of Calgary, In the Province of Alberta, MAKE OATH AND SAY:
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SENT BY:SUPERIOR PR 1: O v P ;J A r N M E INC. :12-v 3-S8 :11=25AM : . S UPERIOR PROPANE JN'C _. ,Lit:\., ;, 1'10 .JIYD - j ... Sl416863087l:#l2/21 l~U. ) 0 f C r. j -2-I. la.traduotlpn 1. I am Vice President, Westem Operatlons of Superior Propane Inc. ("Superior") and have held this position since November, 1997. As such, I have personal knowledge of the matters set out herein. Unless othe.wlae stated, an statements made in
this afnda\lit are based on my knowledge, information and belief, due to my poaltlon with Superior. VVhere I have bean provided with information, I believe such information to be true.
z. At Superior, I am responsible for Superior's operations In western Canada, including managlng supply, transportation, safety, and over 50 retail di1tribution branches. Aside from my clay-to-day duties, l have been responsible for the following initiatives since joining Superior: (i) coordinating the development of Business Plans for all Branches; (II) reorganizing the Branch/Region structure to Improve profitability; (HI) negotiating collective 0 agreements; and (iv) revising Superior's supply and Inventory storage strategy. Prior to becoming Vice President. Weat8m Operations. I waa Vtee Preaident and Chief Information Officer at Noreen Energy Resources Limited. Attached hereto as Exhibit ''A" is a copy of my current resum6.
II. Th• propp11d AOQUl•Hlon 3. Purauant 10 a Share Purchase Agreement entered Into on July 20, 1998 (the •sPA1, Superior agreed to acquire from The Chancellor Holding• Corporation, a wholly. owned Indirect subsidiary of Petro-Canada, all of the leaued and outstanding aharea of ICG 0 Propane Inc. ("ICG"), another wholly.owned indirect subsidiary of Petro.Canada, for a purchase price of $175 million (the ''Proposed Acquisition").
4. The SPA anticipated a closing of the Prcpo1ed Acquia1tion on Octot>er 30, 1996. and expr88tly provided that. In any event. tf tna closing had not occurred by
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.3. December 15, 1998, Petro-Canada would be free to walk away ftom the Proposed Acquisition. At the same time, Superior is obliged, under the SPA and the accompanying mutual covenant side-fetter, to use lta best efforts to dose the Proposed Acquisition by December 15, 1998, faltlng which it may be Uable to ICG for damage&. If the transaction does not close by December 15. 1998, Superior win lose its right to purchase the shares of ICG and its opportunity to realize the considerable etflclancles from the merger of its operations with ICG's operations.
Ill. Ih• Directan ,Ypllcatlao 5. The Director seeks to enjoin the cfosing of the Proposed Acquisition for a period of 21 days, which, tr granted, would extend to December 26. 1998: i.e., a date after December 15, 1998, the last possible date on which the Proposed Acqulsnlon can cloae pursuant to the SPA and related agreements. 0 IV. Su•rioD Pmposed Hold.S•a1r1ta Arrangement e. I have read the affidavit of Marte Schweitzer and I understand that it is being flied with the Tribunal Jn response to the Director's application for an order pursu&1nt to s. 100 of the Act enjoining the closing of the Proposed Acquisition, and in support of closing the Proposed Acquisition under the terma proposed by Superior as set out tn the draft holdaeparate Order attached to Mr. Schweitzer's aftldavlt as Exhibit "U".
7. Superior ie very concerned that the value of ICG wiU be deeply eroded if the D Tribunal J:J•rmits the Proposed Acquisition to close yet prohibits Superior from implementing the merger. In particular, as Mr. Schweitzer haa expre11ed in his affidavit, Superior is concerned that, following closing, a number Of key ICG personnel would leave I CG to exploit financial incentives built Into their employment agreements; other key individuals would be likely to leave ICG due to the persisting uncertainty.
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SENT BY:SLJPERIOR PROPANE INC. ;12- 3-38 ;11=25AM :SUPERIOR PROPANE INC~ . .Vtl.. ), I :1,0 I; yt;r1r1 LJTill ~ . 314168630871;#14/21 •tV, JV I U I, " -4-v. Agpolntm1nt •• Int.rim Managers at ICG e. To addre81 this risk, Mr. Schweitzer, on behalf of Superior. propoees immediately putting effective and knowledgeable leadership In place at ICG to support the company in meeting it& financial goals, promoting its competttiveneas. and ensuring effective management during the period of any Interim period. The new interim management would be comprised of two lndMcluala presently employed by Superior. Including me. who, prior to Joining ICG, would terminate their employment and sever all employment ties to Superior.
9. I understand and accept that following my termination from Superior, I will have no '8gally enforceable guarantee or right of re-employment at Superior In the event that, ultimat8'y. Superior is not permitted to fully implement its acquisition of ICG. or I am otherwise terminated by ICG. 0 10. Following my termination from Superior,\ would be hired as Senior Vice President, Chief Operating Offtc:er of ICG, on lhe following terme.
(i) an annual salary of $1651000; (ll) an incentive bonus that Is tied to maintaining and Improving operating cash flow will be Implemented in 1999 and focus on retaining value in ICG. The value of the Incentive could range from 0-1000A> of baae salary depending on financial performance; (Ill) beneflts equivalent tc those currently offered to ICG executives; and 0 (iv) a se\'erance package equal to two year1' salary in the event of conetructive dismissal or upon a change of oantrol of ICG If tt is sold
to a third party.
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SENT BY:SLJPERIOR PROPANE INC ·12 3 aa ll,L.-.. _,, 1,,v : .v""" ~ .. :. ' • - - 0 ;11:26AM :SUPERIOR PROPANE INC-. 914168630871:~15/21 -5-11. I further understand and accept that, once at ICG, I will be prohibited from communicating any confidential information to any pef$0n net Involved In the management or operatione of ICG and, for greater certainty, 1 will be prohibited from disclosing any confidential inform&tiof'.l to Superior.
12. a have been managing SupetiOr's business operations in weetem Canada since November 1997. I betieve that I have the know1edge and experience in the propane industry to manage ICG effectfvely. lam confident that, under my management, ICG will continue as a vigorous competitor to Superior, thereby preserving, If not enhancing, its value.
13. I swear this affidavit in response to the application of the Director far an interim order pursuant to s. 100 of the Act enjoining the closing of the Proposed Acquisition and in support of the hold-11psrate order proposed by Superior and attached as Exhibit Q ·u· to Mr. Schweitzer's affidavit, and for no other or improper purpose. ) ) ) ) ) ) PETER 0. JONES Commiaaioner for taking AffidaVlts, ate. 6i. Ut. e"°"i .. "" •J ~-tA.... . fHERESA R. REISCH 0 viV COMMISSION EXPIRES 1JN JUNE ,, I 1999 Docl: !D'7561.2