,,,,,, SENT BY=SUPERIOR PROPANE INC. :12- 3-98 :11=23AM :SUPERIOR PROPANE INC-. - IJC.v, J . .,,:; 1.vur1r1 uno - ~ THE COMPETITION TRIBUNAL IN lME MAn"ER OF THE COMPETT110N ACT. R.S.C. c.C-34 1 u amended, and the Compotltlon Tribunal tes:OTTAW;,·~~-#T3{;;;)· SOR/94-290, as amended (the 11 Ru/e8'); AND IN THI! MATT!R OF an inquiry pur1uant to 1ectlon 10(1)(b) of the Competition Act relating to the proposed acquisition of ICG Propane Inc. by Superior Propane Inc.:
AND 'N THE MATTER OF an .Application by the Director of I nvestlgation and Research for an interim order pursuant to section 100 of the Competition Act.
BE1WEEN: ·' •r THE DIRECTOR OF INVESTIGATION AND RESEARCH, " ' (J -and-
SUPERIOR PROPANE INC., PETRO-CANADA INC., THE CHANCELLOR HOLDINGS CORPORATION and ICG PROPANE INC.
Respondents
AFFIDAVIT OF GEOFFREY N. MACKEY 0
I, GEOFFREY N. MACKEY, of the City of Calgary, In the Province of Alberta, MAKE OATH ANO SAY:
914168630871:;;: 2121 l'HJ. 'O'C r. ~ ~ Trlbun I File No. CT-98/2 COMPEJITION TRIBUNAL TR:BUNAL DE LA CONCURRENa p f I L E LDEC 3 1998 ~ ~ D I REGISTRAR - RfGISTRAiRE T
SENT BY:SLJPERIOR PROPANE INC. : 12- 3-98 : 11 :23AM :SUPERIOR PROPANE 11\·c... V1..11. ~· 1,.7u · .v1;;1.i 1111.i \I -2-I. lntroduc;tion 1. I am the Pre1ident and Chief Operating Offfcer of Superior Propane Inc. ("Superior") and have held this position since July 24, 1997. Aa such, I have personal knowledge of the matters set out herein. Unless otherwise atated, an atatementa made in
this affidavit are baaed on my knowledge, Information and belief, due to my position with superior. VVhere I have been provided with information, I believe auch information to be true.
2. At Superior, I am resporualbl.e for managing all aspects of a $650 mitllon public propane marketing and distribution company. Since becoming President and Chief Operating Officer of Superior in 1997, in addition to my day-to-day duties, I have been responsible for the following major initiatives: rebuilding senior corporate leadership and field leadership teams; introducing a new salary administration and career progression aystem; Introducing a new pricing strategy; introducing a new customer growth 1tn1tegy 0 1 involving Improved brand awareness and the Introduction of call centre tools. Prtor to becoming President of Superior, I was Senior Vice President cf the company beginning in 1996. Before that, from 1994 to 1996. I was employed by Noreen Energy Resources Limited. Superior's owner until 1997, as Vice President cf Human Resources and Administration. reporting directly to the CEO. Attached hereto as Exhibit "A• la a copy of my current resume.
II. lb• Pmp••d Ac;gultltlon 0 3. Pursuant to a Share Purchase Agreement entered into on July 20, 1998 (the "SPA"), Superior agreed to acquire from The Chanoellor Holdings Corporation, a wholly. owned indirect subsidiary of PetfO..Canada, all of the ii&ued and outstanding shares of ICG Propane Inc. ("ICG'1. another wholly-owned indirect subsidiary of Petro-Canada, for a purchase price of $175 mlllion (the "Proposed Acquisition").
'Doc:f: 509225.l
a11168630871.· = ·~,,.1 · n u "T rr u,:.. 1 .. \,I. JI.I r U o , 1
-3-4. The SPA anticipated a closing cf the Propoaed Acquisition on October 30, 1998, and expressly provided that, In any event. If the closing had not occurred by December 15, 1998, Petro-Canada would be free to walk away from the Proposed Acqula\tlon. At the same time, Superior is obli;ed, under the SPA and the accompanying mutual covenant aide-letter, to use its best efforts to close the Proposed Acquieition by Oecembar 15, 1998, failing which it may be liable to ICG for damages. If the transaction does not close by December 15, 1998, Superior will lose its right to purchase the shares cf ICG and its opportunity to realize the conalderable efficiencies from the merger of Its operation• wtth ICG's operations.
Ill. Tbt Dlmctor'• Appllcatlon 5. The Director seeks to enjoin the closlng of the Proposed Acquisition for a period of 21 days, which, if granted, would extent to December 25, 1998; i.e., a date after 0 December 15, 1998, the last possible date on whlch the Proposed Acquisition can cloee pursuant to the SPA and related agreements.
IV. &uperiq(• PrppQltd Hpld.Sep•rate Arrangem1ot 6. 1h ave read the affidavit of Mark Schwettzer and I understand that It Is being filed with the Tribunal in response to the Oirector'a application for an order pursuant to s. 100 of the Act enjoining the dosing of the Proposed Acquisition. and in support of closing the Proposed Acquisition under the 18rma propCled by Superior ae eat out in the draft hold. 0 separate Order attached to Mr. Schweitzer's affidavit a1 Exhibit "U". 7. Superior is very concerned that the value of ICG will be deeply eroded if the Tribunal permits the Proposed Acquisition to close yet prohibits Superior from implementing the merger. In particular, as Mr. Schweitzer has expressed in hts affidavit.
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.4. Superior is concerned that, fellowing closing, a number CJf key ICG personnel would leave ICG tc exploit financial incentives built into their employment agreement&; ottier key lndlvidua11 would be likely to leave ICG due to the persisting uncertalnty.
V. Appojnb1J1nt 11 lnt@dm M1n191ra et ICG 8. To address this risk, Mr. Schweitzer, on behalf cf Superior, proposes immediately putting effective and knowledgeable leadership In place at ICG to support the company in meeting il$ financial goal&, promoting its competitiveness. and ensuring effedlve management during the penod of any interim period. The new interim management would be comprised of two Individuals 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. J wlll Q have no legally enforceable guarantee or right of re-employment at Superior in the event that, ultimately, Superior is not permitted to fully implement Its acquiattlon of ICG, or I am otherwise terminated by ICG.
10. Following my termination from Supericr, I would be hired as President and Chief Executive Officer of ICG, on the following terms:
(Q an annua1 salary of S21 O,DOO; (10 an Incentive bonus that ie tied to maintaining and improving operating cash flow will be implemented in 1999 and focus on retaining value In 0 ICG. The value of the Incentive could range from 0-100% of baae salary depending on flnancial performance; (iii) benefits equivalent to those currently offered to ICG executives; :;md Docf.:509225.2
, ..... ""'W'. 314168630871;~ 5121 lim '• I I
SENT BY:SLJP : E " R O IO R PROPANE INC. ;12- 3-98 :11:24AM :SUPERIOR PROPANE JN·c~ lit:,\,, J. i .V/llY• :lllU I.I 914168630871:# 6/21 llV, JU I\, i , I J. -5-(iv) a $everance package equal to two years' salary in the event of constructtve diamiual or upon a change of control of ICG. if it is sold to a third party.
11. As President and Chief Executive Officer of ICG, • would also have a seat on ICG's board of directors.
12. I further understand and accept that, once at ICG, t will be prohibited from communicating any confidential information to any person not involved in the management operations of lCG and, for greater certainty, I wiU be prohibited from disacaing any confidential information to Superior.
13. I have been managing all aspecta of Superio~s business operations since 1gg5_ I believe that I have the know~ge and experience In the propane induatry to manage )CG effectively. I am confident that. under my management. ICG wlll continue as 0 a vigorous competitor to Superior, thereby preserving, if not enhancing. Its value. 14. I swear thia affidavit In response to the application of the Director for an interim order pursuant to s. 100 of the Act enjuinlng the closing of the Propoaed Acquisition and in support of the hold-eparate order proposed by Superior and attached as Exhibit .. U" to Mr. Schweitzer's affidavit, and for no o1her or Improper purpose.
SWORN BEFORE ME at the City of ) Calgary, In 1he Province of Alberta, } this s rd day of December, 1998 ) ) 0 ) Commi1Sioner for taking Affidavit&, etc. i"' 1'(a. '"°" '" C.& • t AUit. ! c::\. THERESA R. REISCH MY COMMISSION EXPIRES Doc-: !092.%5.i ON JUNE 11, 1999