B.C. clothiers hit the stock market

COMMENT

Judging by what we know already it’s going to be a rather busy week for Canadian retailers, specifically Vancouver-based retailers.

The big news is the pricing of the initial public offering by Aritzia. Originally it planned to sell 20 million shares in the $ 14 — $ 16 range. Now it plans to sell 25 million shares.

It will be a big week also for Peekaboo Beans, which defines itself as “a children’s lifestyle apparel brand that creates high- quality, ethically manufactured children’s playwear with the mission to empower ‘ free play’ in children, for their healthy growth and development.”

The company, formed by Traci Costa, has been around for a decade but is in a different league than Aritzia. Annual revenue is about $ 3.5 million, a fraction of the $542 million generated by Aritzia.

And it’s a different type of business, too: Peekaboo is a direct- sales retailer, selling through 1,000 play stylists. A direct-sales model represents “a low- cost growth strategy without the fixed structural costs that retail or e- commerce retailers must incur.”

Now it is also going public — but not in the traditional manner. Instead of filing a prospectus and raising capital, it is getting there by way of a reverse transaction with the public North Group Finance Ltd. The new firm is expected to start trading Wednesday. The transaction was announced in June and has been working its way through the regulatory and shareholder approval process. Peekaboo will raise capital via the sale of one million units at $1.05 per unit.

Peekaboo’s Costa said “going public allows our employees the opportunity to get in at the early stage of growth, as well as capitalize the business to build out Canada, and south of the border in the future.”

JUDGE EXPLAINS AOS RULING

About a week back Mr. Justice Macleod of the Court of Queen’s bench of Alberta gave an oral ruling on the plan of arrangement between Marquee Energy Ltd. and Alberta Oilsands Inc. That ruling decreed that contrary to the norm, shareholders of AOS must have a vote on the matter.

Now the same justice has released written reasons for that decision which has been termed precedent- setting and contrary to the normal practice for TSX-Venture-listed companies.

The decision was required because of the actions of Smoothwater Capital, the largest shareholder at AOS. The dissident was against AOS’s plan to acquire Marquee: instead it wanted AOS to distribute the cash to shareholders. Given its AOS ownership stake, Smoothwater was confident that a shareholder vote would reject the deal with Marquee.

In his ruling that an AOS shareholder vote was required, Justice Macleod said it was “abundantly clear from all the evidence” that the “essence” of the proposed transaction “before us is a merger of AOS and Marquee.” But he noted that the “interim application does not accomplish this intended purpose of combining the two entities.”

Justice Macleod was critical of the proposed deal’s structure between Marquee and AOS on another level: it was done to ensure AOS shareholders didn’t get a vote. After indicating that he was “not at all satisfied” that the Marquee/AOS arrangement has a “valid business purpose,” he added, “its only purpose is to deprive AOS shareholders … a shareholder vote on the amalgamation.”

What’s next? Marquee said it will appeal the ruling, while adjourning its special meeting to mid- October; AOS has been silent.