Management Agreement. Canadian-resident "Manager" will enter into the "Management Agreement" with the affiliated CBCA GP of two newly-formed LPs (Foreign LP and Canadian LP) pursuant to which the GP will delegate all its functions with respect to Foreign LP, including approving Investments and approving dispositions and the Manager will earn fees.
Original issue mezzanine debt. The LPs will invest primarily in "Mezzanine Debt" (i.e., privately placed debt of private companies that is typically subordinated to bank and institutional indebtedness and bears fixed or floating interest at a rate above traditional commercial lending rates, typically with a portion of the interest being paid currently and a portion being deferred) generally acquired on original issue, and related securities of persons resident in Canada and the United States. The Foreign LP's investments will be restricted to Mezzanine Debt and other qualified investments.
Foreign LP partners. None of the limited partner investors in Foreign LP will be related to, or affiliated with, any of the GP, the Manager or the Manager's indirect Canadian parent (Canco) and they will be non-residents. Canco will provide services of investment management employees to the Manager.
Ruling: that s. 115.2(2) will apply to the non-resident partners of Foreign LP.