MATERIAL CHANGE REPORT UNDER
SECTION 85 OF THE SECURITIES ACT (BRITISH COLUMBIA)
SECTION 146 OF THE SECURITIES ACT (ALBERTA)
SECTION 84 OF THE SECURITIES ACT (SASKATCHEWAN)
SECTION 75 OF THE SECURITIES ACT (ONTARIO)
SECTION 81 OF THE SECURITIES ACT (NOVA SCOTIA)
SECTION 76 OF THE SECURITIES ACT, 1990 (NEWFOUNDLAND)
ITEM 1. REPORTING ISSUER
Royal Group Technologies Limited (the "Company")
1 Royal Gate Boulevard
Vaughan, Ontario
L4L 8Z7
ITEM 2. DATE OF MATERIAL CHANGE
The date of the material change herein reported is February 25, 2004.
ITEM 3. PRESS RELEASE
A press release disclosing the material change was issued on February
25, 2004 in Toronto, Ontario and disseminated across Canada by CCN
Matthews.
ITEM 4. SUMMARY OF MATERIAL CHANGE
After the close of the markets on February 24, 2004, the Company was
informed by the Enforcement Branch of the Ontario Securities
Commission (the "OSC") that the Company should make public disclosure
of the existence of the OSC's investigation relating to the Company.
The Company understands that the investigation principally concerns
transactions between the Company and a St. Kitts resort which is
controlled by Mr. Vic De Zen, the controlling shareholder of the
Company. The OSC also informed the Company on February 25, 2004, that
the RCMP, along with Canada Customs Revenue Agency, is conducting its
own investigation.
After being advised in late December 2003 that the OSC was conducting
the investigation, the Company established a Special Committee of the
Board of Directors to deal with these matters consisting solely of
independent directors who have retained independent legal counsel and
forensic accountants. The Company has been fully cooperating with the
OSC and intends to continue to do so on a going forward basis.
ITEM 5. FULL DESCRIPTION OF MATERIAL CHANGE
Please see the press release attached hereto as Schedule "A".
ITEM 6. CONFIDENTIAL REPORT
Not applicable.
ITEM 7. OMITTED INFORMATION
No significant facts have been omitted from this report.
ITEM 8. SENIOR OFFICER
For further information, please contact:
Mark Badger
Vice President, Corporate Communications
Tel: (905) 264-0701
Fax: (905) 264-0702
ITEM 9. STATEMENT OF SENIOR OFFICER
The foregoing accurately discloses the material change referred to
herein.
DATED this 27th day of February, 2004 at Vaughan, Ontario.
ROYAL GROUP TECHNOLOGIES LIMITED
Per: /s/ Scott D. Bates
---------------------------
Scott D. Bates
General Counsel and
Corporate Secretary
SCHEDULE "A"
NEWS RELEASE TRANSMITTED BY CCNMatthews
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[ROYAL GROUP TECHNOLOGIES LOGO]
FOR: ROYAL GROUP TECHNOLOGIES LIMITED
TSX, NYSE SYMBOL: RYG
FEBRUARY 25, 2004 - 17:46 ET
ROYAL GROUP TECHNOLOGIES LIMITED
TORONTO, ONTARIO--Royal Group Technologies Limited ("Royal Group" or the
"Company") (RYG: TSX, NYSE) announced today that the Enforcement Branch of the
Ontario Securities Commission ("OSC") informed the Company yesterday afternoon
after the close of the markets that, based on the OSC's investigation relating
to the Company, including information recently obtained by the OSC, public
disclosure should be made of the existence of the investigation. The Company
understands that the investigation principally concerns transactions between the
Company and a St. Kitts resort development which was a purchaser of the
Company's products and services. The St. Kitts resort, which is controlled by
Mr. Vic De Zen, the controlling shareholder of the Company, purchased goods and
services from the Company over the past five years which the Company advises
have a value of approximately $32 million. The OSC also informed the Company
this morning that the RCMP, along with the Canada Customs Revenue Agency, is
conducting its own investigation.
In late December 2003, the Company was advised that the OSC was conducting the
investigation and the Company has been cooperating with the OSC and providing
information to the OSC regarding the Company's relationship with the St. Kitts
resort and past financial transactions between them. The Company established a
Special Committee of the Board of Directors in late December 2003 to deal with
those matters, consisting solely of independent directors who have retained
independent legal counsel and forensic accountants. The Company will continue to
cooperate fully with the OSC.
Royal Group Technologies Limited is a manufacturer of innovative, polymer-based
building products, serving the home improvement, consumer and construction
sectors of the market. The Company has extensive vertical integration, with
operations dedicated to provision of materials, machinery, tooling, real estate
and distribution services to its plants producing finished products. Royal
Group's manufacturing facilities are primarily located throughout North America,
with international operations in South America, Europe and Asia. Additional
investment information is available on Royal Group's web site at
www.royalgrouptech.com under the "Investor Relations" section.
The information in this document contains certain forward-looking statements
with respect to Royal Group, its subsidiaries and affiliates. These statements
are often, but not always made through the use of words or phrases such as
"expect", "should continue", "continue", "believe", "anticipate", "estimate",
"contemplate", "target", "plan", "budget", "may", "will", "schedule" and
"intend" or similar formulations. By their nature, these forward-looking
statements are necessarily based upon a number of estimates and assumptions
that, while considered reasonable by management, are inherently subject to
significant, known and unknown, business, economic, competitive and other risks,
uncertainties and other factors affecting Royal Group specifically or
its industry generally that could cause actual performance, achievements and
financial results to differ materially from those contemplated by the
forward-looking statements. These risks and uncertainties include fluctuations
in the level of renovation, remodeling and construction activity; changes in
product costs and pricing; an inability to achieve or delays in achieving
savings related to the cost reductions or revenues related to sales price
increases; the sufficiency of our restructuring activities, including the
potential for higher actual costs to be incurred in connection with
restructuring activities compared to the estimated costs of such actions; the
ability to recruit and retain qualified employees; the level of outstanding debt
and our current debt ratings; the ability to meet the financial covenants in our
credit facilities; changes in product mix; the growth rate of the markets into
which Royal Group's products are sold; market acceptance and demand for Royal
Group's products; changes in availability or prices for raw materials; pricing
pressures resulting from competition; difficulty in developing and introducing
new products; failure to penetrate new markets effectively; the effect on
foreign operations of currency fluctuations, tariffs, nationalization, exchange
controls, limitations on foreign investment in local business and other
political, economic and regulatory risks; difficulty in preserving proprietary
technology; adverse resolution of litigation and administrative and intellectual
property disputes; changes in environmental regulations; currency risk exposure
and other risks described from time to time in publicly filed disclosure
documents and securities commission reports of Royal Group and its subsidiaries
and affiliates. In view of these uncertainties we caution readers not to place
undue reliance on these forward-looking statements. Statements made in this
document are made as of February 25, 2004 and Royal Group disclaims any
intention or obligation to update or revise any statements made herein, whether
as a result of new information, future events or otherwise.
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FOR FURTHER INFORMATION PLEASE CONTACT:
ROYAL GROUP TECHNOLOGIES LIMITED
SCOTT D. BATES
GENERAL COUNSEL AND CORPORATE SECRETARY
(905) 264-0701 (905) 264-0702 (FAX)
OR
ROYAL GROUP TECHNOLOGIES LIMITED
MARK BADGER
VICE-PRESIDENT, MARKETING AND CORPORATE COMMUNICATIONS
(905) 264-0701 (905) 264-0702 (FAX)