Catalyst Capital Group Inc. achieved a small victory in its campaign to block a takeover of Hudson’s Bay Co. on Wednesday, winning an opportunity to pursue its case in front of the Ontario Securities Commission.

After nearly three hours of arguments, the OSC granted Catalyst standing in the case, deciding it was in the public interest to go ahead with a hearing on Catalyst’s application to stop or delay a $10.30-per-share takeover offer from chairman Richard Baker’s group of shareholders.

In remarks Wednesday, Catalyst cast itself as a deep-pocketed defender of its fellow minority shareholders, railing against what it viewed to be flawed privatization process conducted by a “neutered” special committee of the board of directors.

“For at least six months, the investing public has been kept in the dark,” Catalyst lawyer Adam Chisholm told the OSC’s three-person panel. “Many minority shareholders will not have the sophistication or the resources to bring an application to the commission. I’m thinking about retail investors who own shares of this company.”

Commission vice-chair Grant Vingoe announced his decision in a short statement after the panel deliberated during a 20-minute recess.

The Baker group warned against granting Catalyst standing, arguing it would water down a provision that allows third parties to bring applications before the commission in matters of public interest. Typically, only commission staff bring matters before the commission.

“Staff is the protector of capital markets, not Catalyst,” Baker group lawyer Eliot Kolers told the OSC, pointing to Catalyst’s push to buy up shares after the takeover bid was announced.

“Part of the integrity of the capital markets is not having the commission be used by a self-interested applicant of this nature.”

But commission staff, represented by Charlie Pettypiece, agreed with giving Catalyst standing, arguing that the matter raised “fundamental securities law issues.”

Catalyst, HBC’s largest minority shareholder, has signalled it has enough support to block the deal in a shareholder vote scheduled for Dec. 17. It has also floated its own bid to buy HBC at $11 per share.

On Wednesday, HBC lawyer Seumas Woods questioned the timing of Catalyst’s application, so close to next week’s vote.

“They’ve left it very late in the day,” he said, calling Catalyst’s position “long on rhetoric … short on substance.”

Prominent proxy advisors have also weighed in on the saga, including Glass Lewis & Co., which recommended on Wednesday that shareholders vote in favour the Baker group offer. Institutional Shareholder Services, however, recommended that shareholders vote against the deal in a report on Friday.

Vingoe, the OSC vice-chair, challenged HBC’s criticisms of the last-minute nature of Catalyst’s request for a hearing. HBC complained Catalyst didn’t request a hearing for weeks following HBC’s release of a management circular on the deal. But Vingoe pointed to an HBC news release late on Friday night, which updated HBC’s official account on how the deal came together. The release gave additional information about how the special committee waived a standstill provision to allow shareholder Fabric Luxembourg Holdings S.a.r.l. to join the Baker group’s bid.

By updating its account of the deal, HBC was essentially restating its circular. So while it was released in mid-November, Vingoe said, “it’s only complete very recently.”

The hearing starts on Thursday with Catalyst’s cross-examination of David Leith, chair of the HBC special committee.

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