Lakeport Brewing Income Fund and Labatt Brewing Company Limited - MRRS Decision

Headnote

Mutual Reliance Review System -- OSC Rule 61-501 -- take-over bid and subsequent business combination -- Rule 61-501 requires sending of information circular and holding of meeting in connection with second step business combination -- target's declaration of trust provides that a resolution in writing executed by unitholders holding more than 66 2/3% of the outstanding units is valid and binding as if such voting rights had been exercised in favour of such resolution at a meeting of Unitholders -- second step business combination to be subject to minority approval, calculated in accordance with section 8.2 of Rule 61-501 -- relief granted from requirement that information circular be sent and meeting be held

Applicable Legislative Provisions

OSC Rule 61-501 Insider Bids, Issuer Bids, Business Combinations and Related Party Transactions, ss. 4.2 and 9.1.

March 22, 2007

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO AND QUEBEC

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF THE

TAKE-OVER BID FOR

LAKEPORT BREWING INCOME FUND BY

LABATT BREWING COMPANY LIMITED

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the "Decision Maker") in each of Ontario and Quebec (the "Jurisdictions") has received an application from Labatt Brewing Company Limited (the "Applicant"), in connection with a take-over bid (the "Offer") for Lakeport Brewing Income Fund ("Lakeport"), for a decision pursuant to the securities legislation of the Jurisdictions (the "Legislation") that the requirements of the Legislation that:

(1) a Compulsory Acquisition or Subsequent Acquisition Transaction (each as defined below), as applicable, be approved at a meeting of the unitholders of Lakeport (the "Unitholders"); and

(2) an information circular be sent to the Unitholders in connection with either a Compulsory Acquisition or Subsequent Acquisition Transaction, as applicable;

be waived (collectively, the "Requested Relief").

Under the Mutual Reliance Review System ("MRRS") for Exemptive Relief Applications:

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) this MRRS Decision Document evidences the decision of each Decision Maker.

Interpretation

Defined terms contained in National Instrument 14-101 - Definitions have the same meaning in this decision unless they are defined in this decision.

Representations

This decision is based on the following representations by the Applicant:

1. The Applicant was founded in London, Ontario in 1847 and exists under the Canada Business Corporations Act. The Applicant's registered office and principal executive office are located at Labatt House, Suite 299, 207 Queen's Quay West in Toronto, Ontario. The Applicant is not a reporting issuer. The Applicant is an indirect wholly-owned subsidiary of Companhia de Bebidas das Américas - AmBev, a publicly traded company (Bovespa and the New York Stock Exchange) based in Sao Paulo, Brazil, which is itself indirectly controlled by InBev S.A./N.V., a publicly traded company (Euronext: INB) based in Leuven, Belgium.

2. Lakeport is an unincorporated open-ended limited purpose trust established under the laws of the Province of Ontario on April 27, 2005 by declaration of trust, as amended and restated pursuant to an amended and restated declaration of trust dated June 21, 2005 (the "Declaration of Trust"). The head office of Lakeport is located at 201 Burlington Street East in Hamilton, Ontario. Lakeport is a reporting issuer in all of the provinces and territories of Canada and the outstanding units of Lakeport (the "Units") are listed and posted for trading on the Toronto Stock Exchange under the symbol "TFR.UN".

3. The Units are held by CDS Clearing and Depository Services Inc. in book-entry only form.

4. Pursuant to the take-over bid circular dated February 21, 2007 (the "Circular") mailed to the Unitholders and to holders of securities convertible into Units, in connection with the Offer:

(a) the Offer is for all of the outstanding Units at a price of $28.00 in cash per Unit;

(b) one of the conditions of the Offer is that the number of Units (including the Units held at the date of the expiry of the Offer by or on behalf of the Applicant and any of its affiliates) representing at least 66-2/3% of the outstanding Units on a fully-diluted basis shall have been validly deposited under the Offer and not withdrawn at the expiry of the Offer;

(c) if the conditions to the Offer are satisfied (or waived by the Applicant) and the Applicant takes up and pays for the Units deposited pursuant to the Offer, the Applicant may proceed with a compulsory acquisition of the Units not deposited to the Offer (a "Compulsory Acquisition") as permitted by Lakeport's Declaration of Trust for the same consideration per Unit as was paid under the Offer, if within 120 days after the date of the Offer, the Offer is accepted by Unitholders holding not less than 90% of the Units (other than Units held at the date of the Offer by or on behalf of the Applicant or an affiliate or an associate of the Applicant or persons acting jointly or in concert with the Applicant);

(d) in connection with either a Compulsory Acquisition, if available and if the Applicant elects to proceed thereunder, or a Subsequent Acquisition Transaction (as defined below), the Applicant currently intends to amend the Declaration of Trust by the Written Resolution (as defined below) to provide that non-tendering offerees will be deemed to have elected to transfer and to have transferred their Units to an offeror immediately on the giving of the offeror's notice prescribed by the Declaration of Trust notifying non-tendering offerees that, among other things, the offeror is entitled to acquire their Units by way of Compulsory Acquisition or Subsequent Acquisition Transaction, as applicable (as opposed to 21 days after sending of an offeror's notice, as currently provided) (the "Notice Amendment");

(e) if a Compulsory Acquisition as permitted under the Declaration of Trust is not available to the Applicant or the Applicant elects not to proceed under those provisions, the Applicant currently intends to acquire the Units not deposited to the Offer by:

i. causing the Declaration of Trust to be amended as permitted pursuant to its terms (the "Threshold Amendment") to provide that a Compulsory Acquisition may be effected if the Applicant and its affiliates, after take-up of and payment for the Units deposited under the Offer, hold not less than 66-2/3% of the Units calculated on a fully-diluted basis or to make such other amendment as is necessary and permitted under the Declaration of Trust, in order to provide for the acquisition of the Units not deposited to the Offer in each case at the same price as the price paid under the Offer (the acquisition following such Threshold Amendment being referred to herein as a "Subsequent Acquisition Transaction"); and

ii. proceeding with the Subsequent Acquisition Transaction in respect of the Units not deposited to the Offer as permitted by the Declaration of Trust as so amended;

(f) in order to effect either a Compulsory Acquisition, if available and if the Applicant elects to proceed thereunder, or a Subsequent Acquisition Transaction in accordance with the foregoing, rather than seeking the Unitholders' approval at a special meeting of the Unitholders to be called for such purpose, the Applicant intends to rely on section 11.10 of the Declaration of Trust, which specifies that a resolution in writing (the "Written Resolution") circulated to all Unitholders and executed by Unitholders holding more than 66-2/3% of the outstanding Units entitled to be voted on such resolution, if such resolution is a special resolution, is as valid and binding as if such resolution had been passed at a meeting of Unitholders duly called for the purpose; which Written Resolution will approve, among other things, the Threshold Amendment and the Notice Amendment and any Compulsory Acquisition or Subsequent Acquisition Transaction undertaken in accordance therewith, as applicable; and

(g) if the Applicant is unable to effect either the Compulsory Acquisition or the Subsequent Acquisition Transaction in the manner described above, the Applicant reserves the right, to the extent permitted by applicable law and subject to the terms and conditions of the Support Agreement made as of January 31, 2007 between Lakeport and the Offeror (a copy of which was filed on SEDAR on February 5, 2007), to (i) purchase additional Units in the open market or in privately negotiated transactions, in another take-over bid or exchange offer or otherwise or from Lakeport, or (ii) take no further action to acquire additional Units. Alternatively, the Applicant may sell or otherwise dispose of any or all Units acquired pursuant to the Offer.

5. Notwithstanding Section 11.10 of the Declaration of Trust, in certain circumstances the Legislation requires that the Compulsory Acquisition or the Subsequent Acquisition Transaction, as applicable, be approved at a meeting of Unitholders called for that purpose.

6. To effect either a Compulsory Acquisition or Subsequent Acquisition Transaction, as applicable, the Applicant will obtain minority approval, as that term is defined in the Legislation, calculated in accordance with the terms of Section 8.2 of Regulation Q-27 -- Respecting Protection of Minority Securityholders in the Course of Certain Transactions, and Section 8.2 of Ontario Securities Commission Rule 61-501 -- Insider Bids, Issuer Bids, Business Combination and Related Party Transactions (the "Minority Approval"), albeit not at a meeting of Unitholders, but by Written Resolution.

7. The offer and take-over bid circular provided to Unitholders in connection with the Offer contains all disclosure required by applicable securities laws, including without limitation the take-over bid provisions and form requirements of the securities legislation in the Jurisdictions and the provisions of Ontario Securities Commission Rule 61-501 relating to the disclosure required to be included in information circulars distributed in respect of business combinations.

Decision

Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.

The decision of the Decision Makers under the Legislation is that the Requested Relief is granted provided that Minority Approval shall have been obtained by Written Resolution.