George Weston Limited et al. - MRRS Decision

Headnote

ApplicableOntario Statutes

ApplicableOntario Regulations

ApplicableOntario Rules

INTHE MATTER OF

THESECURITIES LEGISLATION OF ONTARIO,

ALBERTA,QUEBEC AND NEWFOUNDLAND

AND

INTHE MATTER OF

THEMUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS

AND

INTHE MATTER OF

GEORGEWESTON LIMITED

AND

INTHE MATTER

OFRBC DOMINION SECURITIES INC.,

TDSECURITIES INC., BMO NESBITT BURNS INC.,

CIBCWORLD MARKETS INC., MERRILL LYNCH CANADA INC.,

NATIONALBANK FINANCIAL INC. AND SCOTIA CAPITAL INC.

MRRSDECISION DOCUMENT

WHEREASthe local securities regulatory authority or regulator (the"Decision Maker") in each of Ontario, Alberta, Quebec and Newfoundland(the "Jurisdictions") has received an application from RBC DominionSecurities Inc. ("RBCDS"), TD Securities Inc. ("TDSI"), BMONesbitt Burns Inc. ("Nesbitt"), CIBC World Markets Inc. ("CIBCWM"),Merrill Lynch Canada Inc. ("Merrill"), Scotia Capital Inc. ("Scotia")and National Bank Financial Inc. ("NBF" and, collectively withRBCDS, TDSI, Nesbitt, CIBCWM, Merrill and Scotia, the "Filers")for a decision pursuant to the securities legislation of theJurisdictions (the "Legislation") that the requirement (the"Independent Underwriter Requirement") contained in the Legislationwhich restricts a registrant from acting as an underwriter inconnection with a distribution of securities of an issuer bymeans of a prospectus, where the issuer is, in connection withthe distribution, a "connected issuer" (or the equivalent) ofthe registrant, unless a portion of the distribution at leastequal to that portion underwritten by non-independent underwritersis underwritten by at least one independent underwriter, shallnot apply in respect of a proposed distribution (the "Offering")of preferred shares (the "Shares") of George Weston Limited("Weston") to be qualified for distribution by a short formbase shelf prospectus of Weston dated October 4, 2001 (the "ShelfProspectus"), as supplemented by a prospectus supplement (the"Prospectus Supplement") describing the specific terms of theOffering (the Shelf Prospectus and the Prospectus Supplementare collectively referred to as the "Prospectus");

ANDWHEREAS pursuant to the Mutual Reliance Review Systemfor Exemptive Relief Applications (the "System"), the OntarioSecurities Commission is the principal regulator for this application;

ANDWHEREAS Weston and the Filers have represented to theDecision Makers that:

1.Each of the Filers is registered under the Legislation as adealer in the categories of "broker" and "investment dealer"or equivalent categories and none of the Filers are in defaultin respect of any of the requirements thereunder.

2.Weston is a corporation incorporated under the laws of Canadaon January 27, 1928 and amalgamated under the Canada BusinessCorporations Act effective January 1, 1989. Weston's registeredoffice is located at 22 St. Clair Avenue East, Toronto, OntarioM4T 2S7.

3.Weston carries on business primarily in Canada and the UnitedStates directly and indirectly through its subsidiaries andthrough its Food Processing and Food Distribution operatingsegments. Weston's Food Processing segment is a major participantin the North American baking and dairy industries. Weston'sFood Distribution segment operates through Loblaw CompaniesLimited, the largest food distributor in Canada. Weston's consolidatednet sales for its fiscal year ended December 31, 2000 amountedto $22.3 billion and its consolidated net earnings for thatperiod were $481 million. As at December 31, 2000, the consolidatedassets of Weston were $11.4 billion and its shareholders' equitywas $2.9 billion.

4.The common shares of Weston are listed on The Toronto StockExchange.

5.Weston has a market capitalization of approximately $13.5 billion.

6.Weston is a reporting issuer under the Legislation and is notin default of any requirements of the Legislation.

7.It is anticipated that Weston will enter into an underwritingagreement (the "Agreement") with the Filers and certain otherunderwriters (the "Underwriters"), immediately prior to thetime of filing the Prospectus Supplement, whereby Weston willagree to sell and the Underwriters will agree to purchase theShares.

8.RBCDS is proposing to act as the lead underwriter in connectionwith the Offering.

9.Weston has entered into a credit facility agreement dated July25, 2001 with a syndicate of financial institutions, which includeRoyal Bank of Canada ("Royal"), Canadian Imperial Bank of Commerce("CIBC"), Bank of Montreal ("BMO"), Merrill Lynch Capital CanadaInc. ("ML Capital"), National Bank of Canada ("NBC"), Bank ofNova Scotia ("BNS") and Toronto-Dominion Bank ("TD") (collectively,the "Lenders"), for a credit facility of approximately $3 billionmaturing in three portions on April 25, 2002, July 25, 2002and October 25, 2002 (the "Credit Facility"). The Credit Facilityprovides for advances for the purpose of Weston's acquisitionof the stock of Bestfoods Baking Co., Inc. and certain trade-marksused in the business of Bestfoods Baking for a purchase priceof U.S. $1.765 billion and for the payment of costs, fees andother expenses incurred by Weston in connection with the purchase.In addition, the Credit Facility provides for a revolving 364-dayoperating line facility of $312.7 million maturing July 25,2002 and subject to renewal at that date. Pursuant to the CreditFacility, the commitments of Royal, CIBC, BMO, ML Capital, NBC,BNS and TD are $199 million, $238 million, $199 million, $199million, $199 million, $199 million and $199 million, respectively,being a total commitment of $1.432 billion on the part of theLenders, collectively. There is no security for the indebtednessunder the Credit Facility; there are, however, guarantees providedby two wholly-owned subsidiaries of Weston. In addition to aproportionate participation in the operating line facility underthe Credit Facility, the Lenders have provided additional creditlines in a total amount of approximately $125 million to Weston.

10.As at November 15, 2001, Weston had borrowings of approximately$1.551 billion outstanding under the Credit Facility, includinga total amount of $706 million on the part of the Lenders, collectively.Weston is in compliance with the terms of the Credit Facilityand is not in financial difficulty.

11.RBCDS is a wholly-owned subsidiary of Royal, Nesbitt is a wholly-ownedsubsidiary of an indirect majority owned subsidiary of BMO,CIBCWM is a wholly-owned subsidiary of CIBC, TDSI is a wholly-ownedsubsidiary of TD, NBF is a wholly-owned indirect subsidiaryof NBC, Scotia is a wholly-owned subsidiary of BNS and Merrillis an affiliate of ML Capital.

12.Pursuant to the Agreement, the Filers may underwrite a portionof the aggregate amount of Shares pursuant to the Offering thatis greater than would otherwise be permitted by the Legislation.

13.The terms, structuring and pricing of the Offering will be determinedsolely by negotiation between Weston and the Underwriters. Noneof the Lenders will play any role in those determinations ordecisions. The net proceeds of the Shares sold under the Offeringwill be added to the general funds of Weston and used to repaymaturing commercial paper, to refinance other indebtedness,including repayment of a portion of the indebtedness outstandingunder the Credit Facility to all members of the syndicate offinancial institutions including the Lenders on a pro rata basis,and for general corporate purposes. The use of proceeds willbe disclosed in the Prospectus.

14.The Prospectus will contain the information required by AppendixC to proposed National Instrument 33-105 (Underwriting Conflicts)(the "Proposed National Instrument").

15.In connection with the Offering Weston may be a "connected issuer"(or the equivalent) of the Filers (as defined in the Legislation).Weston is not, and will not be, a "related issuer" of the Filers(as defined in the Proposed National Instrument).

AND WHEREAS pursuant to the System this MRRS DecisionDocument evidences the decision of each Decision Maker (collectively,the "Decision");

ANDWHEREAS each of the Decision Makers is satisfied thatthe test contained in the Legislation that provides the DecisionMaker with the jurisdiction to make the Decision has been met;

THEDECISION of the Decision Makers pursuant to the Legislationis that the Independent Underwriter Requirement shall not applyto the Filers in connection with the Offering provided that:

(a) at the time of the Offering, Weston is not a "related issuer"(or the equivalent) of the Filers as defined in the ProposedNational Instrument; and

(b) the prospectus contains disclosure of the relationship betweenWeston, the Filers and the Lenders as would be required by AppendixC of the Proposed National Instrument.

November26, 2001.

"RobertW. Davis"       "Robert W. Korthals"