Bell Canada International Inc. - MRRS Decision

Headnote

Mutual Reliance Review Systemfor Exemptive Relief Applications - Exemption granted from requirements in the legislation to disclose executive compensation andindebtedness of directors, executive officers and senior officersin connection with the mailing of an information circular fora special shareholders' meeting. Relief granted because theexcluded information had just been publicly disclosed in connectionwith the issuer's annual meeting, there had been no materialchange in the excluded information since it was publicly disclosed,and the excluded information was not relevant to the mattersunder consideration at the special meeting.

Ontario Statutes Cited

Ontario Regulations Cited

AND

AND

MRRS DECISION DOCUMENT

WHEREAS the Canadiansecurities regulatory authority or regulator (the Decision Maker)in each of British Columbia, Alberta, Saskatchewan, Ontario,Nova Scotia and Newfoundland and Labrador (the Jurisdictions)has received an application from Bell Canada International Inc.(BCI) for a decision under the Canadian securities legislationof the Jurisdictions (the Legislation) that BCI be exemptedfrom the requirement of the Legislation to include certain disclosurein the Information Circular (as defined below) regarding executivecompensation and indebtedness of directors, executive officersand senior officers (collectively, the Required Disclosure);

AND WHEREAS under theMutual Reliance Review System for Exemptive Relief Applications(the System), the Ontario Securities Commission is the principalregulator for this application;

AND WHEREAS BCI has representedto the Decision Makers that:

1. BCI is a reporting issuerin each of the provinces of Canada, was incorporated underthe Canada Business Corporations Act (CBCA) on January18, 1985 and is not in default of any of the requirementsof the Legislation. The common shares of BCI are dually listedon the Toronto Stock Exchange and on the NASDAQ National Marketunder the symbols "BI" and "BCICF" respectively.

2. BCE Inc. (BCE) owns througha wholly-owned subsidiary, or exercises control or directionover approximately 62.2% of the common shares of BCI.

3. BCI owns, develops andoperates advanced communications companies in markets outsideCanada, with a focus on Latin America. BCI holds the majorityof its investments through an indirect equity interest inTelecom Américas Ltd. (Telecom Américas). TelecomAméricas is a facilities-based communications companyformed under the laws of Bermuda on November 16, 2000 andis BCI's main asset. Telecom Américas was formed asa joint venture by BCI, América Móvil S.A. deC.V. (América Móvil) of Mexico and SBC International,Inc. (SBC) of the United States as a vehicle to expand theircollective presence within the Latin American telecommunicationsmarket. As of September 30, 2001, Telecom Américas,through its operating companies, served close to six millionsubscribers.

4. A reorganization of TelecomAméricas (the Reorganization) was completed on February8, 2002 after which BCI held, jointly with AméricaMóvil and SBC, an indirect 42% equity interest.

5. Shortly after the Reorganization,BCI completed its own recapitalization plan, which consistedof a series of transactions including a rights offering whichclosed on February 15, 2002.

6. Recent financial and economicdevelopments in Brazil have resulted in Telecom Américasexperiencing a liquidity crisis which BCI is unable to fund.Telecom Américas' lenders have asked that its outstandingshort-term bank debt be repaid or significantly reduced. Failureby Telecom Américas to pay down its short-term bankdebt, which totals US$254 million as at April 30, 2002, couldtrigger a cross-acceleration of : (1) BCI's outstanding indebtednessunder an amended and restated credit facility with a groupof secured lenders (the Amended and Restated Credit Facility);(2) its obligations under the high yield notes of TelecomAméricas issued pursuant to a prospectus dated September21, 1999; and (3) its guarantee obligations represented bythe promissory notes issued by Telecom Américas InvestmentsLtd., a wholly-owned subsidiary of Telecom Américas,in an aggregate principal amount of US$631.3 million in connectionwith the acquisition by Telecom Américas of a 100%economic interest in Tess S.A.

7. BCI does not have the capacityto provide further funding to Telecom Américas, whichplaces BCI in a precarious position with respect to its investmentin Telecom Américas. If BCI's partners in Telecom Américasprovide Telecom Américas with the funding it requiresin the short term to meet its obligations, and assuming BCIdoes not contribute its proportionate share of such funding,BCI's interest in Telecom Américas would be significantlydiluted. If, on the other hand, Telecom Américas' othershareholders do not provide the necessary funding, TelecomAméricas would become insolvent.

8. On May 31, 2001, BCI enteredinto a share purchase agreement in order for AméricaMóvil to purchase BCI's interest in Telecom Américasfor a total consideration of US$366 million. In addition,as part of the transaction, BCI will be released from contingentliabilities relating to Telecom Américas of approximatelyUS$250 million (the Telecom Américas Disposition).BCI does not believe that any other party would make a comparableoffer and it believes that the Telecom Américas Dispositionis beneficial for all of its stakeholders. The Telecom AméricasDisposition, together with the anticipated proceeds from thedisposition of BCI's remaining assets, Canbras CommunicationsCorp. and Axtel S.A. de C.V., would likely permit BCI to repayfully the secured lenders, and subject to the resolution ofcertain contingent claims against BCI, should permit BCI torepay its unsecured creditors and make a distribution to itsshareholders.

9. If the Telecom AméricasDisposition fails to close, BCI's ability to pay the unsecuredcreditors, including its holders of high yield notes, andpossibly to make a distribution to its shareholders couldbe jeopardized. BCI believes that the failure to close theTelecom Américas Disposition by August 9, 2002 wouldentitle the secured lenders to declare all outstanding indebtednessunder the Amended and Restated Credit Facility immediatelydue and payable and to immediately enforce their securityinterests pursuant to the agreement dated as of September17, 2001 concerning the pledge of the common shares of TelecomAméricas. The secured lenders would then be entitledto require América Móvil to purchase all ofthe Telecom Américas shares to which the secured lendersacquire title pursuant to the exercise of their rights assecured creditors. All this could lead to circumstances underwhich BCI would be forced to seek creditor protection in insolvencyproceedings, to the potential detriment of all BCI stakeholders.

10. As a result of existingand threatened litigation against BCI, any distributions tostakeholders (except to BCI's secured lenders under the Amendedand Restated Credit Facility) could be delayed for severalyears while such claims are being adjudicated. Accordingly,BCI is proposing, as part of an arrangement under section192 of the CBCA (the Arrangement), the creation of an orderlyand expeditious claims process to identify, adjudicate andresolve all contingent claims against BCI in a timely andfair manner within the Arrangement proceedings. Such a claimsprocess, if approved by the Court, would permit the resolutionof contingent claims against BCI to proceed in tandem withBCI's efforts to dispose of its remaining assets after theTelecom Américas Disposition.

11. BCI will seek its shareholders'approval of the proposed Arrangement under the CBCA and willprepare an information circular to be delivered to its shareholders(the Information Circular) in connection with a special meetingof BCI's shareholders to be held on July 12, 2002 (the SpecialMeeting). Also, BCI will seek Court approval in connectionwith the matters to be described in the notice of the SpecialMeeting and the Information Circular.

12. In absence of this DecisionDocument, the Legislation requires the Required Disclosureto be included in the Information Circular.

13. The Required Disclosureis not relevant to the matters being considered by the shareholdersat the Special Meeting since the directors and senior officersof BCI are not directly or indirectly parties to the Arrangementand neither their performance nor their compensation is tobe at issue at the Special Meeting.

14. The Required Disclosurewas provided in BCI's information circular dated March 11,2002 (the Annual Meeting Circular) that was mailed to shareholdersof BCI and filed in the Jurisdictions, in connection withBCI's annual general meeting held on May 1^st, 2002.There has been no change to the Required Disclosure as containedin the Annual Meeting Circular.

AND WHEREAS under theSystem, this MRRS Decision Document evidences the decision ofeach Decision Maker (collectively, the Decision);

AND WHEREAS each of theDecision Makers is satisfied that the test contained in theLegislation that provides the Decision Maker with the jurisdictionto make the Decision has been met;

THE DECISION of the DecisionMaker under the Legislation is that BCI be exempted from therequirement of the Legislation to include the Required Disclosurein the Information Circular, provided that:

(1) BCI includes a statementin the Information Circular informing BCI shareholders thatthe Required Disclosure can be found in the Annual MeetingCircular; and

(2) The Annual Meeting Circularis available on SEDAR.

June 14, 2002.

"Paul M. Moore"                    "LorneMorphy"