Securities Law & Instruments


Mutual Reliance Review System for ExemptiveRelief Applications -- take-over bid offers and auditor's consent-- applicant required to provide an auditor's report as partof the take-over bid circular -- auditors were Arthur Anderson-- Arthur Anderson ceased practising public accounting and nolonger consents to the use of previously issued auditors' reports-- applicant's inability to obtain a consent letter from ArthurAnderson an exceptional circumstance beyond Applicant's control-- in the absence of a consent from Arthur Anderson, applicantincluded in the take-over bid circular certain prominent disclosure-- applicant exempt from the consent requirement in connectionwith the take-over bid offers.

Applicable Statutory Provision

Securities Act, R.S.O. 1990, c. S.5,as amended, s. 104(2)(c).

Applicable Regulatory Provision

Ontario Regulation 1015 -- General Regulationmade under the Securities Act, R.R.O. 1990, Reg. 1015, as amended,s. 196.
















WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,Québec, Nova Scotia, and Newfoundland and Labrador (the"Jurisdictions") has received an application fromRussel Metals Inc. ("Russel"), for a decision pursuantto securities legislation of the Jurisdictions (the "Legislation"),in connection with a take-over bid (the "Offers")dated May 15, 2003 made by Russel and/or its wholly-owned subsidiary,Russel Acquisition Inc. ("RAI", and collectively withRussel, the "Offerors") to acquire all of the issuedand outstanding shares (the "Shares") and debentures(the "Debentures", and collectively with the Shares,the "Securities") of Acier Leroux Inc./Leroux SteelInc. ("Leroux Steel"), that Russel be exempt fromthe requirement in the Legislation to include a consent of LerouxSteel's former auditors, Arthur Andersen LLP ("Arthur Andersen"),to the incorporation by reference of the auditors' report ofArthur Andersen on the financial statements of Leroux Steelfor the fiscal year ended November 3, 2001 in the take-overbid circular (the "Circular") accompanying and formingpart of the Offers (the "Consent Requirement");

AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this application;

AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 or in Quebec Commission Notice 14-101;

AND WHEREAS the Offerors having representedto the Decision Maker that:

1. Russel is a corporation existing underthe laws of Canada. Russel is a reporting issuer or the equivalentin each of the Jurisdictions and its common shares are listedand posted for trading on The Toronto Stock Exchange (the"TSX").

2. Leroux Steel is a corporation existingunder the Companies Act (Québec).

3. The Offerors have made the Offers to acquireall of the issued and outstanding Securities, including anyShares issuable on the exercise of stock options or on theconversion of Debentures, for consideration consisting of:

(a) in the case of the Shares, at the optionof each holder of Shares, (x) $6.30 cash, (y) $4.60 cashand one-third of one common share of Russel or (z) 1.2353common shares of Russel for each Share, subject to prorationin the event that the aggregate number of common sharesof Russel otherwise issuable to all holders of Shares wouldexceed 3,612,672; and

(b) in the case of the Debentures, cashin an amount equal to par plus accrued and unpaid interest.

4. As Russel is offering to issue common sharesas part of the consideration payable under the Offers, itis required to include in the Circular the information prescribedby the form of prospectus appropriate for Russel.

5. Russel is qualified pursuant to section2.2 of National Instrument 44-101 ("NI 44-101")to file a short-form prospectus in each of the Jurisdictions.

6. The proposed acquisition of the outstandingSecurities of Leroux Steel constitutes a "significantprobable acquisition" by Russel within the meaning ofsection 1.4 of NI 44-101. Accordingly, Russel is requiredto include or incorporate by reference in the Circular, amongother things:

(a) the audited consolidated financial statementsof Leroux and the notes thereto as at and for the fiscalyear ended November 2, 2002, together with the report ofthe auditors thereon (collectively, the "Leroux 2002Audited Financial Statements"); and

(b) the financial information as at andfor the fiscal year ended November 3, 2001 as containedin the audited consolidated financial statements of Lerouxand the notes thereto as at and for the fiscal year thenended, together with the report of the auditors thereon(collectively, the "Leroux 2001 Audited Financial Statements").

7. The audit report in respect of the Leroux2002 Audited Financial Statements was delivered by Deloitte& Touche LLP. The consent of Deloitte & Touche LLPas required by the Legislation and subsection 10.4(1) of NI44-101 has been filed together with the Circular.

8. The audit report in respect of the Leroux2001 Audited Financial Statements was delivered by ArthurAndersen.

9. On June 3, 2002, Arthur Andersen ceasedpractising public accounting. As a result, Arthur Andersenwill no longer consent to the use of previously issued auditors'reports for purposes of securities filings.

10. The inability of Russel to obtain a consentletter from Arthur Andersen to the inclusion of its auditreport on the Leroux 2001 Audited Financial Statements isan exceptional situation that is outside the control of Russel.

11. The Canadian Securities Administrators(the "CSA") issued CSA Staff Notice 43-304, 62-302and 81-308 Prospectus Filing Matters -- Arthur AndersenLLP Consent (the "Andersen Notice") to provideguidance to issuers with respect to the inclusion in, amongother things, securities exchange take-over bid circularsof financial statements previously audited by Arthur Andersen.

12. The Andersen Notice states that CSA staffwill consider applications from issuers to waive the requirementto obtain the consent of Arthur Andersen for audit reportsrelating to financial statements incorporated by referencein a prospectus, provided that the prospectus includes certainprominent disclosure.

13. In the absence of a consent from ArthurAndersen, Russel has included in the Circular the disclosureset forth in Appendix A hereto and included a cross-referenceto such disclosure in the relevant paragraph of the list ofdocuments incorporated by reference in the Circular.

AND WHEREAS pursuant to the System, thisMRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers underthe Legislation is that Russel is exempt from the Consent Requirementin connection with the Offers.

June 11, 2003.

"Paul M. Moore"
"Harold P. Hands"



"Note with Respect to Arthur AndersenLLP

Arthur Andersen LLP is no longer engaged inthe practice of public accounting in Canada. Accordingly, RusselMetals is unable to obtain the consent of Arthur Andersen LLPwith respect to the incorporation by reference in the Circularof the auditors' report of Arthur Andersen LLP on the consolidatedfinancial statements of Leroux as at and for the fiscal yearended November 3, 2001. Generally, in accordance with applicablesecurities legislation, holders of securities may only exercisea statutory right of action against a person or company thathas prepared a report, opinion or statement that is includedin a take-over bid circular if that person or company has fileda consent in respect of such report, opinion or statement andsuch right of action may only be exercised in respect of thereport, opinion or statement that has been made by such personor company. As a result, the absence of a consent from ArthurAndersen LLP to the inclusion in the Circular of its auditors'report may limit the statutory right of action of Securityholdersagainst Arthur Andersen LLP. Russel Metals is not aware of theextent to which there may be assets available, if any, to satisfyany judgment against Arthur Andersen LLP."