West Fraser Timber Co. Ltd. - MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- Relief granted from the requirement to file certain financial statements with a business acquisition report provided that the business acquisition report will include, or incorporate by reference, the financial statements pertaining to the acquired business that were included in two recent final prospectuses.

Ontario Statutes Cited

National Instrument 51-102 -- Continuous Disclosure Obligations, Part 8.

National Instrument 44-101 -- Short Form Prospectus Distributions.

December 29, 2004

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA, SASKATCHEWAN, MANITOBA, ONTARIO,

QUEBEC, NEW BRUNSWICK, NOVA SCOTIA AND NEWFOUNDLAND

AND LABRADOR (THE JURISDICTIONS)

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM FOR

EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

WEST FRASER TIMBER CO. LTD. (THE FILER)

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from the Filer for

(a) a decision under the securities legislation of the Jurisdictions (the Legislation) exempting the Filer from the requirement that certain financial statements prescribed by Section 8.4 of National Instrument 51-102 Continuous Disclosure obligations (NI 51-102) be filed with the business acquisition report to be prepared by the Filer in connection with the Filer's acquisition of Weldwood of Canada Limited (Weldwood) and

(b) in Quebec, for a revision of the general order that will provide the same result as an exemption order.

Under the Mutual Reliance Review System for Exemptive Relief Applications

(a) Alberta 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 NI 14-101 - Definitions - have the same meaning in this decision unless they are defined in this decision.

In this decision,

(a) Acquisition means the purchase by the Filer of the only issued and outstanding share of Weldwood of Canada Limited for a purchase price of approximately CDN$1.26 billion,

(b) Equity Offering means the offering of 5,852,000 subscription receipts for a total gross proceeds of CDN$275,044,000,

(c) Debt Offering means the offering of CDN$150,000,000 principal amount of 4.94% senior unsecured debentures, and

(d) NI 44-101 means National Instrument 44-101 - Short Form Prospectus Distributions.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer was amalgamated under the Company Act (British Columbia).

2. The Filer's head office is located at Suite 1000, 1100 Melville Street, Vancouver, British Columbia, V6E 4A6.

3. The Filer is a reporting issuer, or the equivalent, in each of the Jurisdictions and, to the best of its knowledge, is currently not in default of any applicable requirements under the securities legislation thereunder.

4. On July 21, 2004 International Paper Company and the Filer signed an acquisition agreement which provided for the Acquisition.

5. On July 30, 2004, the Filer filed a preliminary short form prospectus in all provinces in connection with the Equity Offering.

6. On August 12, 2004, the Filer filed its final prospectus in connection with the Equity Offering.

7. On August 24, 2004, the Filer closed the Equity Offering.

8. On October 5, 2004, the Filer filed a preliminary prospectus in all provinces in connection with the Debt Offering.

9. On October 12, 2004, the Filer filed its final prospectus in connection with the Debt Offering.

10. On October 19, 2004, the Filer closed the Debt Offering.

11. Proceeds from the Equity Offering and the Debt Offering are intended to partially satisfy the purchase price for the Acquisition.

12. The Acquisition is expected to close late in the fourth quarter of 2004.

13. NI 44-101 sets out the financial statements required to be included or incorporated by reference in a short form prospectus, including financial statements relating to "significant acquisitions".

14. Pursuant to NI 44-101, the above prospectuses included financial statements pertaining to Weldwood and the required pro forma financial statements relating to the Acquisition. In addition the prospectus incorporated by reference the following financial statements:

(a) the audited comparative consolidated financial statements of the Filer for the years ended December 31, 2003 and 2002, together with notes thereto and the auditor's report thereon;

(b) the unaudited consolidated financial statements of the Filer for the six-month periods ended June 30, 2004 and 2003.

15. The prospectus filed for the Debt Offering included the following:

(a) the unaudited pro forma condensed consolidated balance sheet of the Filer as at June 30, 2004;

(b) the unaudited pro forma condensed consolidated statement of earnings of the Filer for the six-month period ended June 30, 2004;

(c) the unaudited pro forma condensed consolidated statement of earnings of the Filer for the year ended December 31, 2003;

(d) the compilation report on the unaudited pro forma condensed consolidated financial statements of the Filer;

(items (a) through (d) are collectively the Prospectus Pro Forma Statements), and

(e) the audited financial statements of Weldwood for the years ended December 31, 2003 and 2002;

(f) the unaudited financial statements of Weldwood for the six-month periods ended June 30, 2004 and 2003; and

(g) the review and engagement report on the unaudited financial statements for the six-month periods ended June 30, 2004 and 2003

(items (e) through (g) are collectively the Prospectus Weldwood Statements);

16. The Acquisition constitutes a "significant acquisition" for the Filer for the purposes of NI 51-102, and the Filer will be required to file a business acquisition report within 75 days after the closing of the Acquisition pursuant to Sections 8.2 and 8.5(1)2 of NI 51-102.

17. Pursuant to Section 8.4 of NI 51-102, the business acquisition report must be accompanied by certain financial statements, including:

(a) the audited financial statements of the Filer for the years ended December 31, 2003 and 2002, together with notes thereto and the auditor's report thereon;

(b) the unaudited financial statements of the Filer for the nine-month periods ended September 30, 2004 and 2003;

as well as:

(c) the unaudited pro forma balance sheet of the Filer as at September 30, 2004;

(d) the unaudited pro forma income statement of the Filer for the nine-month period ended September 30, 2004;

(e) the unaudited pro forma income statement of the Filer for the year ended December 31, 2003;

(f) the compilation report on the unaudited pro forma financial statements of the Filer;

(g) the audited financial statements of Weldwood for the years ended December 31, 2003 and 2002;

(h) the unaudited financial statements of Weldwood for the nine-month periods ended September 30, 2004 and 2003; and

(i) the review and engagement report on the unaudited financial statements for the nine-month periods ended September 30, 2004 and 2003.

(items (c) through (i) are collectively called the BAR Financial Statements).

18. Although compliance with the financial statement requirements in NI 44-101 does not necessarily satisfy the financial statement requirements in Section 8.4 of NI 51-102, updated pro forma or Weldwood financial statements would not be materially different from the Prospectus Pro Forma Statements and the Prospectus Weldwood Statements currently available.

19. Weldwood is a private company and separate financial statements prepared in accordance with Canadian Generally Accepted Accounting Principles are not prepared for its operations as a matter of course.

20. The Prospectus Pro Forma Statements and the Prospectus Weldwood Statements have been included in two publicly available prospectuses over the last several months (the pro forma statements included in the prospectus for the Debt Offering were slightly different from those included with the prospectus for the Equity Offering).

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 an exemption from the requirement to file the BAR Financial Statements with the Filer's business acquisition report to be filed in connection with the Acquisition is granted so long as:

1. the Filer files, with its business acquisition report, the Prospectus Pro Forma Statements and the Prospectus Weldwood Statements; and

2. the Acquisition is completed on or before December 31, 2004.