Securities Law & Instruments


Headnote

Subsection 59(1) of Schedule 1 of the Regulation - issuer is exempt from the paymentof the fee otherwise payable pursuant to section 7.7 of Rule 45-501 and subsection23(1) of Schedule 1 in respect of a distribution of securities in an amalgamation madein reliance on the exemption in Section 2.8 of Rule 45-501 - two of three amalgamatingcompanies wholly owned by common parent and only assets being shares in thirdcompany.

Statutes Cited

Securities Act, R.S.O. 1990, c.S.5, as am.

Regulations Cited

Regulation made under the Securities Act, R.R.O., Reg. 1015, as am., ss. 23(1) and59(1) of Schedule 1.

Policies Cited

Section 2.8 of Rule 45-501

IN THE MATTER OF THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5, AS AMENDED (the "Act")

AND

IN THE MATTER OF R.R.O. 1990,
REGULATION 1015, AS AMENDED (the "Regulation")

AND

IN THE MATTER OF
ROTHMANS INC.

ORDER

UPON the application of Rothmans Inc. ("Rothmans") to the Ontario SecuritiesCommission (the "Commission") pursuant to subsection 59(1) of Schedule I of theRegulation for an exemption from the fees required to be paid under section 7.7 of Rule45-501 and subsection 23(1) of Schedule I of the Regulation for a distribution of securitiesmade in reliance on the exemption in Section 2.8 of Rule 45-501 promulgated pursuant tothe Act;

AND UPON it being represented to the Commission by Rothmans that:

1. Rothmans, a reporting issuer in each of the provinces of Canada, is indirectlyowned as to 71.2% by Rothmans International Holdings II B.V. ("RothmansInternational").

2. Rothmans is not in default under the Act.

3. On June 7, 1999, British American Tobacco p.l.c. and Rothmans International B.V.merged their international tobacco businesses. As a consequence of the merger,Rothmans International, as part of the merged business group, is seeking to sell itsinterest in Rothmans in accordance with the terms of a consent order agreed withthe Canadian Competition Bureau and issued by the Competition Tribunal onAugust 6, 1999.

4. It is currently contemplated that the disposition of Rothman International's interestin Rothmans will occur by way of a secondary offering of common shares ofRothmans, to be qualified for distribution in each of the provinces of Canada by thefiling and clearance therein of a short form prospectus of Rothmans.

5. It is desirable for the sale to take place after the amalgamation (the"Amalgamation") of Rothmans with Rothmans International's intermediate holdingcompanies, Rothmans Partnership in Industry Canada Ltd. ("RPII Canada") andRothmans of Canada Limited ("ROC") and continuation as one corporation ("NewRothmans").

6. RPII Canada is a private company whose only material asset is its 100% ownershipinterest of ROC. RPII Canada has no material liabilities and carries on no activebusiness. RPII Canada is a direct, wholly-owned subsidiary of RothmansInternational.

7. ROC is a private company that is the registered holder of 3,923,803 commonshares of Rothmans, representing approximately 71.2% of the outstanding commonshares of Rothmans. ROC has no other material assets, no material liabilities andcarries on no active business. ROC is a direct, wholly-owned subsidiary of RPIICanada.

8. In connection with the Amalgamation, each holder of common shares of Rothmans,other than ROC, will receive common shares of New Rothmans in proportion totheir relative holdings prior to the Amalgamation in exchange for their Rothmansshares. The share capital of ROC and RPII Canada will be cancelled. RothmansInternational will receive common shares of New Rothmans in proportion to theholdings of ROC prior to the Amalgamation in exchange for ROC's Rothmans'shares.

9. The articles, by-laws, authorized share capital, registered office and business ofNew Rothmans will be identical to the articles, by-laws, authorized share capital,registered office and business of Rothmans. The transaction proposed is similarto a short form amalgamation in that, essentially, one company survives theamalgamation with no change in outstanding share capital or otherwise.

10. Under subsection 18(1) of Schedule I of the Regulation, Rothmans Internationalwill pay a fee to the Commission upon the sale of its common shares of NewRothmans pursuant to a short form prospectus of Rothmans equal to 0.04% of theproceeds realized in Ontario (less 10%).

11. But for this order, New Rothmans would be required to pay an additional feepursuant to section 7.7 of Rule 45-501 and subsection 23(1) of Schedule 1 of theRegulation equal to 0.02% of the aggregate value of securities "distributed" inconnection with the Amalgamation, which fee would apply to all securities of NewRothmans which are issued on the Amalgamation. If the amalgamation was a shortform amalgamation, no fee would be payable.

IT IS ORDERED THAT pursuant to subsection 59(1) of Schedule I of theRegulation, New Rothmans is exempt from the requirement to pay the fees specified insection 7.7 of Rule 45-501 and subsection 23(1) of Schedule I of the Regulation inconnection with the Amalgamation.

January 11th, 2000.

"J. A. Geller"      "Robert W. Korthals"