Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - Issuer is a connectedissuer, but not a related issuer, in respect of registrants that are underwriters in proposeddistributions of medium term notes by the issuer - Underwriters exempt from theindependent underwriter requirement in the legislation provided that issuer not in financialdifficulty.

Applicable Ontario Regulations

Regulation made under the Securities Act, R.S.O. 1990, Reg. 1015, as am., ss. 219(1),224(1)(b) and 233.

Applicable Ontario Rules

Proposed Multi-Jurisdictional Instrument 33-105 Underwriting Conflicts (1998), 21 OSCB781, as amended (1999), 22 OSCB 149.


IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO, ALBERTA, BRITISH COLUMBIA AND NEWFOUNDLAND

AND

IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF
SOBEYS INC.

AND

IN THE MATTER OF
SCOTIA CAPITAL INC., BMO NESBITT BURNS INC., NATIONAL BANK FINANCIAL INC., TD SECURITIES INC. AND CIBC WORLD MARKETS INC.

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of Ontario, Alberta, British Columbia and Newfoundland (the"Jurisdictions") has received an application from Scotia Capital Inc. ("Scotia Capital"), BMONesbitt Burns Inc., National Bank Financial Inc., TD Securities Inc. and CIBC WorldMarkets Inc. (the "Applicant Underwriters") for a decision pursuant to the securitieslegislation of the Jurisdictions (the "Legislation") that the provision contained in theLegislation which restricts a registrant from participating in a distribution of securities ofa connected issuer or equivalent thereof (the "Underwriter Restriction") shall not apply tothe Applicant Underwriters in respect of proposed offerings in one or more series orissues (each, an "Offering" and collectively, the "Offerings") of medium term notes (the"Notes) of Sobeys Inc. ("Sobeys") to be made by means of a pricing supplement for eachparticular Offering (each, a "Pricing Supplement") to a short form shelf prospectus (the"Final Shelf Prospectus") expected to be filed during the week of June 19, 2000;

AND WHEREAS pursuant to the Mutual Reliance Review System for ExemptiveRelief Applications (the "System") the Ontario Securities Commission is the principalregulator for this application;

AND WHEREAS the Applicant Underwriters have represented to the DecisionMakers that:

1. Sobeys was incorporated on October 27, 1998 as a wholly-owned subsidiary ofEmpire Company Limited ("Empire") under the Companies Act (Nova Scotia);

2. Sobeys was formed to operate all of Empire's food distribution and food servicebusinesses carried on through Sobeys Capital Incorporated, including SobeysGroup Inc.;

3. Sobeys is a reporting issuer in each of the Jurisdictions and is not in default of anyrequirement of the Legislation;

4. on June 9, 2000, Sobeys filed a preliminary short form shelf prospectus (the"Preliminary Shelf Prospectus") in each of the Provinces of Canada in connectionwith the Offerings; the Offerings will be underwritten by the Applicant Underwritersled by Scotia Capital;

5. pursuant to the terms of a dealer agreement (the "Dealer Agreement") to be enteredinto between the Applicant Underwriters and Sobeys, Sobeys will agree to issueand sell and the Applicant Underwriters will agree to solicit from time to time, offersto purchase the Notes;

6. Sobeys is a party to two credit facilities (the "Credit Facilities") with a syndicate ofbanks; under one of the Credit Facilities, Sobeys was provided with a 364-dayrevolving operating facility in an amount of up to $300 million; under the otherCredit Facility, Sobeys was provided with a non-revolving credit facility in anamount up to $250 million;

7. the Applicant Underwriters are subsidiaries of Canadian chartered banks which arepart of a syndicate of banks which are lenders to Sobeys under the Credit Facilities;the Credit Facilities may be repaid through application of the proceeds of theOfferings; the syndicate of lender banks will not participate in the decision to makethe Offerings nor in the determination of the terms of the distribution or the use ofproceeds thereof; the Applicant Underwriters will not benefit in any manner from theOfferings other than the payment of their portion of the underwriting fee;

8. by virtue of the Applicant Underwriters' relationship with some of the bankscomprising the lending syndicate, each Applicant Underwriter is considered to bea connected issuer (or equivalent thereof) of Sobeys for the purposes of theLegislation;

9. pursuant to the Dealer Agreement, the Applicant Underwriters will purchase 100%of each Offering;

10. the nature of the relationship between Sobeys, Scotia Capital and The Bank ofNova Scotia is described in the Preliminary Shelf Prospectus; the informationspecified in Appendix C of proposed Multi-Jurisdictional Instrument 33-105 -Underwriting Conflicts ("MJI 33-105") will be disclosedin the Final Shelf Prospectus;

11. the Pricing Supplements will contain a certificate signed by Scotia Capital and eachof the Applicant Underwriters in accordance with the requirements of theLegislation;

12. Sobeys has received a preliminary BBB (stable) rating from Dominion Bond RatingService Limited and Canadian Bond Rating Services Inc. in respect of the Notes;

 

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

AND WHEREAS each of the Decision Makers is satisfied that the test contained inthe Legislation that provides the Decision Maker with the jurisdiction to make the Decisionhas been met;

THE DECISION of the Decision Makers pursuant to the Legislation is that theUnderwriter Restriction shall not apply to the Applicant Underwriters in respect of theOfferings provided that, at the time of any Offering:

a. Sobeys is not in financial difficulty and is not a specified party as that term isdefined in MJI 33-105; and

b. Sobeys is not a related issuer, as that term is defined in the Legislation and MJI 33-105, of any of the Applicant Underwriters.

June 23rd, 2000.

"J. A. Geller"      "Stephen N. Adams"