Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - Section 233 of theRegulation - asset backed securities offering - issuer is connected and related issuer ofsole underwriter - no independent underwriter involvement subject to certain conditions,including participation of an arm's length party in the negotiations of the material termsof the offering, the drafting of the prospectus, the due diligence relating to the offering,the pricing of the securities and the disclosure of such information and the relationshipbetween the issuer and the underwriter in the prospectus.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am. (the "Act").

Regulations Cited

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

Rules Cited

In the Matter of the Limitation on a Registrant Underwriting Securities of a RelatedIssuer or Connected Issuer of the Registrant (1997), 20 OSCB 1217.


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

AND

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

AND

IN THE MATTER OF
MERRILL LYNCH MORTGAGE LOANS INC. AND MERRILL LYNCH CANADA INC.

MRRS DECISION DOCUMENT


WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of Ontario, British Columbia, Alberta, Quebec and Newfoundland (the"Jurisdictions") has received an application from Merrill Lynch Mortgage Loans Inc. (the"Issuer") and Merrill Lynch Canada Inc. ("ML Canada", and together with the Issuer, the"Filers") for a decision pursuant to the securities legislation of the Jurisdictions (the"Legislation") that the provision contained in the Legislation mandating independentunderwriter involvement in a distribution of securities of an issuer (the "IndependentUnderwriter Requirement") shall not apply to ML Canada in respect of the proposedoffering (the "Offering") of Bell Mobility Corporate Centre Pass-Through Certificates Series2000-BMCC (the "Certificates") by means of a short form prospectus (the "Prospectus")to be filed in each of the Provinces and Territories of Canada;

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

AND WHEREAS it has been represented by the Filers to the Decision Makers that:

1. the Issuer was incorporated under the laws of Canada on March 13, 1995; theauthorized share capital of the Issuer consists of an unlimited number of commonshares, of which 1,000 common shares are issued and outstanding, all of which areheld by Merrill Lynch & Co., Canada Ltd. ("ML & Co."); the head office of the Issueris located in Toronto, Ontario;

2. the Issuer is a reporting issuer in each of the Provinces of Canada and is not indefault of any of the requirements of the Legislation;

3. the Issuer was formed solely to act as a vehicle for issuing asset backed securities;to date, the Issuer has facilitated the issuance of 6,000,000 S&P 500 BULLS,approximately $163,874,000 Commercial Mortgage Pass-Through Certificates,Series 1998 - Canada 1, $214,079,251, Commercial Mortgage Pass-ThroughCertificates, Series 1999 - Canada 2, $220,000,000 1st Street Tower Pass-ThroughCertificates Series 1999 - 1STT and approximately $227,324,000 CommercialMortgage Pass-Through Certificates, Series 2000 - Canada 3 (collectively, the"Asset-Backed Securities Transactions");

4. as a special purpose corporation, the Issuer currently has no assets or liabilitiesother than its rights and obligations under certain material contracts executed inconnection with the Asset-Backed Securities Transactions and does not carry onany activities except to act as an issuer corporation from time to time;

5. the proceeds of the Offering will finance the purchase by the Issuer of a firstmortgage bond (the "First Mortgage Bond") from a special purpose trust to benamed Bell Mobility Corporate Centre Trust (or such other name as may bedesignated) (the "Seller"); each Certificate will represent an undivided co-ownershipinterest in the First Mortgage Bond; the First Mortgage Bond will be deposited withthe Montreal Trust Company as custodian;

6. pursuant to the terms of an agreement to be entered into between the Seller, H&RRealty Corporation ("HRRC") and H&R Mississauga Complex Limited Partnership("H&R Mississauga"), the Seller will agree to loan the proceeds of the sale of theFirst Mortgage Bond to HRRC, as nominee on behalf of H & R Mississauga, whichwill use such loan to finance the development of an office building and associatedfacility located in Mississauga, Ontario (the "Project"); Bell Mobility Cellular Inc. hasagreed to enter into a lease of the Project for an initial term of at least 18 years;

7. HRRC is an Ontario corporation, all of the shares of which are owned by H&RMississauga, an Ontario limited partnership; HRRC is an independent arm's lengthparty of ML Canada;

8. ML Canada was continued and amalgamated under the laws of Canada onAugust 26, 1998; the authorized share capital of ML Canada consists of anunlimited number of common shares; all of the issued and outstanding commonshares of ML Canada are owned by ML & Co.; the head office of ML Canada islocated in Toronto, Ontario;

9. ML Canada is not a reporting issuer in any Canadian province;

10. ML Canada is registered as a dealer in the categories of "broker" and "investmentdealer" and is a member of the Investment Dealers Association of Canada;

11. ML Canada took the initiative in organizing the business of the Issuer and as suchmay be considered to be a "promoter" of the Issuer within the meaning of theLegislation;

12. ML Canada administers the ongoing operations and pays the ongoing operatingexpenses of the Issuer, but receives no additional compensation for these services,and the officers and directors of the Issuer are employees of ML Canada;

13. the Issuer is a related issuer (as defined in the Legislation) of ML Canada;

14. the Issuer will agree to issue and ML Canada will agree to purchase 100% of theCertificates to be distributed under the Offering;

15. the Prospectus, and preliminary short form prospectus (the "PreliminaryProspectus") to be filed in connection with the Offering, shall contain the followinginformation:

(a) on the front page of each such document,

(i) a statement in boldface type setting out that the Issuer is a relatedissuer of ML Canada;

(ii) a summary explaining the basis upon which the Issuer is a relatedissuer of ML Canada; and

(iii) a cross-reference to the applicable section in the body of thePreliminary Prospectus and Prospectus, as the case may be, wherefurther information concerning the relationship between the Issuerand ML Canada is provided;

(b) in the body of each such document,

(i) a statement setting out that the Issuer is a related issuer of MLCanada;

 

(ii) a summary explaining the basis upon which the Issuer is a relatedissuer of ML Canada, including details of the common ownership byML & Co. and other aspects of the relationship between ML Canadaand the Issuer,

(iii) disclosure regarding the involvement of ML Canada in the decisionto distribute the Certificates and the determination of the terms of theOffering,

(iv) details of the financial benefits described in paragraph 17 belowwhich ML Canada will receive from the Offering, and

(v) disclosure detailing the participation of HRRC in the Offering asdescribed in paragraph 16 below;

16. all material terms of the First Mortgage Bond, the Certificates and the Offering willbe negotiated on an arm's length basis between HRRC and ML Canada; HRRC willparticipate in the drafting of the Preliminary Prospectus, and will participate in thedrafting of the Prospectus, the due diligence relating to the Offering and in thepricing of the Offering;

17. the only financial benefits which ML Canada will receive as a result of the Offeringare the normal arm's length underwriting commission, a structuring fee, andreimbursement of its expenses associated with the Offering;

AND WHEREAS pursuant to the MRRS this Decision Document evidences thedecision 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 theIndependent Underwriter Requirement shall not apply to ML Canada in connection withthe Offering provided that:

(a) HRRC participates in the Offering as stated in paragraph 16 above; and

(b) HRRC's participation in the Offering and the relationship between the Issuerand ML Canada are disclosed in the Preliminary Prospectus and theProspectus as stated in paragraph 15 above.

August 11th, 2000.

"J. A. Geller"      "R. Stephen Paddon"