Securities Law & Instruments

Headnote

MRRS - Mutual Reliance Review System for Exemptive Relief Applications - Issuer is a"connected issuer" but not a "related issuer" of registrants that are to act asunderwriters in a proposed distribution of securities of the Issuer - Issuer is not a"specified party" as defined in Draft Multi-Jurisdictional Instrument 33-105 UnderwriterConflicts - Registrants underwriters exempted from independent-underwriterrequirements, provided that, at the time of the distribution, the issuer is not a "specifiedparty" as defined in the Instrument, and, in the case of each registrant, is not a relatedissuer.

Applicable Ontario Statutes

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

Applicable Ontario Regulations

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

Applicable Ontario Rules

In the Matter of the Limitations on a Registrant Underwriting Securities of Related Issueror Connected Issuer of the Registrant, (1997) 20 OSCB 1217, as varied by (1999) 22OSCB 6295

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

AND

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

AND

IN THE MATTER OF
RBC DOMINION SECURITIES INC., BMO NESBITT BURNS INC., CIBC WORLD MARKETS INC., MERRILL LYNCH CANADA INC., SCOTIA CAPITAL INC.,NATIONAL BANK FINANCIAL INC., TD SECURITIES INC., GOEPEL McDERMID INC. AND ARC ENERGY TRUST

MRRS DECISION DOCUMENT


WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of British Columbia, Newfoundland, Ontario and Québec (the"Jurisdictions") have received an application from RBC Dominion Securities Inc. ("RBCDS") for a decision pursuant to the securities legislation of the Jurisdictions (the"Legislation") that the requirements contained in the Legislation for:  

(i) at least 50% of an offering of securities to be underwritten by independentunderwriters; and

(ii) the largest portion of an offering of securities underwritten by an independentunderwriter to be not less than the largest portion of the offering underwritten byany non-independent underwriter,

where the offering is otherwise being underwritten by underwriters in respect of which theissuer is a "connected issuer" (the "Proportional Independent Underwriter Requirements"),or the equivalent, shall not apply to a proposed distribution of trust units (the "Trust Units") of ARC Energy Trust (the "Issuer") to be made by way of a short form prospectus (the"Offering");

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 Corporation has represented to the Decision Makers that:

1. The Issuer is an open-end investment trust created on May 7, 1996 under the lawsof the Province of Alberta pursuant to a trust indenture between ARC ResourcesLtd. and Montreal Trust Company of Canada, as trustee.

2. The Issuer is a reporting issuer under the securities laws of the Province of Ontarioand is a reporting issuer, or the equivalent thereof, in each of the other provincesof Canada. It is not in default of any of the requirements of the Legislation.

3. The Trust Units are listed and posted for trading on The Toronto Stock Exchange.

4. The Issuer has agreed to issue 6,500,000 Trust Units on a bought deal basis (foraggregate gross proceeds of $75,725,000) pursuant to an underwriting agreementdated September 20, 2000 (the "Underwriting Agreement") among the issuer andRBC Dominion Securities Inc., BMO Nesbitt Burns Inc., CIBC World Markets Inc.,Merrill Lynch Canada Inc., Scotia Capital Inc., National Bank Financial Inc., TDSecurities Inc. and Goepel McDermid Inc. (collectively, the "Underwriters"), and hasagreed to grant to the Underwriters an option for up to an additional 2,200,000Trust Units (such option to be exercised prior to the closing of the Offering).

5. The Underwriting Agreement provides, among other things, for the payment of acommission to the Underwriters equal to 5.0% of the gross proceeds of the Offering.Subject to a work fee payable to the lead underwriter (RBC Dominion SecuritiesInc.), the commission will be paid on a pro rata basis to the Underwriters basedupon the amount of Trust Units that the Underwriters have each agreed toundertake to sell on behalf of the Issuer.

6. The proportion of the Offering to be sold on behalf of the Issuer by the Underwriters(the "Syndicate Composition") pursuant to the Underwriting Agreement is asfollows:

(a) RBC Dominion Securities Inc. - 33%

(b) BMO Nesbitt Burns Inc. - 14%

(c) CIBC World Markets Inc. - 14%

(d) Merrill Lynch Canada Inc. - 14%

(e) Scotia Capital Inc. - 14%

(f) National Bank Financial Inc. - 5%

(g) TD Securities Inc. - 4%

(h) Goepel McDermid Inc. - 2%

7. The Issuer has undertaken in the Underwriting Agreement to file a preliminary shortform prospectus and a short form prospectus (collectively, the "Prospectuses") withthe securities regulatory authorities in each of the provinces of Canada and toobtain a receipt therefor in order to qualify the Trust Units for distribution in thoseprovinces. Alberta will be designated as the prime jurisdiction for filing of theProspectuses.

8. The Underwriters will not benefit in any manner from the Offering other than thepayment of the commissions described in paragraph 5 above. However, it iscurrently intended that the net proceeds of the Offering will be used to repay bankindebtedness, thereby making additional funds available for capital expendituresunder the Credit Facility (as hereinafter defined), as set out in paragraph 12 of thisMRRS Decision Document.

9. The Issuer has a $270 million credit facility (the "Credit Facility") currentlyestablished with three Canadian chartered banks (the "Banks"). Each of RBCDominion Securities Inc., CIBC World Markets Inc. and Scotia Capital Inc.(collectively, the "Bank-Affiliated Underwriters") are affiliated with one of the Banks.The Issuer currently owes the Banks approximately $188,000,000 under the CreditFacility.

10. The nature of the relationship among the Issuer and each of the Bank-AffiliatedUnderwriters and the Banks will be described in the Prospectuses.

11. The Prospectuses will contain a certificate signed by each Underwriter inaccordance with Item 20 of Appendix B of National Policy 47.

12. The net proceeds of the Offering will be used to finance the Issuer's 2000 capitalexpenditure program of $200 million by funding the remaining capital expendituresto be spent during 2000 and to repay outstanding indebtedness incurred to financecapital expenditures to date.

13. The Issuer is not, in connection with the Offering, a "related issuer" of any of theUnderwriters for the purposes of the Legislation or Proposed Multi-JurisdictionalInstrument 33-105 (the "Proposed Instrument"). However, by virtue of therelationships described above, the Issuer may, in connection with the Offering, bea "connected issuer" of the Bank-Affiliated Underwriters for the purposes of theLegislation and the Proposed Instrument.

14. The decision to undertake the Offering, including the determination of the terms ofthe distribution, was made through negotiation between the Issuer and theUnderwriters, without involvement of the Banks.

15. Merrill Lynch Canada Inc., BMO Nesbitt Burns Inc., National Bank Financial Inc.,TD Securities Inc. and Goepel McDermid Inc., each of which are independentregistrants, have participated in the due diligence carried out prior to the filing of theProspectuses and the negotiation of the price of the Trust Units.

16. The Underwriters, in connection with the Offering, will not comply with theproportional requirements of the Legislation.

17. The Prospectuses will comply with the Proposed Instrument. The Issuer is not infinancial difficulty and the Issuer is not a "specified party" as defined in theProposed Instrument.

AND WHEREAS pursuant to the System this MRRS Decision Document evidencesthe decision of each of the Decision Makers (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 the Bank-Affiliated Underwriters shall be exempted from the Proportional Independent UnderwriterRequirements contained in the Legislation in respect of the Offering.

September 29th, 2000.

"J. A. Geller"       "Howard I.Wetston"