Clearnet Communications Inc. - MRRS Decision

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications - as a result of a take-over bid, issuerhas one beneficial holder of equity securities - following take-overbid, issuer entered into consent solicitation and tender offerand acquired over 99.9% of the principal amount of each classof debt security outstanding - following consent solicitationand tender offer, issuer has 54 beneficial holders of debt securities- indenture governing debt securities contain provision thatthe indenture may be amended with consent of not less than amajority in principal amount of each class of debt security- issuer deemed to have ceased to be a reporting issuer.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c.S.5, as am. s.83.

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
BRITISH COLUMBIA, ALBERTA,
SASKATCHEWAN, MANITOBA,
ONTARIO, QUEBEC, NOVA SCOTIA AND NEWFOUNDLAND AND LABRADOR

AND

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

AND

IN THE MATTER OF
CLEARNET COMMUNICATIONS INC.

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,Quebec, Nova Scotia and Newfoundland and Labrador (the "Jurisdictions")has received an application from Clearnet Communications Inc.("Clearnet") for a decision under the securities legislationof each of the Jurisdictions (the "Legislation") thatthe Clearnet be deemed to have ceased to be a reporting issueror the equivalent thereof under the Legislation;

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this application;

AND WHEREAS Clearnet has representedto the Decision Makers that:

1. Clearnet is a corporation continued underthe Canada Business Corporations Act (the "CBCA"),is a reporting issuer in each of the Jurisdictions, and is notin default of any of the requirements of the Legislation, otherthan its failure to file its interim financial statements asat, and for the financial periods ending, June 30, 2001, andSeptember 30, 2001.

2. Clearnet's head office is located at 200Consilium Place in Scarborough, Ontario.

3. Clearnet does not intend to seek public financingby way of an offering of its securities.

4. Clearnet has authorized capital consistingof an unlimited number of Class A non-voting shares (the "ClassA Shares"), 1,851,376,400 Class B shares (the "ClassB Shares"), 18,513,764 Class C subordinate voting shares(the "Class C Shares"), 18,513,764 Class D subordinatevoting shares (the "Class D Shares") and an unlimitednumber of preference shares. Clearnet's issued and outstandingcapital consists of 44,603,286 Class A Shares, 321,236,012 ClassB Shares, 6,092,591 Class C Shares, 7,790,741 Class D Shares,5,500,000 Series 1 preference shares (the "Series 1 PreferenceShares"), 209,215 Series 2 preference shares (the "Series2 Preference Shares") and 811,606 Series 3 preference shares(the "Series 3 Preference Shares," and together withthe Series 1 Preference Shares and the Series 2 Preference Shares,the "Preference Shares").

5. On September 20, 2000 TELUS Corporation ("TELUS")made offers (the "Take-over Bid") to acquire all ofthe outstanding shares of Clearnet. On October 20, 2000, TELUSacquired all of the Class B Shares, Class C Shares and ClassD Shares and in excess of 95% of the outstanding Class A Sharesof Clearnet pursuant to the Take-over Bid. On January 12, 2001TELUS completed the acquisition of the remaining Class A Sharesthrough the compulsory acquisition provisions of the CBCA.

6. As of December 13, 2000 Clearnet had $149,616,000principal amount of 6.75% Convertible Debentures (the "ConvertibleDebentures") and 573,923 Warrants to purchase Class A Shares(the "Warrants") outstanding. On December 15, 2000,TELUS made offers (the "Subsequent Offers") to purchaseall of the outstanding Convertible Debentures and Warrants.On January 9, 2001, TELUS acquired in excess of 98% of the principalamount of Convertible Debentures outstanding and on January18, 2001 TELUS acquired in excess of 99% of the outstandingWarrants pursuant to the Subsequent Offers. In February 2001,TELUS completed the acquisition of the remaining Warrants andConvertible Debentures through the compulsory acquisition provisionsof the CBCA.

7. Subsequent to the Take-over Bid and the SubsequentOffers, Clearnet amended its articles of incorporation to createthe Preference Shares. All of the outstanding Preference Shareswere issued to subsidiaries of TELUS and are owned, indirectly,by TELUS.

8. During the period from December 1995 to April1999 Clearnet distributed over $2 billion principal amount ofsenior discount notes (the "Senior Discount Notes")to the public in Canada and the United States pursuant to prospectusesand registration statements, in underwritten offerings. TheSenior Discount Notes are non-convertible securities.

9. On May 11, 2001 Clearnet commenced tenderoffers and consent solicitations (the "Tender Offers")in respect of the Senior Discount Notes which then remainedoutstanding. The Tender Offers expired at midnight on June 8,2001 and pursuant to the Tender Offers Clearnet repurchased99.9% of each of four (4) classes of Senior Discount Notes.

10. The respective Indentures (the "Indentures")governing the Senior Discount Notes contained a number of restrictivecovenants and provisions, including a covenant (the "DisclosureCovenant") that Clearnet would file with the Trustee ofthe Senior Discount Notes (the "Trustee") and provideregistered holders of the Senior Discount Notes, after the filingthereof with the United States Securities and Exchange Commission(the "SEC"), copies of Clearnet's annual reports,information, documents and other reports (collectively, the"Reports") that Clearnet is required to file withthe SEC pursuant to Section 13(a) or 15(d) of the United StatesSecurities and Exchange Act of 1934 (the "Exchange Act"),notwithstanding that the Clearnet may not be required to remainsubject to the reporting requirements of the Exchange Act.

11. The Indentures contained a covenant (the"Delivery Covenant") that Clearnet would provide theTrustee with audited financial statements for each fiscal yearand statements of income for each fiscal quarter (collectively,the "Financial Statements"), and that the Trusteewould, while such statements were current, maintain custodyof same and make them available for inspection by registeredholders of Senior Discount Notes.

12. Other than the Disclosure Covenant and theDelivery Covenant, the Indentures do not contain any provisiongiving registered or beneficial holders of Senior Discount Notesany right to receive, review or examine financial or other reportssimilar to the Reports or the Financial Statements.

13. The Indentures contain a provision (the"Amending Provision") that, with the consent of notless than a majority in principal amount of each class of SeniorDiscount Notes, the Trustee may enter into a supplemental indenturefor the purpose of adding provisions to, changing in any manneror eliminating any provisions of the respective Indentures ofeach class of Senior Discount Notes, or modifying in any mannerthe rights of the registered holders of such class of SeniorDiscount Notes.

14. The Indentures do not contain any provisionrequiring, and have not ever contained a provision requiring,Clearnet to file any financial or other information with a DecisionMaker in any Jurisdiction. The Indentures do not contain anyprovision requiring, and have not ever contained any provisionrequiring, Clearnet be a reporting issuer or the equivalentin any Jurisdiction.

15. The Tender Offers included a Consent Solicitation,the purpose of which was to amend or eliminate substantiallyall of the restrictive provisions or covenants contained inthe Indentures including the Disclosure Covenant and the DeliveryCovenant (the "Proposed Amendments").

16. The Tender Offers stated that:

(i) the Proposed Amendments would eliminatesubstantially all of the restrictive provisions and covenantsof each Indenture, including the Disclosure Covenant and theDelivery Covenant, which might have an adverse effect on thevalue of the Notes; and

(ii) if the Tender Offers were consummated andthe Proposed Amendments were adopted and became operative, Clearnetintended to terminate its registration under the Exchange Act,at which time it will no longer be obligated under the Indenturesor applicable law to file Reports with the SEC or to furnishcopies thereof to registered holders of Senior Discount Notes,which would adversely affect the amount of publicly availableinformation about Clearnet and might affect the liquidity andtrading prices of the Senior Discount Notes.

17. Upon consummation of the Tender Offers:

(i) the Indentures were amended and substantiallyall restrictive provisions and covenants (other than the covenantsto pay principal and interest) of the Indentures, includingthe Disclosure Covenant and the Delivery Covenant, were eliminatedin accordance with the Amending Provision;

(ii) Clearnet no longer provides Reports toholders of the Senior Discount Notes, as contemplated in theDisclosure Covenant, and does not file those reports with theSEC;

(iii) Clearnet no longer provides the FinancialStatements to the Trustee, as contemplated in the Delivery Covenant;and

(iv) Clearnet terminated its registration underthe Exchange Act.

18. To the best information and belief of Clearnet,Clearnet currently has 16 beneficial holders of the Senior DiscountNotes resident in Ontario, 15 beneficial holders (other thanTELUS) of Senior Discount Notes resident in British Columbia,12 beneficial holders of Senior Discount Notes resident in Alberta,9 beneficial holders of Senior Discount Notes resident in Quebec,1 beneficial holder of Senior Discount Notes resident in Manitoba,and 1 beneficial holder of Senior Discount Notes resident inNewfoundland. These beneficial holders of Senior Discount Noteshold an aggregate of approximately $1.55 million principal amountof Senior Discount Notes, which is less than one tenth of onepercent (0.1%) of the original outstanding principal amountof the Senior Discount Notes.

19. As a result of the Take-over Bid, the SubsequentOffers and the compulsory acquisition procedures, all of theissued and outstanding securities of Clearnet, other than theSenior Discount Notes, are owned, directly or indirectly, byTELUS.

20. Clearnet ceased to be a registrant withthe SEC on January 12, 2001 and was removed from NASDAQ at thattime. The Class A Shares were delisted on The Toronto StockExchange on February 12, 2001. No securities of Clearnet, includingdebt securities, are listed or quoted on any exchange or marketin Canada or elsewhere.

AND WHEREAS under System, this MRRSDecision Document evidences the decision of each Decision Maker(collectively, the "Decision");

AND WHEREAS each Decision Maker is ofthe opinion the test contained in the Legislation that providesthe Decision Maker with the jurisdiction to make the Decisionhas been met;

THE DECISION of the Decision Makers pursuant to the Legislationis that Clearnet is deemed to have ceased to be a reportingissuer or the equivalent thereof under the Legislation.

April 22, 2002.

"Theresa McLeod"      "Lorne Murphy"