Securities Law & Instruments

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications - applicant intends to make an offer forall of its outstanding 7.5% debentures due December 1, 2003in exchange for 7.25% convertible unsecured subordinated debenturesdue June 30, 2008 - offer not an issuer bid because debt securitiesto be acquired are not convertible into securities other thandebt securities - relief from registration and prospectus requirementsgranted in connection with the issuance of the 7.25% debenturesprovided that the offer made by the applicant for the 7.5% debenturesis completed in accordance with all rules pertaining to issuerbids - first trade in respect of 7.25% debentures granted subjectto certain conditions.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 25(1), 53(1), 74(1).

Applicable Ontario Rules

Rule 61-501 - Insider Bids, Issuer Bids, GoingPrivate Transactions and Related Party Transactions.

Applicable Instrument

Multilateral Instrument 45-102 - Resale of Securities- s. 2.11.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN,

MANITOBA, ONTARIO, QUEBEC,NEW BRUNSWICK,

NOVA SCOTIA, PRINCE EDWARDISLAND, NEWFOUNDLAND AND LABRADOR,

YUKON, NORTHWEST TERRITORIESAND NUNAVUT

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

FIRST CAPITAL REALTY INC.

 

MRRS DECISION DOCUMENT

WHEREAS First Capital Realty Inc. (formerlyCentrefund Realty Corporation) (the "Filer") intendsto make an offer (the "Bid") to all holders (the "Holders")of its outstanding 7.5% debentures due December 1, 2003 (the"Original Debentures") to purchase such Holders' OriginalDebentures in exchange for newly-issued 7.25% convertible unsecuredsubordinated debentures of the Filer due June 30, 2008 (the"New Debentures");

AND WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundlandand Labrador, Yukon, Northwest Territories and Nunavut (the"Jurisdictions") has received an application (the"Application") from the Filer for a decision underthe securities legislation of the Jurisdictions (the "Legislation")that, (a) subject to certain conditions, the Filer be exemptfrom the requirements in the Legislation to be registered totrade in a security and to obtain a receipt for a preliminaryprospectus and a prospectus (the "Registration and ProspectusRequirements") in connection with the distribution by theFiler of the New Debentures pursuant to the Bid, and (b) theApplication and this Decision (as defined below) remain in confidenceuntil the earlier of the announcement of the Bid and January31, 2003;

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

AND WHEREAS the Filer has representedto the Decision Makers that:

1. The Filer is a corporation incorporatedunder the laws of Ontario. The Filer is a reporting issueror the equivalent thereof in all of the Jurisdictions andis not in default of any requirements of the Legislation.

2. The Filer is a growth-oriented real estateinvestment company that concentrates on the ownership of neighbourhoodand community shopping centres.

3. The authorized capital of the Filer consistsof an unlimited number of common shares ("Common Shares")and an unlimited number of preference shares. As at October10, 2002, the Filer had issued and outstanding 18,568,272Common Shares and no preference shares.

4. As at October 10, 2002, the Filer alsohad outstanding: (i) $37,312,700 principal amount of OriginalDebentures, (ii) $57,441,000 principal amount of 8.5% convertibleunsecured subordinated debentures ("8.5% Debentures");(iii) $97,522,000 principal amount of 7.875% convertible unsecuredsubordinated debentures ("7.875%" Debentures");(iv) $99,999,100 principal amount of 7.0% convertible unsecuredsubordinated debentures ("7.0% Debentures"); (v)$133,881,900 amount of 7.25% convertible unsecured subordinateddebentures ("7.25% Debentures"); and (iv) 10,428,213common share purchase warrants ("Warrants").

5. The Common Shares, Original Debentures,8.5% Debentures, 7.875% Debentures, 7.0% Debentures, 7.25%Debentures and Warrants are listed on the Toronto Stock Exchange(the "TSX") under the trading symbols "FCR","FCR.DB", "FCR.DB.A", "FCR.DB.B","FCR.DB.C", "FCR.DB.D" and "FCR.WT",respectively.

6 Pursuant to the Bid, the Filer will makean offer to all Holders to purchase their Original Debenturesin exchange for New Debentures.

7. The Original Debentures were issued pursuantto a trust indenture (the "Original Trust Indenture")dated as of March 9, 1994 between the Filer and Montreal TrustCompany of Canada ("Montreal Trust"), as supplementedby a first supplemental indenture made among the same partiesdated as of December 30, 1994, a second supplemental indenturemade among the same parties dated as of January 1, 1996, athird supplemental indenture made among the same parties datedas of January 1, 1998, a fourth supplemental indenture madeamong the same parties dated as of November 30, 1998 and afifth supplemental indenture made among the same parties andComputershare Trust Company of Canada ("Computershare")dated as of October 1, 2002 pursuant to which Montreal Trustresigned as trustee and Computershare was appointed as successortrustee under the Original Trust Indenture (the Original TrustIndenture as supplemented by the first, second, third, fourthand fifth supplemental indentures is referred to herein asthe "Original Trust Indenture"). The Original TrustIndenture provides that the Filer or the Trustee (as definedin the Original Trust Indenture) or any of their respectiveaffiliates may, by notice given in accordance with the OriginalTrust Indenture, purchase the Original Debentures at any pricepursuant to a call for tenders given to all Holders of theOriginal Debentures.

8. The outstanding 7.25% Debentures were issuedpursuant to a trust indenture (the "Trust Indenture")dated as of June 30, 1998 between the Filer and Montreal Trustas supplemented by a first supplemental indenture made amongthe same parties and Computershare dated as of October 1,2002 pursuant to which Montreal Trust resigned as trusteeand Computershare was appointed as successor trustee underthe Trust Indenture (the Trust Indenture as supplemented bythe first supplemental indenture is referred to herein asthe "Trust Indenture"). The Trust Indenture providesfor the issuance of up to $350,000,000 principal amount of7.25% Debentures and, accordingly, the New Debentures willbe issued thereunder.

9. The New Debentures will be convertibleat the holder's option into fully-paid Common Shares at anytime prior to the close of business on the earlier of June30, 2008 and the last business day preceding the date fixedfor redemption at a price of $24.40 per Common Share, subjectto adjustment.

10. The Original Debentures are not convertibleinto other securities of the Filer. Accordingly, the Bid isnot an issuer bid under the Legislation because the offeris being made to acquire debt securities that are not convertibleinto other securities of the Filer.

11. Application has been made to the TSX tolist both the New Debentures to be issued in connection withthe Bid and the Common Shares issuable upon the conversionof such New Debentures.

12. The Filer will send to each Holder a circular(a "Bid Circular") in the form of an issuer bidcircular under the Legislation that will include prospectus-leveldisclosure of the New Debentures and the Common Shares issuableupon the conversion of the New Debentures.

13. The Bid Circular will contain a contractualright of action equivalent to the statutory right of actionthat would otherwise apply if the Bid Circular were an issuerbid circular under the Legislation.

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

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers underthe Legislation is that the Registration and Prospectus Requirementsshall not apply to the distribution of New Debentures issuedpursuant to the Bid provided that:

a) in respect of the Bid, the Filer complieswith all of the requirements of the Legislation pertainingto issuer bids; and

b) the first trade of New Debentures acquiredpursuant to the Bid shall be deemed to be a distributionunless

(i) the Bid Circular is filed by the Fileron SEDAR (as defined in Multilateral Instrument 45-102Resale of Securities);

(ii) the trade is not a control distribution(as defined in Multilateral Instrument 45-102 Resaleof Securities); and

(iii) the Filer is a reporting issueror the equivalent in the Jurisdictions n the date thatthe Original Debentures are first taken up under the Bid.

AND THE FURTHER DECISION of the DecisionMakers under the Legislation is that the Application and theDecision shall be held in confidence by the Decision Makersuntil the earlier of (a) the announcement of the Bid and (b)January 31, 2003.

November 6, 2002.

"Paul M. Moore"                    "HaroldP. Hands"