Exemption Orders (Discretionary)

SCOTIA CAPITAL INC.


2001 BCSECCOM 249

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - Relief granted from certain underwriting conflict provisions of the Rules on the basis that if proposed Multi-Jurisdictional Instrument 33-105 Underwriting Conflicts was in effect, no such relief would be required. The proportionality requirements of the Rules are not met because no independent underwriter is underwriting an amount equal to that of the largest portion being underwritten by a non-independent underwriter. Issuer is a “connected issuer” but is not a “related issuer” of the applicant underwriters, and is not a “specified party” as defined in 33-105.

Applicable British Columbia Provisions

Securities Act, R.S.B.C. 1996, c. 418, s. 48
Securities Rules, R.B.C. Reg. 194/97, s. 78

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

AND

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

AND

IN THE MATTER OF SCOTIA CAPITAL INC., TD SECURITIES INC., CIBC WORLD MARKETS INC. AND RBC DOMINION SECURITIES INC.

MRSS DECISION DOCUMENT

WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of British Columbia, Alberta, Ontario, Québec and Newfoundland (the "Jurisdictions") has received an application from Scotia Capital Inc., TD Securities Inc., CIBC World Markets Inc. and RBC Dominion Securities Inc. (collectively, the "Applicants") for a decision under the securities legislation of the Jurisdictions (the "Legislation") that the requirement contained in the Legislation which restricts a registrant from participating in a distribution of securities of a connected issuer shall not apply to the Applicants in connection with the proposed offering (the "Offering") of subscription receipts (the "Subscription Receipts") by Superior Propane Income Fund (the "Issuer") to be made by means of a short form prospectus (the "Prospectus");

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

AND WHEREAS the Applicants have represented to the Decision Makers that:

1. The Applicants are registrants under the Legislation, whose head offices are located in the Province of Ontario.

2. The Issuer is a trust governed by the laws of the Province of Alberta.

3. The Issuer was established as a limited purpose trust and its activities are restricted to owning, acquiring, holding and transferring the securities of Superior Propane Inc. ("Superior"), a national retailer of propane gas and services, and other ancillary purposes. Superior is a wholly-owned Subsidiary of the Issuer.

4. The Issuer is a reporting issuer under the securities legislation of each of the provinces of Canada. The Issuer's outstanding trust units are listed on The Toronto Stock Exchange.

5. The Issuer has a market capitalization in excess of $700 million.

6. The Issuer intends to enter into an underwriting agreement with a syndicate of underwriters including the Applicants and BMO Nesbitt Burns Inc., Merrill Lynch Canada Inc. and National Bank Financial Inc. (collectively the "Underwriters") whereby the Issuer will agree to issue and sell, and the Underwriters will agree to purchase, as principals, the Subscription Receipts.

7. The Issuer will file a preliminary short form prospectus (the "Preliminary Prospectus") and the Prospectus with the securities regulatory authorities in each of the provinces of Canada in order to qualify the Subscription Receipts for distribution in those provinces.

8. Superior currently has credit facilities (collectively, the "Credit Facilities") with Canadian chartered banks (the "Banks") of which the Applicants are subsidiaries. As at the date hereof, the following amounts are outstanding under the Credit Facilities:
    Bank of Nova Scotia $60 million
    Toronto Dominion Bank $105 million
    Canadian Imperial Bank of Commerce $57.5 million
    In addition, Superior has available to it a credit facility of up to $25 million with Royal Bank of Canada. As at the date hereof, the Issuer has a nil outstanding balance under this credit facility.

9. The proceeds of the Offering, before deducting the Underwriters' fees and expenses of the Offering, are currently expected to be approximately Cdn. $97 million. The proceeds will be used by the Issuer to subscribe for a subordinated promissory note to be issued by Superior. Superior will use these funds in part to repay a portion of the Credit Facilities.

10. Accordingly, the Issuer may be considered a "connected issuer" (or equivalent) (within the meaning of the Legislation and Proposed Multi-Jurisdictional Instrument 33-105 -- Underwriting Conflicts (“Proposed Instrument 33-105”)) of the Applicants. The Issuer is not a "related issuer" (or equivalent) (within the meaning of the Legislation or Proposed Instrument 33-105) of the Applicants.

11. The proportionate percentage share of the Offering to be underwritten by each of the Applicants is as follows:
    Scotia Capital Inc. 30%
    TD Securities Inc. 25%
    CIBC World Markets Inc. 9%
    RBC Dominion Securities Inc. 9%

12. The Underwriters, in connection with the Offering, do not comply with the proportional requirements of the Legislation.

13. The nature and details of the relationship between the Issuer, the Applicants and the Banks will be described in the Preliminary Prospectus and the Prospectus as prescribed by Proposed Instrument 33-105, including, without limitation, the information specified in Appendix “C” of Proposed Instrument 33-105. The Preliminary Prospectus and the Prospectus will further contain a certificate signed by each Underwriter in accordance with Item 21.2 of Form 44-101F3 to National Instrument 44-101.

14. The Applicants will receive no benefit relating to the Offering other than the payment of their fees in connection therewith.

15. The decision to issue the Subscription Receipts, including the determination of the terms of the distribution, was made through negotiations between the Issuer and the Underwriters without involvement of the Banks.

16. The Applicants advise that the Issuer is in good financial condition and that it is not a "specified party" as defined in Proposed Instrument 33-105.

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

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

IT IS THE DECISION of the Decision Makers under the Legislation that the requirement contained in the Legislation which restricts a registrant from participating in a distribution of securities of a connected issuer shall not apply to the Applicants in connection with the Offering by the Issuer to be made by means of the Prospectus provided that:

1. The Prospectus contains the information required by Appendix C to Proposed Instrument 33-105; and

2. At the time of the Offering:

(a) the Issuer is not a specified party (as defined in Proposed Instrument 33-105); and

(b) the Issuer is not a related issuer (as defined in the Legislation and in Proposed Instrument 33-105) of any of the Underwriters.

DATED this 24th day of January, 2001.



Howard I Wetston Theresa McLeod
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