Rothmans Inc.

MRRS Decision


Mutual Reliance Review System for Exemptive Relief Applications - Waiver grantedfrom the provisions of subsection 4.1(3)(a) of NP 47 as read in conjunction withsubsections 4.4(2) and 4.4(3) of NP 47 to enable Issuer to continue to effectdistributions under NP 47 without having to file a new AIF as a result of effecting anamalgamation with two wholly-owned subsidiaries.

Applicable Ontario Statutory Provisions

National Policy Statement No. 47, ss. 4.1(3)(a), 4.4 (2) and 4.4(3)







WHEREAS the local securities regulatory authority or regulator (the "Decision Maker")in each of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba,Ontario, New Brunswick, Nova Scotia, Newfoundland and Prince Edward Island (the"Jurisdictions") has received an application from Rothmans Inc. (the "Filer" or"Rothmans") for a waiver under section 4.5 of National Policy Statement No. 47 (the"Policy") that the requirements contained in subsections 4.4(2) and 4.4(3) of the Policyto file a new annual information form ("AIF") in order to continue to satisfy the eligibilityrequirements of section 4.1 of the Policy and to access the prompt offering qualificationsystem (the "POP System") following the amalgamation (the "Amalgamation") of theFiler and Rothmans Partnership in Industry Canada Ltd. ("RPII Canada") andRothmans of Canada Ltd. ("ROC") shall not apply to Rothmans upon the Amalgamationoccurring;

AND WHEREAS under the Mutual Reliance Review System for Exemptive ReliefApplications (the "System"), the Ontario Securities Commission is the principalregulator for this application;

AND WHEREAS the Filer has represented to the Decision Makers that:

1. Rothmans is a holding company that participates in the Canadian tobaccoproducts industry through its 60% interest in Rothmans, Benson & Hedges Inc.Rothmans was incorporated under the Canada Business Corporations Act and isa reporting issuer and a participant in the POP System in each province ofCanada.

2. Rothmans is not in default of the requirements of applicable Canadian securitieslegislation.

3. Rothmans' common shares are listed on The Toronto Stock Exchange. Theaggregate market value of Rothmans' common shares is in excess of $800million.

4. The head office of Rothmans is in Ontario.

5. Rothmans is indirectly owned as to 71.2% by Rothmans International Holdings IIB.V. ("Rothmans International"). On June 7, 1999, British American Tobacco plcand Rothmans International merged their international tobacco businesses. Asa consequence of the merger, Rothmans International is seeking to sell itsinterest in Rothmans in order to comply with an order of the CanadianCompetition Tribunal issued on August 6, 1999. Rothmans proposes toamalgamate with RPII Canada and ROC in order to facilitate the disposition byRothmans International of its indirectly held common shares of Rothmans. Thecontinuing corporation is hereinafter referred to as "New Rothmans".

6. It is currently contemplated that the disposition of Rothmans International'sinterest in Rothmans will occur by way of a secondary offering of commonshares of New Rothmans, to be qualified for distribution in each of the provincesof Canada by the filing and clearance therein of a short form prospectus ofRothmans pursuant to the POP System.

7. RPII Canada is a private company whose only material asset is its 100%ownership interest of ROC. RPII Canada has no material liabilities and carrieson no active business. RPII Canada is a direct, wholly-owned subsidiary ofRothmans International.

8. ROC is a private company that is the registered holder of 3,923,803 commonshares of Rothmans, representing approximately 71.2% of the outstandingcommon shares of Rothmans. ROC has no other material assets, no materialliabilities and carries on no active business. ROC is a direct, wholly-ownedsubsidiary of RPII Canada.

9. In connection with the Amalgamation and subject to shareholder approval, eachholder of common shares of Rothmans, other than ROC, will receive commonshares of New Rothmans in proportion to their relative holdings prior to theAmalgamation in exchange for their Rothmans' shares. The share capital ofROC and RPII Canada will be cancelled. Rothmans International will receivecommon shares of New Rothmans in proportion to the holdings of ROC prior tothe Amalgamation in exchange for ROC's Rothmans' shares.

10. The articles, by-laws, share capital, registered office and business of NewRothmans will be identical to the articles, by-laws, share capital, registered officeand business of Rothmans. The transaction proposed is similar to a short formamalgamation in that, essentially, one company survives the amalgamation withno change in outstanding share capital or otherwise.

11. The Amalgamation will be submitted to the shareholders of Rothmans for theirapproval at a special meeting anticipated to be held on or about January 17,2000. A Management Information Circular of Rothmans setting out the details ofthe Amalgamation was mailed to shareholders and filed with the securitiescommissions or similar authorities in each province of Canada via SEDAR onDecember 21, 1999.

12. Unless the waiver sought is granted, Rothmans would have to file, as a"Successor Issuer", a new AIF pursuant to subsection 4.4(3) in order to satisfythe "Current AIF" requirement of clause 4.1(3)(a) of the Policy. Also, unless thewaiver sought is granted, the determination of whether Rothmans satisfies the$75 million equity requirement in subsection 4.1.(1)(c) would depend, pursuantto subsection 4.4(2), upon a calculation that is based on the closing prices foreach of the 10 trading days prior to the filing of a new AIF.

13. Prior to the Amalgamation, Rothmans will have been a reporting issuer in eachCanadian province for more than 12 months and will have satisfied the eligibilitycriteria in section 4.1 of the Policy. Rothmans' initial annual information formwas filed on August 18, 1999.

14. The Amalgamation will not result in any change to the affairs of Rothmans whichwould be material to investors.

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

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

The Decision of the Decision Makers under the Policy is that, pursuant to section 4.5 ofthe Policy, the requirements of clauses 4.1(1)(c) and 4.1(3)(a), as read in conjunctionwith subsections 4.4(2) and 4.4(3), respectively, of the Policy, are hereby waived, sothat Rothmans may continue to participate in and make distributions under the POPSystem without first having to file a new AIF as a result of the Amalgamation, providedthat this waiver terminates on the earlier of:

(a) 140 days after the end of Rothmans' financial year; and

(b) the date of filing a renewal AIF by Rothmans in respect of its 2000 financial year-end.

This Decision will automatically expire upon proposed National Instrument 44-101coming into force and being adopted as a rule in each of the Jurisdictions.

January 14th, 2000.

"Margo Paul"