BC Sugar Refinery, Limited — M&A Activity 1997

Jun 7, 1997

BC SUGAR BC SUGAR REFINERY, LIMITED DIRECTORS’ CIRCULAR RELATING TO THE OFFER BY GREAT PACIFIC ACQUISITION INC. TO PURCHASE ALL OF THE COMMON SHARES OF BC SUGAR REFINERY, LIMITED This Circular contains a recommendation by the Board of Directors that shareholders ACCEPT the Offer and TENDER their Common Shares to the Offer Notice to United States Shareholders The offer is made for the securities of a foreign issuer and while the offer is subject to disclosure requirements of the country in which the issuer is incorporated or organized, investors should be aware that these requirements are different from those of the United States. Investors should also be aware that the bidder or its affiliates, directly or indirectly, may bid for or make purchases of the issuer’s securities subject to the offer, or of the issuer’s related securities, during the period of the offer, as permitted by applicable Canadian securities laws. The enforcement by investors of civil liabilities under the federal securities laws may be affected adversely by the fact that the issuer is located in a foreign country and that some or all of its officers and directors are residents of a foreign country. June 5, 1997

BC SUGAR REFINERY, LIMITED

P.O. Box 2150

Vancouver, B.C.

V6B 3V2

DIRECTORS’ CIRCULAR

This Directors’ Circular is issued by the board of directors (the “Board of Directors” or the “Board”) of BC Sugar Refinery, Limited (“BC Sugar” or the “Corporation”) in connection with the offer announced on May 20, 1997 (the “$14.75 Great Pacific Offer”), and amended on May 29, 1997 (the “Great Pacific Offer”) by Great Pacific Acquisition Inc. (the “Offeror”), a wholly-owned subsidiary of Great Pacific Capital Corp. (“Great Pacific”), as described in the Offeror’s offer to purchase and offering circular dated June 4, 1997 (together, the “Offering Circular”). The Great Pacific Offer is to purchase all of the Class A and Class B common shares of the Corporation (collectively, the “Common Shares”) on the basis of, at the option of the holder of Common Shares, either

(i) $15.00 cash per Common Share (the “Cash Option”), or

(ii) one Class A non-voting exchangeable redeemable share of the Offeror (collectively the “Offeror Shares”) for each Common Share, provided that this option will only be available if the aggregate amount of cash payable under option (i) is not less than $83,018,370 (the “Participating Option”).

The Offer will be open for acceptance until 11:59 p.m. (Vancouver time) on June 26, 1997 unless withdrawn or extended.

All currency amounts in this Directors’ Circular are expressed in Canadian dollars unless otherwise indicated. All information pertaining to directors and senior officers of BC Sugar is based on their respective responses to a questionnaire provided by BC Sugar to each of them for the purpose of obtaining such information. All references to outstanding Common Shares in this Directors’ Circular mean outstanding Common Shares as at the date hereof.

BACKGROUND TO THE GREAT PACIFIC OFFER

AND RESPONSE OF BC SUGAR

The events in this section of the Directors’ Circular are described on a chronological basis.

Annual Meeting

At the annual meeting of shareholders of BC Sugar held on February 18, 1997, Balaclava Enterprises Ltd. (“Balaclava”), a company controlled by Mr. Stuart Belkin, submitted a shareholder proposal requesting the directors of BC Sugar to rescind BC Sugar’s shareholders rights plan. The proposal was approved by the shareholders at the meeting by 12,225,851 votes to 4,556,769. The rights plan was rescinded effective February 25, 1997.

At the time of the annual meeting, Great Pacific Industries Inc., an affiliate of Great Pacific, was the beneficial owner of 4,937,100 Class A common shares or 19.97% of the outstanding Common Shares and Balaclava was the beneficial owner of 4,728,500 Class A common shares or 19.12% of the outstanding Common Shares. Both Great Pacific Industries Inc. and Balaclava voted in favour of rescission of the Plan.

Balaclava Takeover Bid

On April 25, 1997, Balaclava announced that it was making an offer, through a wholly-owned subsidiary, Balaclava Acquisition Inc., to purchase 7,850,000 Common Shares (the “Balaclava Offer”) and that the consideration would be $15.00 per Common Share in cash. Balaclava also announced that its offer would be conditional on at least that number of Common Shares being deposited under the Balaclava Offer which, together with the 19.45% of the Common Shares already owned at that time by Balaclava, would represent 50.1% of the Common Shares of BC Sugar on a fully diluted basis. The Balaclava Offer was originally open for acceptance until 4:30 p.m. (Vancouver time) on May 16, 1997. Balaclava subsequently amended its offer, by way of notice of extension dated May 5, 1997, to extend the time for acceptance to midnight (Vancouver time) on May 16, 1997, to comply with timing requirements under applicable securities laws.

Further Acquisitions of Common Shares

Subsequent to the date of Balaclava’s announcement, Balaclava made indirectly further purchases of Common Shares and now holds directly and indirectly 5,236,400 Common Shares, being approximately 21.18% of the outstanding Common Shares of the Corporation. Great Pacific Industries Inc. has increased its direct and indirect holding since the annual meeting to 7,036,400 Common Shares which represents approximately 28.41% of the outstanding Common Shares of the Corporation.

Special Committee

On receiving notice of Balaclava’s intention to make an offer, the Board of Directors formed a special committee (the “Special Committee”) for the purpose of considering the Balaclava Offer and making recommendations to the Board as to the appropriate actions it should take. The Special Committee originally comprised Mr. R. Stuart Angus as chairman, Mr. J.C. Anderson and Mr. William C. Brown. Mr. Brown resigned on April 27, 1997 and the Special Committee was subsequently augmented by the appointment of Mr. F. Cameron Wilkinson and Mr. John M. Pigott. As a result, the Special Committee comprises a majority of the members of the Board of Directors who are independent and disinterested in either the Great Pacific Offer or the Balaclava Offer.

The Special Committee was appointed with a mandate to review the Balaclava Offer and also, with a view to maximizing value for the Corporation’s shareholders, to consider and discuss with management of the Corporation and the professional advisors to the Corporation and the Special Committee possible alternative transactions to the Balaclava Offer including the possibility of a competing bid. Subject to the terms of the Support Agreement (as defined below), if considered necessary or advisable, the Special Committee is authorized to pursue any alternative transaction through discussions and negotiations with third persons.

The Special Committee has engaged Nesbitt Burns Inc. (“Nesbitt Burns”) to provide, among other things, financial advice and to give opinions on both the Balaclava Offer and the Great Pacific Offer. It has also retained Osler, Hoskin & Harcourt as its legal advisor and received advice from the Corporation’s legal advisor, Bull, Housser & Tupper. In pursuing its mandate to consider the Balaclava Offer and to make recommendations to the Board as to appropriate actions to be taken to enhance shareholder value, the Special Committee has met regularly with its financial and legal advisors, on a formal and informal basis. In particular, it has received regular up-dates on the work carried out by Nesbitt Burns.

On May 4, 1997, based on the recommendation of the Special Committee, the Board of Directors issued a directors’ circular to shareholders in which it stated that it was considering the Balaclava Offer and advised shareholders of BC Sugar not to tender their shares to the Balaclava Offer pending further communication from the Board.

Shareholder Rights Plan

On May 8, 1997, the Board of Directors approved, subject to regulatory approval, a limited duration permitted bid shareholder rights plan (the “Plan”) with immediate effect.

The Plan was adopted to provide the Special Committee and the Board of Directors with an appropriate period of time to explore alternatives to enhance shareholder value. The Plan also afforded the Special Committee and the Board of Directors additional time to assess and evaluate the Balaclava Offer.

To implement the Plan, the Board of Directors authorized the distribution of one share purchase right for each outstanding Common Share of BC Sugar held of record at 11:59 p.m. (Vancouver time) on May 8, 1997. The rights issued to shareholders under the Plan will entitle the holder to acquire Common Shares of BC Sugar at a 50 percent discount to the prevailing market price upon a person or group acquiring 5 percent or more of the Common Shares of BC Sugar (a “Flip-in Event”). The rights are not exercisable in respect of a bid which satisfies the requirement for a “permitted bid” . A permitted bid may include a partial bid if the maximum number of shares which can be taken up under the partial bid is specified, provided that such maximum number may not be increased without an amendment to the bid.

The Plan exempted persons already holding 5 percent of the Common Shares from triggering a Flip-in Event provided they do not acquire any additional Common Shares except pursuant to a permitted bid or other exemption under the Plan. Upon exercise of the rights, the Board of Directors may also issue or deliver cash, debt or equity securities or other assets in addition to or in place of Common Shares.

The Plan was approved by The Toronto Stock Exchange on May 13, 1997. Following the implementation of the Plan, the Balaclava Offer was amended, on May 13, 1997, by, among other things, extending the expiry date of the Balaclava Offer to May 30, 1997 and by specifying the maximum number of Common Shares to be taken up. At that time, these amendments made the Balaclava Offer a permitted bid under the Plan. The Plan was subsequently amended (see below) with the effect that the Balaclava Offer was no longer a permitted bid. The Balaclava Offer expired on May 30, 1997 with no Common Shares being taken up thereunder.

Support Agreement and Great Pacific Offer

On May 11, 1997, representatives of Great Pacific delivered to the Chairman of the Special Committee a proposal to make a bid at $14.50 cash per share for all of the Common Shares if the Corporation would enter into a support agreement with Great Pacific and the Offeror. Great Pacific’s proposal was to expire at 7:00 p.m. (Vancouver time) on Monday, May 12, 1997. The Special Committee met extensively on May 12, 1997 with its legal and financial advisors and representatives of Great Pacific. The Special Committee sought additional consideration and improved terms from Great Pacific. Although Great Pacific made some improvements to its proposal, the Special Committee did not believe that it was in a position to recommend the proposal.

During the course of the next week, negotiations continued on certain aspects of the proposal previously made by Great Pacific. As well, Nesbitt Burns contacted Balaclava on May 15, 1997 with a view to possible amendments to the Balaclava Offer. On May 16, 1997, Great Pacific increased its proposal for all of the Common Shares to $14.75 per share and improved certain other terms. A meeting of the Special Committee was held on May 17, 1997 and legal counsel were instructed to continue negotiations with Great Pacific. On May 17, 18 and 19, the Special Committee’s legal advisor, Osler, Hoskin & Harcourt, and the Corporation’s legal advisor, Bull, Housser & Tupper, in consultation with the Chairman of the Special Committee, negotiated with Great Pacific the terms of the Support Agreement (as defined below). On May 19, 1997, the Special Committee met to consider the terms of the Support Agreement and concluded that it would recommend to the Board that it approve the Support Agreement and recommend a bid by Great Pacific for all of the Common Shares on the terms contained in the Support Agreement.

Based upon the recommendation of the Special Committee, the Board of Directors approved on May 19, 1997, (with Messrs. Pattison, Geer and Belkin abstaining and Mr. Pekarsky, not being in attendance, registering his dissent after the meeting), an agreement (the “Support Agreement”) with Great Pacific and the Offeror under which the Offeror agreed to make an offer to purchase all outstanding Common Shares at a price of , at the option of the holder of Common Shares, either $14.75 in cash or one Offeror Share per Common Share. The Great Pacific Offer is conditional on, among other things, at least that number of Common Shares being deposited under the Great Pacific Offer (which together with the 7,036,400 Common Shares already held by an affiliate of Great Pacific) represents at least 50% of the Common Shares of BC Sugar on a fully diluted basis plus one Common Share (the “Minimum Condition”). Great Pacific subsequently increased the cash element of the Great Pacific Offer on May 29, 1997 to $15.00 per BC Sugar Common Share (see below).

Under the terms of the Support Agreement, the Board of Directors agreed to recommend the Great Pacific Offer in this Directors’ Circular and resolved to do so on May 19, 1997 (with Messrs. Pattison, Geer and Belkin abstaining and Mr. Pekarsky, not being in attendance, registering his dissent after the meeting).

The Corporation also agreed under the Support Agreement that it will not solicit other bids. It was permitted to continue dealing with two parties which had signed confidentiality agreements in order to determine if these parties are prepared to make a superior offer to the Great Pacific Offer. These two parties have since May 22, 1997, however, indicated separately that they do not wish to pursue negotiations with the Corporation. The Corporation is also permitted to provide Balaclava with access to confidential information. In addition, the Corporation is able to respond, in connection with the proper discharge of the Board’s fiduciary duties, to a bona fide financially superior offer. In the event that such a superior offer arises prior to the expiry of the Great Pacific Offer, Great Pacific has the right to match the superior offer.

Under the terms of the Support Agreement, the Corporation has agreed that it will pay a break-up fee of $5,000,000 to Great Pacific if the Board withdraws its recommendation in favour of the Great Pacific Offer, fails to reaffirm its recommendation within 48 hours after the announcement of a superior offer, or if a superior offer is made and the Great Pacific Offer is withdrawn or if the Minimum Condition is not satisfied and another person has acquired sufficient shares to represent de facto control of the Corporation. In addition, in certain other circumstances, if the Offeror withdraws the Great Pacific Offer and there is no superior proposal, Great Pacific will be paid a break-up fee of $1,000,000 but will not be entitled to the break-up fee of $5,000,000.

Also under the terms of the Great Pacific Offer, the Offeror has stated that it may utilize the compulsory acquisition provisions of section 206 of the Canada Business Corporations Act (“CBCA”) after Common Shares are taken up and paid for under the Great Pacific Offer. In the event that such statutory right of acquisition is not available or the Offeror elects not to pursue such right, the Offeror intends, subject to certain conditions and limitations, to pursue a Second-Step Transaction (as defined below). In order to effect a Second-Step Transaction, the Offeror intends to propose a statutory arrangement, amalgamation, merger, restructuring or other combination of, or transactions involving, BC Sugar and the Offeror or an affiliate of the Offeror, which may constitute a going private transaction and/or a related party transaction (“Second-Step Transaction”), for the purposes of combining the Offeror and BC Sugar together into a successor corporation (“New BC Sugar”), and/or transferring some of the acquisition debt into New BC Sugar. In a Second-Step Transaction, the holders of Common Shares may have the right to dissent under the CBCA and to be paid the fair value for their Common Shares, with such fair value to be determined by a court.

Subject to certain exceptions, if a Second-Step Transaction is effected, the holders of Common Shares (other than the Offeror and its associates and affiliates) and the holders of Offeror Shares will be entitled to receive, at their option, either (i) voting common shares in the capital of New BC Sugar (“Participating Shares”) on a one-for-one basis in New BC Sugar which will carry on the business of BC Sugar, or (ii) consideration per Common Share or per Offeror Share, as the case may be, in cash or the right to receive cash within 35 days following the approval of the Second-Step Transaction at least equal to the Cash Option.

If the Offeror does not complete a Second-Step Transaction, the Offeror Shares will be redeemed at a redemption price per share of $15.00 and holders of Offeror Shares will have the right to exchange their Offeror Shares on a one-for-one basis for Common Shares of BC Sugar. In the absence of a Second-Step Transaction or a compulsory acquisition transaction holders of Common Shares who do not tender to the Great Pacific Offer will continue to hold their Common Shares in BC Sugar.

The Offeror has reserved the right not to issue Participating Shares of New BC Sugar on the Second-Step Transaction and to redeem the Offeror Shares if, in the Offeror’s opinion, there would not be a liquid trading market for the Participating Shares, in which case holders of the Common Shares, other than Great Pacific, the Offeror and its affiliates, will receive the cash consideration referred to above.

Shareholders are urged to read the detailed description of the Second Step Transaction in the Great Pacific Offer. The disclosure of the Second Step Transaction set out herein is a summary only and qualified in its entirety by the disclosure set out in the Great Pacific Offer.

Amendments to Shareholder Rights Plan

The Plan initially provided that a permitted bid is a take-over bid which, among other conditions, provides that no Common Shares will be acquired before 4:30 p.m. (Vancouver time) on May 30, 1997, which is made to all shareholders (regardless of the jurisdiction in which the shareholder resides), which allows for the deposit of Common Shares at any time until 4:30 p.m. (Vancouver time) on May 30, 1997 and if the bid is a partial bid and the bidder reserves the right to take up a greater number of shares than it is obligated to, the bidder will specify such maximum number. In order to obtain Great Pacific’s agreement to announce and to make the Great Pacific Offer, it was necessary for the Corporation to agree, subject to the approval of The Toronto Stock Exchange, to amend the Plan to provide that for the purpose of the definition of a “permitted bid” the date and time (at and after which Common Shares may be acquired) be amended from 4:30 p.m. (Vancouver time) on May 30, 1997 to 11:59 p.m. (Vancouver time) on June 26, 1997.

The Plan was originally due to expire on June 30, 1997 except if a Flip-in Event (the effect of which under the Plan had not been waived by the Board of Directors as permitted under the Plan) had occurred prior thereto (in which event, the Plan would terminate on October 31, 1997, or if litigation is then ongoing respecting the Plan, 30 days following the termination of all litigation respecting the Plan). As a consequence of the extension of the time that a permitted bid must remain open, the expiry date of the Plan was also extended from June 30, 1997 to July 15, 1997.

The Toronto Stock Exchange approved the amendments to the Plan on May 27, 1997.

Notice of Change

On May 22, 1997 the Board of Directors issued a notice of change to its directors’ circular dated May 4, 1997 in which it recommended that, in light of the proposed Great Pacific Offer, shareholders reject the Balaclava Offer and not tender their shares to the Balaclava Offer.

Response by Balaclava

Balaclava did not extend the time during which Common Shares could be deposited under the Balaclava Offer to June 26, 1997 so as to make it a permitted bid under the Plan, which extension the Corporation had agreed to support. Balaclava issued on May 28, 1997 and thereafter a series of press releases and published on May 28 and 29, 1997 advertisements in local and national newspapers indicating, among other things, that Balaclava would seek to contest the Plan, as amended, before the Ontario Securities Commission after the expiry of the Balaclava Offer on May 30, 1997 and before taking up any Common Shares tendered under the Balaclava Offer.

The Special Committee responded in a press release issued on May 28, 1997 and published advertisements in local and national newspapers on May 30, 1997. The Special Committee reminded shareholders that the Balaclava Offer was a partial bid only and advised that it had received advice from its financial advisors that the “effective value” of the Balaclava Offer on an all BC Sugar Common Shares basis, as opposed to a partial bid basis, was approximately $13.50 per Common Share. The Special Committee drew shareholders’ attention to the deficiencies in the Balaclava valuation previously highlighted in the Directors’ Circular dated May 4, 1997 and urged shareholders to review the formal valuation to be carried out in connection with the Great Pacific Offer pursuant to Ontario Securities Commission Policy 9.1 before making any decision regarding the tender of their Common Shares.

Ontario Securities Commission Proceedings

On May 29, 1997, Balaclava applied to the Ontario Securities Commission for an order cease-trading any rights that might become issuable under the Plan, as amended, thus permitting Balaclava to take up and pay for Common Shares deposited under the Balaclava Offer if at least 7,850,000 Common Shares were on deposit under the Balaclava Offer or, if Balaclava waived its minimum deposit condition, Common Shares representing at least 50.1% of the Common Shares held by the public (i.e. not including Balaclava and Great Pacific) were on deposit.

The Special Committee, on the advice of legal advisors, also formally applied to the Ontario Securities Commission for, amongst other things, a permanent cease-trading order in respect of the Balaclava Offer unless Balaclava extended its offer until at least 11:59 p.m. on June 26, 1997 or included a new and proper independent valuation as required by Ontario Securities Commission Policy 9.1. In the submissions made on its behalf, the Special Committee reiterated its concerns with respect to the purported Ontario Securities Commission Policy 9.1 valuation prepared by Goepel Shields & Partners Inc. which accompanied the Balaclava Offer.

Increase in Great Pacific Offer

On May 29, 1997, representatives of Great Pacific contacted the Chairman of the Special Committee with a proposed amendment to the Great Pacific Offer announced on May 20, 1997. Due to the terms accompanying the proposed amendment, the Special Committee, after taking advice from legal and financial advisors, formed the view that the proposed amendment did not merit recommendation to the Board.

Great Pacific then reconsidered its proposal and later the same day communicated its willingness to increase the cash portion of the offer to $15.00 per Common Share. Great Pacific and the Offeror announced the improved offer in a press release the same day. BC Sugar placed an advertisement, which appeared in national and local newspapers on May 30, 1997, advising shareholders not to tender to the Balaclava Offer, which expired that day, but rather to wait for the Great Pacific Offer.

Valuation

Under the terms of the Support Agreement, the Offeror agreed to make its offer in compliance with all applicable corporate and securities laws and policies and, in this connection, agreed to have carried out a valuation in accordance with Ontario Securities Commission Policy 9.1 and Policy Q-27 of the Commission des valeurs mobilières du Québec. Great Pacific retained on or about May 19, 1997 Odlum Brown Limited (“Odlum Brown”) of Vancouver, British Columbia to prepare such a valuation.

Odlum Brown has had full access to all information regarding BC Sugar, its business and operations which Odlum Brown considered necessary. Representatives of Odlum Brown met with the Chairman of the Special Committee, the Special Committee’s financial and legal advisors and two members of senior management of BC Sugar on May 29, 1997 to discuss, among other things, Odlum Brown’s qualifications, personnel involved in the valuation process and independence. As well, Odlum Brown discussed with Nesbitt Burns on a regular basis certain aspects of the methodology, analyses and assumptions made by Odlum Brown in its work to date.

On May 30, 1997, three representatives of Odlum Brown met with all the members of the Special Committee, the Committee’s financial and legal advisors and two representatives of senior management of BC Sugar and discussed the process relating to its valuation of the Common Shares including its qualifications, personnel, independence and fee arrangements. As well, Odlum Brown reviewed at the meeting a draft summary of its valuation of the Common Shares which included its conclusion that as at March 31, 1997, the fair market value of the Common Shares is in the range of $13.00 to $14.65 per Common Share on a fully diluted basis. After its presentation, Odlum Brown responded to questions and comments from members of the Special Committee and the Special Committee’s financial and legal advisors. After Odlum Brown’s representatives had left the meeting, the Special Committee discussed Odlum Brown’s valuation and its draft summary valuation, including the range of fair market value for the Common Shares, with the two members of senior management of BC Sugar in attendance and with the Special Committee’s financial and legal advisors.

Odlum Brown’s valuation has been prepared subject to the supervision of, and has been fully discussed with, the Special Committee. The Special Committee believes that Odlum Brown’s valuation in respect of the Cash Option was carried out in compliance with Ontario Securities Commission Policy 9.1 and Policy Q-27 in all material respects and that Odlum Brown is independent of Great Pacific and is properly qualified. The Special Committee is satisfied that the assumptions and methodology employed by Odlum Brown in its valuation are not unreasonable. For the complete summary valuation prepared by Odlum Brown, shareholders are directed to the summary contained in the Offering Circular of the Offeror. Shareholders are urged to read the summary in the Offering Circular in its entirety.

Expiry of Balaclava Offer

The Balaclava Offer expired at 4:30 p.m. (Vancouver time) on May 30, 1997. By a press release issued the same day, Stuart Belkin, President of Balaclava Acquisition Inc., announced that 2,418,292 Common Shares had been deposited under the Balaclava Offer and that, having regard to the number of Common Shares deposited, Balaclava would not take up and pay for any of the deposited shares.

Having regard to the number of Common Shares deposited under the Balaclava Offer, Balaclava withdrew its application to the Ontario Securities Commission for an order to cease-trade any rights that might become issuable under the Plan and, consequently, the Corporation has also withdrawn its application in respect of the Balaclava Offer.

Report of the Special Committee and Board Resolution

On May 19, 1997, the Board of Directors, upon the recommendation of the Special Committee, resolved to recommend the $14.75 Great Pacific Offer. After considering the Great Pacific Offer, the Balaclava Offer, the Support Agreement and other matters it considers relevant, as reported to the Board and described below, the Special Committee recommended to the Board of Directors at a meeting on June 5, 1997 that the Board recommend that shareholders accept the Great Pacific Offer and tender their shares accordingly. In making the foregoing recommendation, the Special Committee has focused on the Cash Option. Due to the nature of the Participating Option and the particular circumstances of individual shareholders, shareholders wishing to consider further the Participating Option should consult their investment dealer, stockbroker, bank manager, lawyer or other professional advisor. The Board resolved (with Mr. Stuart Belkin abstaining) to recommend that shareholders accept the Great Pacific Offer and approved the issuance of this Directors’ Circular.

RECOMMENDATION OF THE BOARD

The Board of Directors recommends that shareholders ACCEPT the Great Pacific Offer and that shareholders TENDER their Common Shares to the Great Pacific Offer. In making the foregoing recommendation, the Board has focused on the Cash Option. Due to the nature of the Participating Option and the particular circumstances of individual shareholders, shareholders wishing to consider further the Participating Option should consult their investment dealer, stockbroker, bank manager, lawyer or other professional advisor.

REASONS FOR RECOMMENDATION

The Board of Directors has carefully considered the Great Pacific Offer and received the benefit of advice from its financial and legal advisors. In concluding that the Great Pacific Offer should be accepted, the Board took the following principal factors into account:

Opinion of Financial Advisor and Odlum Brown Valuation

On June 5, 1997 Nesbitt Burns delivered an oral opinion to the Special Committee and the Board that, subject to certain assumptions and reliances, the $15.00 cash per BC Sugar Common Share offered pursuant to the Great Pacific Offer is fair from a financial point of view to the shareholders of BC Sugar other than Great Pacific. A copy of the Nesbitt Burns written opinion is attached to this Directors’ Circular as Appendix A. Shareholders are urged to read the opinion in its entirety.

Pursuant to Ontario Securities Commission Policy 9.1 and Policy Q-27 of the Commission des valeurs mobilières du Québec, Odlum Brown has prepared a formal valuation of the Common Shares. In the opinion of Odlum Brown and, subject to certain assumptions and reliances, the fair market value as of March 31, 1997 of the Common Shares is in the range of $13.00 to $14.65 per Common Share on a fully diluted basis. Thus, the $15.00 cash per Common Share offered under the Great Pacific Offer exceeds the high-end of this range.

A summary of Odlum Brown’s valuation is contained in the Offering Circular of the Offeror. Shareholders are urged to read the summary in the Offering Circular in its entirety. A copy of the full Odlum Brown formal valuation of the Common Shares may be inspected by shareholders of BC Sugar at the offices of BC Sugar at 123 Rogers Street, Vancouver, British Columbia, during ordinary business hours while the Great Pacific Offer remains outstanding. In addition, a copy of the full Odlum Brown formal valuation may be mailed to any shareholder of BC Sugar upon request to the Chief Financial Officer of BC Sugar, James W. Hudson and payment of a nominal charge sufficient to cover printing and postage.

Best Available Alternative

The Board of Directors determined that, while interested parties are not precluded from proposing financially superior transactions, the Great Pacific Offer is the only offer available to the Corporation at this time and is fair from a financial point of view.

Prospect of Superior Offer

Under the terms of the Support Agreement, the Corporation agreed that it will not solicit other bids. While the Corporation was permitted to continue dealing with two parties which had signed confidentiality agreements in order to determine if these parties were prepared to make a superior offer to the Great Pacific Offer, both of these parties have since May 22, 1997 separately advised the Special Committee that they do not wish to continue negotiations with the Corporation. The Corporation is able to respond to a superior offer from other third parties subject to the Offeror’s right to match the superior offer.

Potential Continued Investment in BC Sugar

By being given under the Great Pacific Offer the option in certain circumstances to receive Offeror Shares for Common Shares of BC Sugar, shareholders may choose to continue their investment in the Corporation, subject to the terms and conditions contained in the Great Pacific Offer and should the Offeror conclude that a liquid trading market would exist following a Second-Step Transaction. (For further details see the discussion of a Second-Step Transaction in the section headed “Support Agreement and Great Pacific Offer” above).

SHARE CAPITAL OF THE CORPORATION

The authorized capital of the Corporation consists of an unlimited number of Class A and Class B common shares, 124,000 5% cumulative redeemable preference shares and an unlimited number of preferred shares issuable in series. As of May 26, 1997, there were 24,766,914 issued and outstanding Common Shares of the Corporation consisting of 23,977,162 Class A and 789,752 Class B common shares. There are no preference or preferred shares outstanding. Subject to the prior rights of the holders of preference and preferred shares, the Class A and the Class B common shares have equal voting rights, rank equally with respect to dividends and to the distribution of assets in the event of liquidation, dissolution, or winding up of the Corporation, and are convertible into one another on a share for share basis.

To implement the Plan, described above, on May 8, 1997 the Board of Directors authorized the distribution of one share purchase right for each outstanding Class A and Class B Common Share of BC Sugar. The rights issued under the Plan will entitle the holder to acquire Common Shares at a 50% discount to the prevailing market price upon a person or group acquiring 5 percent or more of the Common Shares of BC Sugar (a “Flip-in Event”). The Plan and the rights expire on July 15, 1997 unless a Flip-in Event has occurred.

The outstanding Common Shares are listed and posted for trading on The Toronto Stock Exchange.

EMPLOYEES’ SHARE OPTION PLAN

BC Sugar has an employees’ share option plan for the benefit of key employees of the Corporation and its affiliates. Stock options are granted at the discretion of the Board of Directors at an exercise price not lower than the closing price of the Common Shares on The Toronto Stock Exchange at the date of grant.

As at May 27, 1997, stock options to acquire 375,000 Common Shares were issued and outstanding, of which 130,000 have an exercise price of $15.00 or higher.

Upon the recommendation of the Special Committee, the Board authorized on June 5, 1997 amendments to the share option plan to clarify that all outstanding options become vested upon a take-over bid being made by an insider, such as Great Pacific, thereby facilitating the exercise of all outstanding options.

Holders of exercisable stock options who wish to exercise those stock options and deposit the resulting Common Shares under the Great Pacific Offer are required to remit the exercise price for such Common Shares to the Corporation before receiving those Common Shares, which then may be deposited.

EMPLOYEE SHARE PURCHASE PLAN

The Corporation operates an employee share purchase plan to enable employees to purchase Common Shares on a deferred payment basis. The purchase plan is administered so as to provide payment in full by the end of one calendar year following the purchases of all indebtedness incurred by participating employees. Shares are purchased in the open market throughout the year by Rogers Sugar Ltd., a subsidiary of the Corporation, pursuant to the share purchase plan. Each year employees indicate their interest in purchasing shares and either purchase the shares outright or borrow funds to make the purchase, in which event the purchased shares are held by the employees’ employer, being Rogers Sugar Ltd., Refined Sugars, Inc. or Lantic Sugar Limited, as the case may be, as security pending payment in full of indebtedness incurred by the employee purchasers. As at May 27, 1997, 69,424 Common Shares registered in the name of 312 employees remained in the possession of Rogers Sugar Ltd., Refined Sugars, Inc. or Lantic Sugar Limited, as the case may be, and the aggregate outstanding indebtedness under the purchase plan was $312,320.08.

Rogers Sugar Ltd. intends to tender to the Great Pacific Offer all of the Common Shares currently held by it under the plan. As well, Common Shares held as security by Rogers Sugar Ltd., Refined Sugars, Inc. or Lantic Sugar Limited, (to the extent so directed by the employee shareholders) will also be tendered and the Offeror has agreed to apply the proceeds payable to each employee shareholder first in satisfaction of the employee’s indebtedness to Rogers Sugar Ltd., Refined Sugars, Inc. or Lantic Sugar Limited, as the case may be, and then any surplus to the employee shareholder.

OWNERSHIP OF SHARES OF BC SUGAR BY DIRECTORS AND OFFICERS

The following table sets out the names and positions of all directors and officers of the Corporation and the number of securities of any class of securities of the Corporation beneficially owned, directly or indirectly, or over which control or direction is exercised, by each such director and officer of the Corporation and, where known after reasonable inquiry, by their respective associates or any person acting jointly or in concert with the Corporation:

Name and Position Held	Number of Common Shares(1) Class A Class B			Approximate Percentage of Outstanding Common Shares		Number of Common Shares under Option(7)
J.C. Anderson Director	65,500	Nil	0.26%		Nil
R. Stuart Angus Director, Chairman of the Board	5,000	Nil	0.02%		Nil
A. Stuart Belkin Director	5,236,400(2)	Nil	21.18%		Nil
William C. Brown Director, President and Chief Executive Officer of the Corporation	69,045(3)	Nil	0.27%		170,000
Hon. Pat Carney, P.C. Director	2,100	Nil	0.01%		Nil
P. Nicholas Geer Director	Nil	Nil	0%		Nil
Jim Pattison Director	7,036,400(4)	Nil	28.41%		Nil
John M. Pigott Director	2,000(5)	Nil	0.01%		Nil
F. Cameron Wilkinson Director	4,000	Nil	0.02%		Nil
André O. Bergeron Vice President	6,848	Nil	0.03%		35,000
David M.S. Elliott Vice President	1,000	Nil	0.004%		40,000
Gregory J. Hoskins Vice President	14,668	Nil	0.06%		35,000
James W. Hudson Vice President, Finance and Chief Financial Officer of the Corporation	2,300	Nil	0.01%		40,000
Roy E. Spires Treasurer and Secretary of the Corporation	500	Nil	0.002%		5,000
Rogers Sugar Ltd.	183,416(6)	Nil	0.74%		Nil

(1) each outstanding Common Share described above has a purchase right attached pursuant to the Plan described above (See “Shareholder Rights Plan”)

(2) through Balaclava Enterprises Ltd. and its affiliates

(3) Helen Brown owns 5,724 of these Common Shares

(4) through Great Pacific Industries Inc., an affiliate of Great Pacific

(5) Elizabeth Pigott owns 900 of these Common Shares.

(6) for distribution under the employee share purchase plan described above

(7) all options were granted more than two years before the date of this Circular (See “Employees’ Share Option Plan”)

PRINCIPAL HOLDERS OF SHARES OF BC SUGAR

To the knowledge of the directors and officers of the Corporation, after reasonable enquiry, there is no person or company acting jointly or in concert with the Corporation who owns or exercises control or direction over any securities of any class of securities of the Corporation, nor are there any securities of the Corporation beneficially owned or over which control or direction is exercised by any person or company holding or exercising control or direction over more than 10% of any class of equity securities of the Corporation or holding or exercising control or direction over securities of the Corporation carrying more than 10% of the votes attached to the Common Shares of the Corporation except as follows:

Name of Beneficial Owner	Number of Securities Owned or Controlled(1)	Approximate Percentage of Outstanding Common Shares
Balaclava Enterprises Ltd.(2)	5,236,400	21.18%
Great Pacific Industries Inc.(3)	7,036,400	28.41%
Rogers Sugar Ltd.(4)	183,416	0.74%

(1) Based on advice to the Board of Directors.

(2) See note (2) to “Ownership of Shares of BC Sugar by Directors and Officers”.

(3) See note (4) to “Ownership of Shares of BC Sugar by Directors and Officers”.

(4) See note (6) to “Ownership of Shares of BC Sugar by Directors and Officers”.

INTENTION WITH RESPECT TO THE OFFER

To the knowledge of the directors and officers of the Corporation, after reasonable inquiry, none of the directors or officers of the Corporation nor any of their respective associates nor any person or company acting jointly or in concert with the Corporation nor any person or company holding more than 10% of any class of securities of the Corporation has accepted or intends to accept the Great Pacific Offer except Rogers Sugar Ltd., as described under “Employee Share Purchase Plan”, William C. Brown (63,321 Common Shares and 90,000 options), Helen Brown (5,724 Common Shares), Gregory J. Hoskins (14,668 Common Shares and 35,000 options), David M.S. Elliott (1,000 Common Shares, 15,000 options), Roy E. Spires (500 Common Shares and 5,000 options), J.C. Anderson (65,500 Common Shares), André O. Bergeron (6,848 Common Shares and 35,000 options), James W. Hudson (2,300 Common Shares and 15,000 options), R. Stuart Angus (5,000 Common Shares), John M. Pigott (2,000 Common Shares) and F. Cameron Wilkinson (4,000 Common Shares).

TRADING IN COMMON SHARES OF BC SUGAR

None of the Corporation or any of its directors or officers or, to the knowledge of the directors and officers of the Corporation, after reasonable enquiry, any associate of any director or senior officer of the Corporation, any person holding more than 10% of the Common Shares, or any person or company acting jointly or in concert with the Corporation, has traded any Common Shares of the Corporation during the six months preceding the date of the Great Pacific Offer or this Directors’ Circular except for the trades shown below:(1)

Name	Nature of Trade	Date of Trade	Number of Shares Traded	Price per Share
Roy E. Spires	Sale	November 25, 1996	500	$12.00
William C. Brown	Purchase(5)	January 1, 1997	1,900	$11.75
James W. Hudson	Purchase(5)	January 1, 1997	900	$11.75
Roy E. Spires	Purchase(5)	January 1, 1997	236	$11.90
David M.S. Elliott	Purchase(5)	January 1, 1997	1,000	$11.75
André O. Bergeron	Purchase(5)	January 1, 1997	1,014	$11.75
Gregory J. Hoskins	Purchase(5)	January 1, 1997	1530	$11.75
Gregory J. Hoskins	Purchase	January 10, 1997	1600	$11.48
Gregory J. Hoskins	Purchase	January 14, 1997	1400	$11.40
Gregory J. Hoskins	Purchase	January 17, 1997	1000	$11.95
Gregory J. Hoskins	Purchase	January 20, 1997	3000	$12.50
Andre O. Bergeron	Sale	February 19, 1997	4200	$13.00
Great Pacific Industries Inc.(2)	Purchase	February 27, 1997	980,000	$13.73
Estate of Ian Angus(3)	Sale	February 27, 1997	36,600	$13.53
David M.S. Elliott	Sale	February 28, 1997	5800	$13.60
Estate of Ian Angus(3)	Sale	February 28, 1997	4,200	$13.80
Great Pacific Industries Inc.(2)	Purchase	March 5, 1997	1,119,300	$14.15
David M.S. Elliott	Sale	March 7, 1997	5000	$14.00
Roy E. Spires	Sale	March 21, 1997	1000	$13.70
Balaclava(4)	Purchase	March 24, 1997	5,300	$13.75
Balaclava(4)	Purchase	March 25, 1997	26,600	$13.74
Balaclava(4)	Purchase	March 26, 1997	18,100	$13.74
Balaclava(4)	Purchase	April 1, 1997	1,600	$13.25
Balaclava(4)	Purchase	April 2, 1997	7,400	$13.25
Balaclava(4)	Purchase	April 3, 1997	1,000	$13.25
Balaclava(4)	Purchase	April 8, 1997	17,800	$13.00
Balaclava(4)	Purchase	April 9, 1997	600	$13.00
Balaclava(4)	Purchase	April 10, 1997	1,300	$13.00
André O. Bergeron	Purchase	April 25, 1997	2000	$14.50
David M.S. Elliott	Sale	April 25, 1997	19,250	$14.10
David M.S Elliott	Sale	April 25, 1997	750	$14.15
James W. Hudson	Sale	April 25, 1997	19,250	$14.10
James W. Hudson	Sale	April 25, 1997	750	$14.15
Balaclava(4)	Purchase	April 30, 1997	155,900	$14.80
Balaclava(4)	Purchase	May 1, 1997	112,900	$14.90
Balaclava(4)	Purchase	May 2, 1997	88,500	$14.97
Balaclava(4)	Purchase	May 2, 1997	900	$14.22
Balaclava(4)	Purchase	May 5, 1997	70,000	$15.00

Notes:

(1) Based on advice to the Board of Directors and information contained in the Offering Circular.

(2) See note 4 to “Ownership of Shares of BC Sugar by Directors and Officers”.

(3) R. Stuart Angus resigned as executor of the estate of Ian Angus on May 6, 1997.

(4) See note 2 to “Ownership of Shares of BC Sugar by Directors and Officers”.

(5) Purchased pursuant to the Corporation’s Employee Share Purchase Plan.

To the knowledge of the directors and officers of the Corporation, after reasonable inquiry, with the exception of Common Shares issued upon the exercise of options, none of the directors or officers of the Corporation intends to purchase Common Shares during the Great Pacific Offer nor do any of them know of such an intention on the part of any other person.

CERTAIN ISSUANCES OF SECURITIES OF THE CORPORATION

With the exception of the rights issued under the Plan, no Common Shares (or securities convertible into Common Shares) have been issued to the directors or officers of the Corporation during the two years preceding the date of this Directors’ Circular, or since that date, other than the Common Shares issued upon exercise of stock options as shown under “Trading in Common Shares of BC Sugar”.

OWNERSHIP OF SECURITIES OF GREAT PACIFIC OR THE OFFEROR

None of the Corporation, the directors or officers of the Corporation or, to the knowledge of the directors and officers of the Corporation, after reasonable enquiry, any associates of the directors and officers of the Corporation, any person or company holding or exercising control or direction over more than 10% of any class of equity securities of the Corporation, any person or company holding or exercising control or direction over securities carrying more than 10% of the votes attached to the Common Shares of the Corporation, or any person or company acting jointly or in concert with the Corporation, owns or exercises control or direction over any securities of any class of securities of Great Pacific or the Offeror except as follows:

Name and Position Held	Number of common shares(1)
Jim Pattison	68,414,546 common shares of Great Pacific and 1 common share of the Offeror

Notes

(1) based on advice to the Board of Directors.

TRADING IN SECURITIES OF GREAT PACIFIC OR THE OFFEROR BY BC SUGAR AND ITS DIRECTORS AND OFFICERS

Neither the Corporation nor any of the directors or officers of the Corporation nor any such persons’ associates nor, to the knowledge of the directors and officers of the Corporation after reasonable inquiry, any person who beneficially owns or exercises control or direction over more than 10% of the outstanding Common Shares, nor any person or corporation acting jointly or in concert with the Corporation, has traded any securities of Great Pacific or the Offeror except in connection with the formation of the Offeror during the six month period preceding the date of this Directors’ Circular.

RELATIONSHIP BETWEEN GREAT PACIFIC OR THE OFFEROR AND DIRECTORS AND OFFICERS OF BC SUGAR

There are no arrangements or agreements made or presently proposed to be made between Great Pacific or the Offeror and any of the directors or officers of the Corporation, including arrangements or agreements with respect to compensation for loss of office or as to their remaining in or retiring from office if the Great Pacific Offer is successful.

Each of the following directors or officers of the Corporation is a director and/or officer of Great Pacific or the Offeror or any of their respective subsidiaries:

Name	Principal Position
Jim Pattison	Director and officer of Great Pacific and director of the Offeror
P. Nicholas Geer	Director and officer of both Great Pacific and the Offeror

ARRANGEMENTS AND AGREEMENTS BETWEEN BC SUGAR AND ITS DIRECTORS AND OFFICERS

The Corporation is a party to agreements with three of its executive officers, Messrs, Brown, Elliott and Hudson, pursuant to which the executive officers are entitled to compensation for termination of their employment in certain circumstances. The events that will trigger the payment of compensation are (a) at the option of the Corporation, dismissal without cause, or (b) at the option of the executive, termination of employment in the event of a demotion in his position, the diminishment of his responsibilities in a matter of substance, or in any other circumstances tantamount to constructive dismissal, including (i) sale, exchange or other change in the control of the Corporation, (ii) the sale of all or substantially all of its assets, (iii) the disposition of a majority of its outstanding shares, (iv) the termination of its business or the liquidation of its assets, or (v) the merger or consolidation of the Corporation as a result of which its shareholders receive less than 50% of the voting shares of a new or continuing corporation.

The principal component of the compensation payable to the executive officers will be payment of a lump sum amount which will be equal to three times the sum of his base salary and the average bonus, if any, paid to him by the Corporation in the previous three years.

Except as described above, and the payment of directors’ fees, there are no service contracts of any director or officer of the Corporation or any of its affiliates with the Corporation with more than a 12 month period remaining and there is no arrangement or agreement made or proposed to be made between the Corporation and any of its directors or officers pursuant to which a payment or other benefit is to be made or given by way of compensation for loss of office or as to their remaining in or retiring from office if the Great Pacific Offer is successful.

INTERESTS OF DIRECTORS, OFFICERS AND OTHERS IN MATERIAL CONTRACTS OF GREAT PACIFIC OR THE OFFEROR

Except as described herein, none of the officers or directors of the Corporation and their respective associates or, to the knowledge of the directors and officers of the Corporation, after reasonable enquiry, any person or company holding or exercising control or direction over more than 10% of any class of equity securities of the Corporation, or any person or company holding or exercising control or direction over securities carrying more than 10% of the votes attached to the Common Shares of the Corporation, or any person acting jointly or in concert with the Corporation, has any interest in any material contract to which Great Pacific or the Offeror is a party.

MATERIAL CHANGES

Except as otherwise described elsewhere in this Directors’ Circular, no information is known to the directors or officers of the Corporation concerning or that indicates any material change in the prospects or affairs of the Corporation since March 31, 1997, the date of the last published unaudited interim consolidated financial statements of the Corporation.

REMUNERATION OF FINANCIAL ADVISOR

Nesbitt Burns was engaged by the Corporation to provide the Board and the Special Committee with, among other things, opinions on both the Balaclava Offer and the Great Pacific Offer. In consideration of these services, the Board of Directors has approved an agreement to pay Nesbitt Burns aggregate fees of $525,000 and incentive fees if certain alternative transactions are consummated. The Corporation has also agreed to indemnify Nesbitt Burns against certain liabilities and to reimburse Nesbitt Burns for reasonable expenses.

OTHER MATTERS

On June 4, 1997, Mr. Daniel U. Pekarsky resigned from the Board of Directors.

STATUTORY RIGHTS

Securities legislation in certain of the provinces and territories of Canada provides holders of Common Shares with, in addition to any other rights they may have at law, rights of rescission or to damages, or both, if there is a misrepresentation in a circular or notice that is required to be delivered to the holders of Common Shares. However, such rights must be exercised within prescribed time limits. Holders of Common Shares should refer to the applicable provisions of the securities legislation of their province or territory for particulars of those rights or consult with a lawyer.

APPROVAL OF DIRECTORS’ CIRCULAR

The contents of this Directors’ Circular have been approved, and the delivery of this Directors’ Circular has been authorized, by the Board of Directors.

Vancouver, British Columbia

June 5, 1997

CERTIFICATE

The foregoing contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made. The foregoing does not contain any misrepresentation likely to affect the value or market price of the securities subject to the Offer within the meaning of the Securities Act (Quebec).

On behalf of the Board of Directors

(Signed) R. Stuart Angus (Signed) William C. Brown

Director Director

CONSENT

TO: The Board of Directors of

BC Sugar Refinery, Limited

We hereby consent to the inclusion of our Opinion dated June 5, 1997 as Appendix A in the Directors’ Circular of BC Sugar Refinery, Limited dated June 5, 1997 and to all references thereto in such Directors’ Circular.

Vancouver, British Columbia (Signed) Nesbitt Burns Inc.

June 5, 1997

CONSENT

TO: The Board of Directors of

BC Sugar Refinery, Limited

We hereby consent to the references to our valuation dated May 31, 1997 contained in the Directors’ Circular of BC Sugar Refinery, Limited dated June 5, 1997.

Vancouver, British Columbia (Signed) Odlum Brown Limited

June 5, 1997

Appendix A

June 5, 1997

The Board of Directors

BC Sugar Refinery, Limited

P.O. Box 2150

123 Rogers Street

Vancouver, B.C.

V6B 3V2

To the Board of Directors:

We understand that Great Pacific Capital Corp. and its wholly owned subsidiary Great Pacific Acquisition Inc. (together, “Great Pacific”) have made an Offer (the “Offer”) to purchase all of the Class A and Class B common shares (the “Shares”) of BC Sugar Refinery, Limited (“BC Sugar”). The consideration per Share under the Offer is, at the election of the holder of Shares, either (i) $15.00 cash or (ii) one Class A non-voting exchangeable redeemable share of Great Pacific Acquisition Inc. The terms and conditions of the Offer are set out in an offer to purchase and offering circular document (the “Offering Circular”) prepared by Great Pacific dated June 4, 1997, which was to be mailed on June 4, 1997 and is to be open for acceptance until 11:59 p.m. (Vancouver time) on June 26, 1997.

BC Sugar has retained Nesbitt Burns Inc. (“Nesbitt Burns”) to render certain financial advisory services to the board of directors of BC Sugar (the “Board”) and we will receive a fee for our services. In the ordinary course of our business, we and certain of our affiliates may actively trade the securities of BC Sugar for our own account and for the account of our customers and, accordingly, may at any time hold a long or short position in such securities. We have, in the past, provided certain financial advisory and investment banking services to BC Sugar and we have received compensation for such services. The Bank of Montreal is Nesbitt Burns’ controlling shareholder and is the lead bank on certain of BC Sugar’s credit facilities.

Our advisory services and the opinions expressed herein are provided for the information of the Board in its evaluation of the Offer and our opinions are not intended to be and do not constitute a recommendation to any shareholder with respect to any offer. Our opinions are not and should not be construed as a valuation of BC Sugar or any of its assets. Our opinions may not be published or otherwise used or referred to, nor shall any public reference to Nesbitt Burns be made, without our prior written consent. We consent to the reference to this letter and its inclusion in the BC Sugar Directors’ Circular dated on or about June 5, 1997.

Credentials of Nesbitt Burns

Nesbitt Burns is one of Canada’s largest investment banking firms, with operations in all facets of corporate and government finance, mergers and acquisitions, equity and fixed income sales and trading, investment research and investment management. The opinions expressed herein are the opinions of Nesbitt Burns and the form and content herein have been approved for release by a committee of its directors and officers, each of whom is experienced in merger, acquisition, divestiture and valuation matters.

In connection with rendering our opinions, we reviewed and relied upon, or carried out, among other things, the following:

1. a substantially completed draft of the BC Sugar Directors Circular dated on or about June 5, 1997 relating to the Offer;
2. the Valuation of BC Sugar prepared in accordance with Ontario Policy 9.1 and Quebec Policy No. Q-27 by Odlum Brown Limited;
3. the Offering Circular dated June 4, 1997;
4. the BC Sugar Shareholder Rights Plan dated May 8, 1997;
5. the amendment to the BC Sugar Shareholder Rights Plan dated May 19, 1997;
6. the support agreement between Great Pacific and BC Sugar dated May 19, 1997;
7. the audited annual financial statements and interim financial reports, Annual Reports, Annual Information Forms and Proxy Statements for BC Sugar for each of the three consecutive fiscal years ending September 30, 1996
8. the unaudited interim reports for the periods ending December 31, 1996 and March 31, 1997;
9. the 1997 budget and five year forecast prepared by the management of BC Sugar;
10. a review of the most recent available tax pool balances for the Canadian and U.S. operations;
11. certain information and discussions with certain senior officers, directors, senior management and other representatives and advisors of BC Sugar relating to the business, operations, assets, liabilities and prospects of BC Sugar;
12. a review of various industry related documents and discussions with the management of BC Sugar related to the Canadian and U.S. sugar industries and their respective regulatory environments;
13. discussions with BC Sugar’s legal counsel and a review of documents prepared by external consultants to BC Sugar with respect to various matters including environmental issues and the appraised values of excess land;
14. public information relating to the business, operations, financial performance and stock trading history of BC Sugar and other selected public companies that we considered relevant;
15. a review of the financial terms of the Offer, in relation to, among other things, current and historical market prices and trading volumes of the Shares, the historical and projected earnings of BC Sugar and other operating data of BC Sugar, and the capitalization and financial condition of BC Sugar;
16. data with respect to the financial terms of certain other similar transactions which we considered relevant in evaluating the transaction contemplated by the Offer;
17. a letter of representation as to certain factual matters dated the date hereof provided by BC Sugar and addressed to us; and

xviii) such other information, investigations and analyses as we considered appropriate in the circumstances.

Assumptions and Limitations

We have relied upon, and have assumed the completeness, accuracy and fair representation of all financial and other information, data, advice, opinions and representations obtained by us from public sources including the Offering Circular or provided to us by BC Sugar and its affiliates or advisors or otherwise pursuant to our engagement and the opinions herein are conditional upon such completeness, accuracy and fair representation. Subject to the exercise of professional judgment and except as expressly described herein, we have not attempted to verify independently the accuracy or completeness of any such information, data, advice, opinions or representations. Senior management of BC Sugar has represented to us, in a letter delivered as at the date hereof, among other things, that the information, data, opinions and other materials (the “Information”) provided to us by or on behalf of BC Sugar are complete and correct at the date the Information was provided to us and that, since the date of the Information, there has been no material change, financial or otherwise, in the position of BC Sugar, or in its assets, liabilities (contingent or otherwise), business or operations and there has been no change of any material fact which is of a nature as to render the Information untrue or misleading in any material respect.

The opinions herein are rendered on the basis of securities markets, economic and general business and financial conditions prevailing as at the date hereof and the condition and prospects, financial and otherwise, of BC Sugar as they were reflected in the information and documents reviewed by us and as they were represented to us in our discussions with management of BC Sugar. In our analyses and in connection with the preparation of the opinions, we have made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of any party involved in the Offer.

In considering the Offer, with your consent we have limited our review to the cash alternative, which is available to all shareholders, and we express no opinion with respect to the Class A non-voting exchangeable redeemable shares of Great Pacific Acquisition Inc.

Based upon and subject to the foregoing, it is our opinion that the $15.00 cash alternative available under the Offer is fair, from a financial point of view, to the holders of Shares other than Great Pacific.

Yours very truly,

Nesbitt Burns Inc.