570 DUNSMUIR
LENDERS COMMITTEE
#108-5410 Balsam St. Vancouver BC. V6M 4B4
Telephone (604) 263-4423
E-mail - Caljura@AOL.com

April 3rd, 2001

Dear Sir/Madame's

Firstly, allow me to apologize for the delay of this newsletter, it can be attributed to some pending matters that remained unresolved until as late as last week. I decided to defer the mailing until I could report to you with more certainty.


570 DUNSMUIR STREET, VANCOUVER

The remaining retail and office space was leased from February 1st 2001 to the Academy Of Learning, a national computer and business college. The suitability of this tenant is in keeping with the "assembly" type space 570 Dunsmuir offers. Lease negotiations were extensive but concluded satisfactorily. The retail space leased by this tenant will be used as an enrolment office and also gives them street level exposure.

After a meeting with the major tenant (L.S.C) last week to resolve a few minor problems I carried out a visual inspection of all floors and I am pleased to report the building seems to be operating smoothly. There is opportunity for additional revenues in my opinion and I have taken steps to realize this potential income. The building has considerable high-ceiling basement space not being utilized. I have contacted the leasing agent and asked him to attempt to rent this space, he agrees this space is a viable source of additional income.


JUDICIAL TRUSTEE MATTERS

During the course of my most recent meeting with the Judicial Trustee we discussed what consideration was being given to the final disposition of the building. I was informed in recent discussions they had with various commercial real-estate professionals all indications were that now is not the ideal time to market the building for sale, the present provincial political - economic climate not being the least of their reasons. My personal enquiries regarding market conditions are consistent with the findings of the Judicial Trustee. In any event, the building is producing a reasonable cash flow so awaiting the optimum market to sell is of no detriment to the lenders.

Given that the mandate of the Judicial Trustee is to attempt to maximize recovery, it is incumbent upon them to seek professional advice outside their own realm of expertise, and adhere to it when it is deemed there is a potential benefit to the lenders. Many lenders have asked the question; " How much of my initial investment can I expect to see at the end of all this"? Estimating what the lenders will ultimately receive is subject to many variables, i.e. final sale price, direct costs, our share of indirect costs, all indeterminable amounts until the absolute conclusion of the trusteeship. Presumably for these reasons, the Judicial Trustee is reluctant to give an estimate on the issue of final recovery. However, if I were to give an opinion based on the data I have before me, I don't think I would be far off if I suggested twenty cents on the dollar, inclusive of the benefit of the current cash flow for a period of time.


INDIRECT COSTS DEFINED

These are fees incurred by PwC in general matters pertaining to the trusteeship, as opposed to direct costs which are specific to a project and include legal and trustee fees incurred by the project. Examples of indirect costs are trustee and legal fees incurred in the pursuit of financial recovery where it pertains to Eron principals and insiders. Also, the many projects that failed before or after October 3rd 1997 but nevertheless required some degree of administration after their demise is another example.

The indirect costs are absorbed by the surviving projects in accordance with the January 1998 order of Justice Tysoe which stated a projects percentage contribution to indirect costs shall be that projects percentage of all project direct costs, i.e. the more project costs, the more indirect costs. Doesn't seem fair, does it? Especially when it comes to projects such as Dunsmuir, which has the highest direct costs of all projects.


570 DUNSMUIR LITIGATION

In my last newsletter I reported to you of my unsuccessful litigated attempt to have the indirect costs formula amended so that Dunsmuir would not be burdened with such a disproportionate share of these costs. I also mentioned Justice Tysoe left the door open to pursue this initiative from another direction. At the end of last year we returned to court and succeeded in having the January 1998 order amended. It now states certain development; construction, financing and leasing will not be included in the calculation of indirect costs. David Fredrickson (Dunsmuir Counsel) informs me our efforts have resulted in Dunsmuir's contribution to indirects being reduced by approximately $300,000.

We are not presently embroiled in any litigation as a singular project, however the Judicial Trustee is in litigated pursuit of financial recoveries from various sources, which we will benefit from depending on the degree of their success.


INCOME TAX

I have been asked by David Craig to request that election forms that were mailed to you be completed and returned to PwC. These completed forms allow you to be registered with Revenue Canada for the purpose of recovering taxes paid on actual income received in 1997 from your Dunsmir investment. If you did not receive an election form please contact David Craig at (604) 713-6680. If, like most of us, you did not receive any interest income from your investment in Dunsmuir, please ignore this request.


CLASS ACTION - ERON LENDERS vs. BC GOVERNMENT

For those of you who have little or no knowledge regarding this matter, here is a brief synopsis to date:

The BC Supreme Court originally approved the certification of a class action lawsuit. Upon appeal the BC Government were successful in having this decision overturned. Council for the Eron lenders were then granted leave to appeal to the Supreme Court of Canada. The Supreme Court of Canada have agreed to hear the appeal, a date has been set for some time in June. If successful the matter will then be returned to the BC Supreme Court. It will then be set down for trial some time in 2002, then another appeal most likely, and so on. Unfortunately nothing can be done about the fact that the judiciary at this level move at the speed of an arthritic tortoise. Council acting on behalf of the Eron lenders have taken this matter on a contingency basis. I am not aware of the details of the potential split.

Please don't hesitate to call me if any of the above matters require clarification.

Yours Respectfully,

Duncan MacKechnie
Chair 570 Dunsmuir.





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