Compliance Monitoring Dept.

February 2, 1998 PSE CIRCULAR FOR BROKERS NO. 022-98 COMPLIANCE MONITORING DEPT. -LISTINGS GROUP Philippine, Stock Exchange 4/F Philippine Stock Exchange Centre Ortigas Center, Pasig City Attention : Ms . Grace de Guia Supervisor Mr . Jim Alabastro Compliance Analyst RE : News Article entitled, "Belle's Profit Shrinks in '97 On Peso's Fall" Gentlemen : We refer to your letter-facsimile of even date in respect of the captioned matter. We note that the matters contained in the said article arose from a reported interview with the Company's Chairman, Mr. Jaime C. Gonzalez. Please be advised that the income figures mentioned in the article were stated as estimates, based on tentative data and, therefore, not yet final. Needless to state, upon finalization of the data (after completion of the Company's year-end audit), we will report and/or "fully" and "accurately" disclose all the material information to the Exchange in due course. LLjur Very truly yours, (SGD.) A. BAYANI K. TAN Corporate Secretary Belle's profit shrinks in '97 on peso's fall By IAN C . SAYSON Reporter BELLE Corp., a publicly-listed gaming and property concern, said its net income last year fell below expectation at P1.20 billion after the company provided for foreign exchange losses on account of the pesos' depreciation. Belle chairman Jaime C. Gonzalez in an interview said the revaluation of the company's dollar loans to reflect the weaker value of the peso has prevented it from hitting its 1997 projected income of P2.02 billion. "We are not going to meet the original target," Gonzalez said. "We are going to report only about P1.20 billion in net income principally because of foreign exchange losses." Gonzalez said the company took a charge of P550 million charge for foreign exchange losses last year to account for the peso's weakening against the dollar. Belle might have to book foreign losses again this year on top of what it recognized in 1997 depending on where the peso-dollar rate would stand by year-end, Gonzalez said. Gonzalez denied the company is in a financial difficulty that it is not going to meet its interest payments on its dollar debts because of the peso's depreciation. "We are absolutely not encountering any difficulties in meeting any of our interest payments," Gonzalez said. "Whoever said that does not know what's going on." The peso's depreciation against the dollar dealt a significant blow to Belle which earlier projected to easily double last year the P1.10 billion profits it made in 1996. After surging 53 percent to P1.16 billion in the first half of 1997 on the back of strong sales from its property projects, Belle's profits in the second half did not grew by the same pace as high interest rates brought about by the currency turmoil stifled demand for property projects. The peso's weakening against the dollar also inflated, in peso terms, the value of the $150 million five year floating rate notes Belle issued in the first quarter of last year. The loan was used to finance in part Belle's property project besides the Manila Bay. From P4 billion at the peso' pre-devaluation average level of P26.72, Belle's $150 million dollar debt amounted to P6.02 billion based on the peso-dollar rate's year-end level of P40.117. The jump in the peso value of Belle's dollar debts prompted many analysts, particularly those at UBS Securities, to suspect that Belle would have trouble meeting interest payments" this year unless it raises its capitalization. LLjur But Gonzalez said: "We are still okay. We have got a lot of cash, we have no problems."