PSE Circular for Brokers No. 1100-98

May 21, 1998 PSE CIRCULAR FOR BROKERS NO. 1100-98 PHILIPPINE STOCK EXCHANGE PSE Center, Exchange Road Ortigas Center, Pasig City Attention : Ms . Isabel Garcia Compliance & Surveillance Department Gentlemen : Please be advised that the Board of Directors of KEPPEL PHILIPPINES HOLDINGS, INC. (KPHI) in its meeting today, 21 May 1998, had approved the following matters, in respect to KPHI's participation in the corporate restructuring of the Keppel Philippine Group of Companies. The following matters were approved by the Board of Directors of KPHI: 1 . Acquisition by KPHI of Cebu Shipyard & Engineering Works, Inc . 's (CSEW) shareholdings in Kepphil Shipyard, Inc. (KSI) in exchange for KPHI's shareholdings in SM Keppel Land Inc . and KPHI's shareholders' advances in SM Keppel Land Inc . KPHI shall acquire the shareholdings of CSEW in KSI which is worth 298.5 million. In exchange, KPHI shall transfer its shareholdings and shareholder's advances to CSEW. The basis of the exchange shall be on the following valuations: (a) 12 times average 3 years earnings for KSI; and (b) Discount of 40% of Not Asset Value (NAV) of SM Keppel Land, Inc. Using these as bases, KPHI shall transfer 150,000 SM Keppel Land, Inc. shares of stock and its stockholder's advances in the amount of P159,202,500 to CSEW. In exchange, CSEW will transfer to KPHI a sum total of 216,070,875 KSI shares of stock. prLL 2 . Approval of the Offer of KPHI's shareholdings in KSI with the CSEW minority shareholders For the minority shareholders of CSEW, who opts to stay in the shipbuilding business, KPHI will offer to exchange its equity investments in KSI for the shareholdings of the said minority stockholders in CSEW. The basis of the exchange shall be based on the 3 years earnings of KSI and the shipyard operations of CSEW. The ratio for the exchange shall be 3.60 KSI shares for every 1 CSEW share. The minority stockholders of CSEW who decides to stay in the shipbuilding business will maintain the earning power of their investments. The minority shareholders will be given the right to exchange their shares within 45 days from the date of the offer by KPHI. 3 . Declaration of Stock Dividend 10% stock dividend declaration to be given to stockholders of record as of 22 June 1998. The above matters shall be submitted to the stockholders of KPHI in their Annual Stockholders Meeting dated 23 May 1998 11:00 am at Makati City, Philippines for their approval and ratification. cdll We trust that the above disclosures complies with the rules and regulations of the Philippine Stock Exchange. Very truly yours, (SGD.) CHEE FOOK MENG Treasurer/VP-Administration