PSE Circular for Brokers No. 1109-98

May 22, 1998 PSE CIRCULAR FOR BROKERS NO. 1109-98 PHILIPPINE STOCK EXCHANGE Exchange Road, Ortigas Center Pasig City, Philippines Attention: Disclosure Department Listing & Disclosure Group Gentlemen : Please be advised that the Stockholders of CEBU SHIPYARD & ENGINEERING WORKS, INC. (CSEW) in their meeting today, 22 May 1998, had approved the following matters. A. In respect to the participation of CSEW in the corporate restructuring of the Keppel Philippine Group of Companies, the following matters were approved by the Board of Directors of CSEW: 1 . The Asset-for-share swap with Keppel Cebu Shipyard, Inc . (KCSI) (new company) As initial step of the corporate restructuring, CSEW shall transfer its shipyard related assets amounting to P436.3 Million and its shipyard related liabilities amounting to P137.8 Million to KSCI. The shiprelated assets are to be transferred at Net Book Value. In exchange for the assets and liabilities of CSEW, KCSI shall issue 298.5 Million worth of common shares out of its authorized capital stock (hereafter "KCSI shares"). KCSI is a wholly-owned subsidiary of CSEW. The assets to be transferred to KCSI from CSEW comprise of one (1) graving dock and four (4) slipways with a maximum capacity of 35,000 dwt. 152-Meter length docking quay, fabrication shop, machine shop, other plant and equipment and inventories. These assets are located at Dad Cleland Avenue, Lapu-lapu City, Cebu. 2 . Exchange of CSEW shareholding in Keppel Cebu Shipyard, Inc . (New company) with Kepphil Shipyard, Inc . (KSI) shares To actualize the purposes of the corporate restructuring, CSEW will transfer all or 100% of its KCSI shares to Kepphil Shipyard, Inc. (KSI). In effect, the shipyard operations are thus transferred to KSI. In exchange, KSI will issue to CSEW out of its authorized capital stock, 298.5 Million worth of common shares (hereafter KSI shares). The ratio for said share-for-share swap is at 1:1. 3 . Exchange of CSEW shareholdings in KSI with Keppel Philippine Holdings, Inc . 's (KPHI) shareholdings and advances in SM Keppel Land, Inc . CSEW will acquire the equity investments (shares of stock) and the stockholders' advances account of KPHI in SM Keppel Land, Inc. KPHI owns 15% of the common shares of SM Keppel Land, Inc and this is equivalent to 150,000 shares. Stockholders' advances of KPHI in SM Keppel Land, Inc as of 22 May 1998 amounts to P159,202,500.00. KPHI shall transfer 150,000 shares of stock and P159,202,500.00 worth of Shareholders' account in SM Keppel Land, Inc to CSEW. There will be a discount of 40% of the Net Asset Value of SM Keppel land, Inc in exchange, CSEW will transfer to KPHI 216,070,875 KSI shares of stock. Prior to the exchange, CSEW owns 377,805,038 KSI shares of stock. 4 . Amendment of the Articles of Incorporation of CSEW as follows : (I) Article I to change the company name of CSEW to Keppel Philippines Properties, Inc .; (II) Article II to change the primary purpose of CSEW to a property holding and development company (iii) increase in authorized capital stock . The change in the corporate name will be from Cebu Shipyard & Engineering Works, Inc to Keppel Philippines Properties, Inc. Any previous resolution in the change in corporate name shall be superseded. Correspondingly, the primary purpose will be amended to the effect that Keppel Philippines Properties, Inc will be a property holding and development company. The recommendation to increase the capital stock was not carried out. B. The other actions approved by the Board of Directors are as follows: 1 . Declaration of Dividend Seven (7%) percent cash dividend declaration to be given to stockholders of record as of 19 June 1998 and to be issued on 17 July 1998. 2 . Renewal of Management and Technical Consultancy Agreement The Management and Technical Consultancy Agreement between Keppel Corporation Ltd and Cebu Shipyard will be renewed for another five years starting 1 January 1998. 3 . Declassification of Class "A" and Class "B" shares into classless Common shares Class "A" and Class "B" shares were declassified as follows: (1) One (1) Class "A" share for every one (1) Classless Common share ii) One (1) Class "B" share for every 1.083 Classless Common share. The corresponding provisions of the Articles of Incorporation will be amended accordingly. Furthermore, the fractional shares resulting in the declassification will be dropped. We trust that the above disclosures complies with the rules and regulations of the Philippine Stock Exchange. Very truly yours, (SGD.) ALEX CHENG TEE HAN Treasurer/VP-Administration