Mondragon International Phils., Inc.

January 25, 1999 PSE CIRCULAR FOR BROKERS NO. 112-99 SUBJECT : MONDRAGON INTERNATIONAL PHILS., INC. Mondragon International Phils., Inc. ("MON") confirmed to the Exchange the news article captioned "Mondragon mulls sale of 40% stake in resort complex" published in the January 16, 1999 issue of The Manila Times which reported that MON is planning to sell up to a 40% stake in its hotel and casino unit to strategic partners to repay its debt. Attached is a copy of the said article. For your information. cdpr (SGD.) JOSE LUIS U. YULO, JR. President and CEO Mondragon mulls sale of 40% stake in resort complex MONDRAGON International Philippines Inc. is planning to sell up to a 40 percent stake in its hotel and casino unit to strategic partners to repay debt, a company official said on Friday. "We are talking to three foreigners and some three to four locals. We are offering as much as 40 percent of Mondragon Leisure (and Resorts Corp)," Faustino Roberto, Mondragon chief finance officer, told Reuters. Mondragon Leisure, the hotel and casino unit of Mondragon International, operates two hotels inside the Clark special economic zone. The plan was part of the company's three-pronged strategy to settle its P5.1 billion obligations to 25 banks after a proposed 90-day debt suspension period, he said. Mondragon said in a letter to the Philippine Stock Exchange on Thursday it had requested a three-month debt relief period from its creditors. The banks have yet to agree. "We've written them a letter and we've talked to almost all of them. We're still continuing to talk to some banks," Roberto said. Apart from getting a strategic partner, Mondragon has hired First Metro Investment Corp, a unit of Metropolitan Bank & Trust Corp. (Metrobank), as adviser in drafting a financial restructuring plan to be presented to creditors. It also plans to reach an agreement soon with Clark Development Corp. (CDC) on its lease payments at the Clark special economic zone. "We want to get new investor or raise funds to be able to compromise with CDC and prepare a financial plan to submit to our creditors to address the (debt) repayments," Roberto said. The state-owned CDC had terminated its lease agreement with Mondragon Leisure after the company failed to pay rental fees. This led to the closure of Mondragon's Mimosa Regency Casino in December. CDC and Mondragon differ over the arrears of rental fees Mondragon needs to pay. "The disruption of our operations in the casino has severely curtailed our cash flows," Mondragon said in its letter to the stock exchange. "We stated the need for a breathing spell to enable us to concentrate all our resources in resolving the issues with CDC and to bring in investment funds to get us back to normalcy." Earlier, local credit rating agency Credit Information Bureau Inc downgraded the rating of Mondragon International's short-term commercial papers due to possible loan payment defaults. Reuters