PSE Circular for Brokers No. 1450-98

June 26, 1998 PSE CIRCULAR FOR BROKERS NO. 1450-98 SUBJECT : JG Summit Holdings, Inc. Changes in Offer Terms covering the 1:2 Stock Rights Offering Further to Stock Rights Notice No. 1027-98 dated May 14, 1998, please be informed that the Board of Governors of the Exchange approved on June 24, 1998 the changes in the terms of the offer pertaining to the 1:2 Stock Rights Offering of JG SUMMIT HOLDINGS, INC ., to wit: Offer Price From P2.25 per share To P2.00 per share End of Offer Period June 19, 1998 July 17, 1998 Use of Proceeds Partial Financing of construction of a naphtha cracker plant in JG Petrochem P2,255,296,273.82 50% P2,004,417,000 50% Partial Financing of Expansion Project of APO Cement 1,353,177,764.29 30% 1,202,653,000 30% Partial Financing of URC 902,118,509.53 20% 801,762,000 20% P4,510,592,547.64 100% P4,008,832,000 100% Payment Due Dates First Tranche Payment June 19, 1998 First Tranche Payment July 17, 1998 Second Tranche Payment December 14, 1998 Second Tranche Payment January 19, 1999 Third Tranche Payment June 21, 1999 Third Tranche Payment July 19, 1999 Fourth Tranche Payment December 14, 1999 Fourth Tranche Payment January 19, 2000 In view of the foregoing, please be informed that the offer period for the said rights offering shall resume on Monday, June 29, 1998, upon the distribution of the revised prospectus, and will end on Friday, July 17, 1998. cdll In addition, all applications received to date, shall be deemed to have been made at the reduced offer price of P2.00 per Offer share. Excess payments, due to the change in the Offer price, that have been made by stockholders who have applied to subscribe under the original terms of the Offering, will be refunded by the Company without interest as soon as practicable but in any case no later than ten (10) banking days after the close of the Offering on July 17, 1998. A refund check shall be made out in favor of the respective applicant (or in the case of joint applications, to the first named applicant) and crossed "Payee's Account Only," and will be mailed or delivered, at the applicant's risk, to the address specified by the applicant in the application. Attached as Annex "A" is a copy of the Company's revised 1998-1999 forecasted financial statements. For your information and guidance. (SGD.) REYNOLD P. ONG Vice President, Listings and Disclosure Group JG SUMMIT HOLDINGS, INC . ASSUMPTIONS TO PROJECTED FINANCIAL STATEMENTS 1. Excess cash is invested in temporary cash investments with interest computed at 20% per annum or 16% net of 20% final tax. 2. It is assumed that there will be no additional acquisitions or disposals of marketable securities. 3. Receivables and accounts payable and accrued expenses are assumed to increase by 10% per annum. Other assets is assumed to increase by 2% per annum. 4. Additional office condominium units acquired in 1995 amounting to P175 million were depreciated starting 1998 (first year of occupancy). 5. It is assumed that additional capital infusion due to stock rights offering is made during the third quarter of 1998. The net proceeds will be advanced to JG Petrochem, Apo Cement and URC. 6. Equity in net earnings from subsidiaries which include food and agro-industrial, real estate and hotels, telecommunications, petrochemicals and cement were computed based on their projected financial statements 7. Other income was projected to increase by 10% per annum except that there will be no gain on sale of marketable securities. (see assumption no. 2) 8. Administrative expenses were projected to increase by 15% per annum. JG SUMMIT HOLDINGS, INC. PROJECTED BALANCE SHEET (Parent Company) In Thousand Pesos 1998 1999 ASSETS Current Assets Cash and Temporary cash investments 88,078 163,349 Marketable securities 171,489 171,489 Receivables 263,991 290,390 Other current assets 28,721 28,721 Total Current Assets 552,279 653,950 Equity Investments 48,237,057 53,724,007 Due from Affiliated Companies 11,134,370 11,134,345 Land 37,268 37,268 Office Condominium Units net of accumulated depreciation 213,232 201,126 Other Assets 1,181,925 682,814 61,356,131 66,433,510 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Loans payable 2,388,208 2,000,000 Accounts payable and accrued expenses 488,842 537,726 Current portion of long-term commercial paper Total Current Liabilities 2,857,050 2,537,726 Long-term commercial papers 2,500,000 2,500,000 Due to Affiliated Companies 16,658,999 15,024,099 Subscriptions Payable 432,938 432,938 Deferred Credits and Other Liabilities 2,307,892 2,37,892 24,756,879 22,802,655 Stockholders' Equity Common Stock 4,731,658 5,762,118 Additional paid-in capital 4,715,771 5,488,616 Deposit for future subscription 386,422 128,807 Accumulated translation adjustment - - Retained earnings 27,461,048 32,946,960 Treasury shares (695,647) (695,647) 36,599,252 43,630,854 61,356,131 66,433,510 ========= ========= JG SUMMIT HOLDINGS, INC. PROJECTED INCOME STATEMENTS (Parent Company) In Thousand Pesos 1998 1999 REVENUES Equity in net earnings 4,593,860 5,594,156 Other income 35,698 23,834 4,629,558 5,617,989 OPERATING AND OTHER EXPENSES 35,931 39,505 NET OPERATING INCOME 4,593,627 5,578,485 NET INTEREST INCOME (EXPENSE) 20,609 22,670 INCOME BEFORE EXTRAORDINARY GAIN 4,614,236 5,601,154 EXTRAORDINARY GAIN NET NET INCOME BEFORE INCOME TAX 4,614,236 5,601,154 PROVISION FOR INCOME TAX NET INCOME 4,614,236 5,601,154 RETAINED EARNINGS, BEG. OF YEAR 22,952,223 27,461,048 Prior period adjustment Cash dividends P.02 per share (105.411) (115.242) RETAINED EARNINGS, END OF YEAR 27,461,048 32,946,960 ========= ========= JG SUMMIT HOLDINGS, INC. PROJECTED STATEMENTS OF CASH FLOWS In Thousand Pesos 1998 1999 CASH FLOWS FROM OPERATING ACTIVITIES Net Income 4,614,236 5,601,154 Adjustments to reconcile net Income to net cash provided by (used in) operating activities; Equity in net earnings of affiliated companies (4,593,860) (5,594,156) Dividends received from equity investments 97,460 107,206 Depreciation 12,105 12,105 Changes in operating assets and liabilities Decrease (increase) in: Marketable equity securities - - Receivables (23,999) (26,399) Other current assets - - Other assets (542,061) 499,111 Increase (decrease) in Accounts payable & accrued expenses 44,440 48,884 (391,679) 647,907 CASH FLOWS FROM INVESTING ACTIVITIES Net increase in equity Investments - - Payment of subscriptions payable - - Increase in deferred credits - - - - CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in due to affiliated companies 7,007,252 (1,634,900) Decrease (increase) in due from affiliated companies (1,350,000) 25 Cash dividends paid (105,411) (115,242) Increase (decrease) in loans (6,800,000) (368,208) Proceeds from: Stock rights offering 1,690,296 1,545,690 Purchase of treasury shares 442,137 (572,635) NET INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS 50,458 75,271 CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF YEAR 37,620 88,078 CASH AND TEMPORARY CASH INVESTMENTS AT END OF YEAR 88,078 163,349 ======== ========