Keppel Philippines Holdings, Inc.

July 1, 1998 PSE CIRCULAR FOR BROKERS NO. 1494-98 SUBJECT : Keppel Philippines Holdings, Inc . Further to Circular No. 1100-98 pertaining to Keppel Philippines Holdings, Inc. ("KPH") participation in the corporate restructuring of the Keppel Philippine Group of Companies, KPH informed the Exchange that the stockholders, in their Annual Meeting, approved the following matters: 1. Acquisition by KPH of Cebu Shipyard & Engineering Works, Inc.'s ("CSE") shareholdings in Kepphil Shipyard, Inc. ("KSI") in exchange for KPH's shareholdings in SM Keppel Land, Inc. and KPH's shareholders' advances in SM Keppel Land, Inc. KPH shall acquire the shareholdings of CSE in KSI which is worth 298.5 million. In exchange, KPH shall transfer its shareholdings and shareholders' advances to CSE. 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 Net Asset Value (NAV) of SM Keppel Land, Inc. Using these as bases, KPH shall transfer 150,000 SM Keppel Land, Inc. shares of stock and its stockholder's advances in the amount of P159,202,500 to CSE. In exchange, CSE will transfer to KPH a sum total of 216,070,875 KSI shares of stock. 2. Approval of the Offer of KPH's shareholdings in KSI with the CSE minority shareholders For the minority shareholders of CSE, who opts to stay in the shipbuilding business, KPH will offer to exchange its equity investments in KSI for the shareholdings of the said minority stockholders in CSE. The basis of the exchange shall be based on the 3 years earnings of KSI and the shipyard operations of CSE. The minority stockholders of CSE 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 KPH. prLL 3. Declaration of Stock Dividend 10% stock dividend declaration to be given to stockholders of record as of 22 June 1998. For your information. (SGD.) REYNOLD P. ONG Vice-President, Listings and Disclosure Group