Asian Terminals, IncorporatedRecord date and Work Program for 1:1 Stock Rights Offering

January 28, 1999 PSE CIRCULAR FOR BROKERS NO. 161-99 SUBJECT : Asian Terminals, Incorporated Record date and Work Program for 1:1 Stock Rights Offering Further to Circular for Brokers nos. 1482-98 and 1883-98, please be informed that the record date of the 1:1 stock rights offering of ASIAN TERMINALS, INC . (the "Company") has been set on February 17, 1999. The details are as follows: cdll Terms of the Offering Ratio one (1) share offered for every common share held Offer Shares 1,000,000,000 common shares Par value P1.00 per share Offer Price P1.00 per. share Record Date February 17, 1999 Ex-Date February 11, 1999 Start of the Offer February 24, 1999 Closing of the Offer for March 2, 1999 Shareholders of record Closing of the Offer for March 8, 1999 the Underwriters Additional Subscription- In the event that the Offer Shares are not Second Round Offering fully subscribed by the eligible stockholders after the First Round, each Applicant may elect, by indicating the number of additional Offer Shares in the same Application, to subscribe to such additional Offer Shares remaining unsubscribed, as may be allocated to such Applicant in proportion to his First Round subscription at the Offer Price ("Second Round"). Eligible Investors Only registered stockholders of the Company as of the record date shall be eligible to subscribe to the Offer Shares. Payment terms Applicants are required to pay in full, upon submission of the duly accomplished and executed Application Form, the total value of the subscription, including the total value of the Additional Subscription. Issue Manager and Underwriter All Asia Capital and Trust Corporation Stock Transfer Agent Far East Bank & Trust Company The net proceeds from the offering of approximately P1.0 billion will be used by the Company to retire the principal amounts of clean short-term debts under the Omnibus Credit Lines from various banks not exceeding P1.0 billion . The short term loans to be liquidated have interest rates ranging from 16.76%-19.50% cdll Attached is a copy of the Company's projected financial statements covering the fiscal year 1998/1999. For your information and guidance. (SGD.) JOSE LUIS U. YULO, JR. President/CEO ANNEX A ASIAN TERMINALS, INC . SHORT TERM LOANS TO BE PAID OFF As of October 31, 1998 Name of Bank Amount (Php) Bangkok Bank 50,000,000 Deutsche Bank 199,844,741 East West Bank 100,000,000 Far East Bank 25,000,000 Hongkong Bank 99,605,536 International Capital Corp. 30,537,486 Land Bank of the Phils. 109,300,000 Metro Bank 50,000,000 Phil. Commercial Capital Inc. 41,853,837 Phil. National Bank 25,000,000 Rizal Comm'l Banking Corp. 50,000,000 Security Bank 50,000,000 Solid Bank 50,000,000 Standard Chartered Bank 108,674,500 TOTAL 989,866,100 Certified correct: (SGD.) RICHARD D. BARCLAY (SGD.) ARTURO P. LOPEZ Executive Vice-President SVP- Corporate/Treasurer ANNEX B ASIAN TERMINALS, INC . CONSOLIDATED STATEMENT OF PROFIT AND LOSS FY 98/99 (000's Philippine Pesos) GROSS REVENUE Arrastre 531,510 Storage 479,812 Stevedoring 810,378 Terminal Handling Services 437,669 Special Services 182,775 Others 77,256 Total 2,619,399 PPA FEES 439,090 REVENUE NET OF PPA FEES 2,180,309 OPERATING/GENERAL & ADMIN EXPENSES Operating Expenses 959,595 General and Administrative Expenses 406,354 Total Expenses 1,365,948 INCOME FROM OPERATIONS 814,361 OTHER INCOME (CHARGES) (617,880) EQUITY IN NET EARNINGS OF A SUBSIDIARY 8,227 GAIN FROM SALE OF SHARES OF STOCKS 26,156 INCOME FROM JOINT VENTURE HFC 186 PROFIT BEFORE INCOME TAX 231,050 PROVISION FOR INCOME TAX 34,337 NET INCOME 196,713 Certified correct: (SGD.) RICHARD D. BARCLAY (SGD.) ARTURO P. LOPEZ Executive Vice-President SVP- Corporate/Treasurer ANNEX C ASIAN TERMINALS, INC . BALANCE SHEET FY 98/99 (000's Philippine Pesos) ASSETS CURRENT ASSET Cash on Hand & in Banks 44,311 Marketable Securities 130,000 Accounts Receivable 515,457 Materials & Supplies Inventory 206,429 Prepaid Expenses & Other Current Assets 571,895 Total Current Assets 1,468,093 PROPERTY & EQUIPMENT Property & Equipment 2,498,631 Leasehold Improvements 1,138,243 MGT PPE 2,110,542 ICD PPE 152,578 Total 5,899,993 Less: Accumulated Depreciation 752,612 Net Property & Equipment 5,147,381 INVESTMENTS SPECIAL PROJECTS 32,478 INVESTMENT IN SHARES OF STOCK 98,764 LEASEHOLD RIGHTS 402,908 Less: Accumulated Amortization (153,825) 249,061 TOTAL ASSETS 7,015,799 ======= LIABILITIES AND STOCKHOLDERS EQUITY CURRENT LIABILITIES Income Tax Payable 8,584 Loans/Lease Payable 1,198,445 Accounts Payable & Accrued Expenses 309,114 Total Current Liabilities 1,516,144 LONG-TERM LIABILITIES Long-Term Debt/Leases net of current portion 2,245,892 Retirement Benefits Payable 53,602 Total Long-Term Liabilities 2,299,483 TOTAL LIABILITIES 3,815 ,637 STOCKHOLDERS EQUITY Capital Stock (P1.28, P1 per) Subscribed and Paid-Up 1,000,000 Premium on Capital Stock 307,433 Retained Earnings 723,701 Equity Infusion 1,000,000 Dividends (27,885) Net income for the year 196,713 3,200,162 TOTAL LIAB. AND STOCKHOLDERS' EQUITY 7,015,782 ======= Certified correct: (SGD.) RICHARD D. BARCLAY (SGD.) ARTURO P. LOPEZ Executive Vice-President SVP- Corporate/Treasurer ASIAN TERMINALS, INC . Cash Flow FY 98/99 (000's Philippine Pesos) Profit Before Interest 872,395 Depreciation 158,377 Total 1,030,772 Income from Batangas 8,227 Income from TRP 26,156 Income from HFC 185 Interest Expense (617,880) Income Tax (34,337) Dividend (27,688) Working Capital 24,881 Cash Flow From Operations 410,317 Property and Equipment (87,004) Leasehold improvements (37,570) Special Projects (50,000) ICD Capex (31,585) MGT Capex (287,483) Investment in Stocks 146,610 Equity infusion 1,000,000 Net Cash Flow 1,063,274 ======= Opening Borrowings 4,333,300 Closing Borrowings 3,270,028 1,063,274 ======= Certified correct: (SGD.) RICHARD D. BARCLAY (SGD.) ARTURO P. LOPEZ Executive Vice-President SVP- Corporate/Treasurer ANNEX D MAJOR ASSUMPTIONS USED IN THE BUDGET (WITH 1 BILLION EQUITY INFUSION) FOR FY 98/99 I. Consolidation The statements show consolidated figures (Container/Gen. Operations/MGT/ICD). II. Capital Expenditures Equipment and facilities were determined as a function of the cargo volumes to be handled. The total cost of projected capital expenditures for FY 98/99 is P380M. aisadc III. Exchange Rate A rate of P40 to US$1 was used for FY98/99. IV. Cargo Throughput A. Containerized Cargo The projected container volume for FY 98/99 is 425,797 tons inclusive of growth within the existing client which incorporate any new business and business losses. Decrease of 2.2% for FY98/99 was due to the economic condition. B. General Cargo Dockside/Anchorage 1. Thruput projections for FY 98/99 is 2,110,690 metric tons for dockside and 1,764,310 metric tons for anchorage. The projections is based on the actual production from November March 1998. The reduction in volume of 24.54% for FY 98/99 was due to the following reasons: a. Pier 15 & 13 would not be 100% operational for the Y98/99. b. Trend is going down because of the high cost of importation. c. MICT share in the volume to be handled is roughly 50,000 MT per month. V. Gross Revenue A. Arrastre Revenues 1. Container Revenues The effective gross tariff rate per TEU is based on actual tariff rates per import and export container. 2. General Cargo Revenues The effective gross tariff rate per metric ton of general cargo is based on the actual rate per commodity applied to projected volume. A tariff increase of 10% was projected on July 15, 1998. B. Stevedoring Revenues 1. Container Revenues The effective gross tariff rate per container is based on the actual rates per self-sustaining and non self-sustaining vessel operations. A 20% increase in tariff rates was assumed effective July 15, 1998 due to the high foreign exchange. 2. General Cargo Revenue The effective gross tariff rate is based on the actual rate per commodity applied to projected volume. A tariff increase .of 20% was projected on July 15, 1998. C. Storage Revenues Storage revenues are based on actual July 1997 to April 1998 thruput. This is contingent on both volume increases during the year and the completion requisite of documentation in taking out the cargo from the port. Tariff increase of 20% was projected effective January 1999. Note: Attached is the new cargo handling tariff rates effective July 15, 1998 with 20% increase on stevedoring (containerized and non-containerized) and 10% increase in arrastre for non-containerized. VI. PPA Fees A. Arrastre Fees Container This is based on existing contract with PPA. ATI will be paying a fixed fee amounting to US $ 4.6 million per annum and variable fee of 8.00% of its gross container revenues or 20% whichever is higher. General Operations Company is projected to pay a fixed fee amounting to US$ 1.2 million per annum and 7.5% of its gross arrastre revenues or 20% whichever is higher. LLphil B. Stevedoring Fees The Company pays stevedoring fees to the PPA amounting to 14.0% of its gross stevedoring revenues. C. Storage Fees The company projected to pay a fixed fee of P55M and a variable fee of 30% of its gross storage revenue in excess of P230M. VII. Expenses A. Operating Expenses 1. Salaries and Wages Salaries and wages are computed based on manpower projections prepared by the operating units. The total number of projected manpower for FY 98/99 is 3,417 personnels, including operating and non-operating divisions. Salaries and wages monthly and daily rates were computed based on the average per pay-grade level. Salaries and wages rate were projected to increased by about 10% during the year. As the new fiscal year will usher in CBA negotiations with the unions and projected government mandated increases were taken into consideration. A reduction of 10% in the salaries and wages despite the annual increases is a result of the cost cutting program being implemented this year. A total of 268 heads was included in the projection to be retrench this FY 98/99. 2. Light and Water The budget is based on the monthly consumption of the operating units measured in kilowatt hour and cubic meters of power and water, respectively. An allowance for a rate increase of 10% was factored in. 3. Fuel, Oil and Lubricants The budget was projected on the basis of monthly consumption of gasoline/diesel, and oil/lubricants of the operating units and the acquisitions of new equipment. 4. Repairs and Maintenance The operating units submitted their budget for the cost of repairs and maintenance of pier and pier equipment and also the new integrated computer system, both existing and to be acquired. 5. Insurance and Bonds Insurance and bonds are based on the actual insurance premiums paid by the Company for both existing and prospective acquisitions. Included in the projection is a decrease in premium as a result of a possible negotiations to the Insurance company. 6. Rentals Amounts were projected based on rental payments on tugboat, pier equipment, office space. B. General and Administrative Expensive 1. Salaries and Wages Salaries and wages of the non-operating divisions are computed based on expected manpower requirements during the year. The identified personnel in each divisions to be assigned to operating units were taken into consideration. The monthly rate assumed represents the average per pay-grade level. It is expected to increase by about 10-15% during the year. Provisions were made for salary adjustments relative to CBA negotiations. Manpower reduction was also taken into consideration. 2. Social Insurance The amounts were based on the prepared budget submitted by both operating and non-operating units computed based on the its equivalent contribution according to salary level. 3. Security Services Considered a reduction of security guards as a result of the cost cutting program but reflecting optimum security services. An annual inflation rate of 10% was assumed. 4. Taxes and Licenses The budget was based on the current level operations with an annual inflation rate of 10%. 5. Employees Benefits The amounts were based on the prepared budget submitted by both operating and non-operating units plus a 10% inflation factored in. 6. General Overhead These were projected based on submitted by the opening and non-operating units plus an inflation rate of 10%. Items that could specifically be identified were specifically included. C. Management Fees This is assumed to be 5% of Net Income before income tax. cdll D. Depreciation Expense Fixed assets are depreciated over their estimated useful life using straight-line method. Acquisition for the year were included in the computation. E. Amortization Leasehold rights is amortized over 40 years. F. Interest Expense Shorterm Loans 20%FY98/99 EFIC Loan 7% FY 98/99 Dollar Loan 9% FY98/99 VIII. Assets A. Accounts Receivable This is assumed to be 1 month's gross revenue. The receivable is projected to be collected the following month. B. Inventory Materials This is maintained at 3% of the total Property and Equipment Under Lease. C. Prepayments This includes rentals paid to the Province of Bataan for the Grains Terminal Project. D. Preoperating Expenses This represents cost incurred for the Grains Terminal and ICD Logistics projects prior to its commercial operation. This includes the rent paid to the Provincial Government of Bataan for the period May 1, 1993 to April 30, 1995. E. Property and Equipment Fixed Assets acquisitions for the projected period are based on ATI's program of capital expenditures. These include direct purchases of equipment for operations and administrative utilization. Listed below are the assumed estimated useful lives of property and equipment. Pier Equipment 10-20 years Office furniture and equipment 01-05 years The estimated useful lives for major capital expenditures are based on the contract with PPA. F. Equipment Under Lease This includes cost of properties to be acquired under capital lease arrangements. G. Leasehold Improvements This refers to capital expenditures under civil works which is to be amortized over a period of 40 years. llcd H. Leasehold Rights These are other assets and the cost of 7R and OTSI contracts reclassified to franchise and from franchise to leasehold rights net of P171 million due from stockholders. The remaining book value will be amortized over a period of 40 years. I. Investment in Shares of Stock This represents investment to Inversora Puerto Buenos Aires (Inversora). The total committed investment of ATI is estimated at US$9.4M which is translated to an effective 10% shareholdings in Terminales Rio dela Plata. Sale of 5% share if projected until end of FY97/98 and the other 5% for FY98/99. J. Special Projects This represents feasibility project costs for the next 5 years. K. Grains Terminal This represents the project cost of Grains Terminal and its Capital Expenditures for the next 5 years amortized over 36 years. IX. Liabilities and Stockholders' Equity A. Accounts Payable/Accrued Expenses This is projected as follows: 1. Suppliers' account 3% of monthly totals of Property and Equipment, Equipment under lease and Leasehold Equipment. 2. VAT 10% of monthly gross revenue 3. Withholding Tax 15% of monthly salaries 4. Management Fees current months' management fees. 5. Accrued Interest represents interest on EPIC and other long-term loans. B. Retirement Benefits Payable This represents the amount of P2.356 million accrued monthly. An annual increase 10% was assumed. C. Income Tax Liability The income tax liability is assumed to be the quarterly tax due for the period computed at 35% of the taxable income. D. Shorterm Borrowings This represents loans and leases payable within the next 12 months. E. Long-term Loans These are loans from local and foreign sources payable beyond 12 months. F. Long-term Leases These are leases on capital assets payable beyond 12 months. cdt Certified correct: (SGD.) RICHARD D. BARCLAY (SGD.) ARTURO P. LOPEZ Executive Vice-President SVP- Corporate/Treasurer