Shareholders of three Keppel Philippines units approve restructuring plans

July 14, 1998 PSE CIRCULAR FOR BROKERS NO. 1616-98 July 13, 1998 Shareholders of three Keppel Philippines units approve restructuring plans Shareholders of keppel Philippines Holdings Inc (KPH), Kepphil Shipyard Inc (KSI) and Cebu Shipyard and Engineering Works Inc (CSEW) have approved the Keppel Philippines Group's restructuring plans at their respective Annual General Meetings held recently. Under the restructuring aimed at further growing and maximizing shareholder value of these listed companies, the Group will consolidate its shiprepair, shipbuilding and marine related operations in Batangas and Cebu under KSI and its property related businesses under CSEW. CSEW will transfer all its shipyard related assets and businesses to its newly incorporated wholly owned subsidiary, Keppel Cebu Shipyard Inc. (KCSI) via an asset-for-share swap based on the book value of CSEW, which is P298.5 million, to be satisfied by the issue of 298.5 million KCSI shares at par value of P1 per share by KCSI. LLpr KPH will sell its entire 15 percent shareholding and stockholders advances in SM-Keppel Land Inc and 82.5 million KSI shares to CSEW, in exchange for the entire 298.5 million shares of KCSI. All the shares of KCSI will be injected by KPH into KSI, making KCSI a 100 percent Subsidiary of KSI. CSEW will be renamed Keppel Philippines Properties Inc. (KPPI), while KSI will be renamed Keppel Philippines Marine Inc. SM-Keppel Land Inc is a joint venture company with the SM Group and is developing a 20,000 sq m property in Ortigas. The swap of shares and stockholder's advances among the three companies was based on the use of a price-earnings multiple for shipbuilding/shiprepair businesses, on one hand, and a market-derived discount on net asset values of property businesses, on the other. Shareholders of CSEW who prefer to stay with the shipyard business can exchange their CSEW shares for KSI shares owned by KPH. The exchange ratio will be one CSEW share for 3.4 new KSI shares, to be offered after completion of the spinning-off of KCSI to KSI. Based on this ratio, shareholders of CSEW will benefit from an improvement in the book value of their shares, while KSI shareholders will gain in their earnings per share. On the other hand, the earnings and book value of KPH shares will be further enhanced. prLL Shareholders of CSEW who opt to remain as shareholders of KPPI will gain from owning a property development stock at a discounted price of 40 percent and from future property-related projects of the Group. Keppel IVI Investments Inc is the financial advisor for the restructuring while Multinational Investment Bancorporation is the independent financial advisor for the minority stockholders of CSEW. The minority stockholders of KPH and KSI are being advised by Insular Investment and Trust Corporation. The restructuring exercise is now subject to the approval by the Securities and Exchange Commission of the Philippines. For further information, contact : Kevin Chee Keppel Philippines Holdings Inc . Tel : (632) 8921816