PSE Circular for Brokers No. 1694-99

July 9, 1999 PSE CIRCULAR FOR BROKERS NO. 1694-99 PHILIPPINE STOCK EXCHANGE 4/F, PSE Center Exchange Road, Ortigas Center Pasig City Attention: Ms . Luisa W . Buenaventura Supervisor, Disclosure Department Gentlemen : This is in response to your inquiry about the news article "MONDRAGON TOLD TO PAY PAGCOR BIR BEFORE RE-OPENING CASINO" published in the July 9, 1999 issue of the Philippine Star. Under the Compromise Agreement dated June 28, 1999 executed by Mondragon Leisure and Resorts Corporation ("MLRC") and the Clark Development Corporation ("CDC") through the Office of the President, MLRC undertakes to settle its liabilities to PAGCOR and the Bureau of Internal Revenue within thirty (30) days from the signing of the Compromise Agreement. Further, immediately upon receipt of the irrevocable letter of credit by CDC to cover the agreed amount of rentals in arrears, MLRC may re-open and resume normal operations of the Mimosa Regency Casino. MLRC may resume normal operations of the Casino on the basis of its existing Agreement with PAGCOR, dated July 27, 1995. While there exist certain differences between MLRC and PAGCOR, said differences are subject to arbitration according to the PAGCOR-Mondragon contract and PAGCOR cannot unilaterally terminate the Agreement without first resorting to arbitration. On 21 April 1998, the Regional Trial Court, Angeles City, Branch 58, issued a writ of preliminary injunction which enjoined PAGCOR from closing the Mimosa Regency Casino and/or disrupting its operations. PAGCOR has appealed the matter of the issuance of a writ of preliminary injunction to the Supreme Court after the Court of Appeals on June 26, 1998 rejected PAGCOR's appeal as well as subsequently a request for reconsideration. In this connection, it may be recalled that the Casino was in full and normal operations prior to December 14, 1998 when CDC stopped its operations in spite of PAGCOR's attempted cancellation of the contract which was effectively restored by the Regional Trial Court with its injunction. Very truly yours, (SGD.) JOSE ANTONIO U. GONZALEZ Chairman and CEO