PSE Circular for Brokers No. 1875-99

July 29, 1999 PSE CIRCULAR FOR BROKERS NO. 1875-99 July 28, 1999 PHILIPPINE STOCK EXCHANGE, INC . PSE Center, Exchange Road Ortigas Center, Pasig City Attention: Ms . Luisa Buenaventura Supervisor, Disclosure Dept . Gentlemen : We write to you once again to update you on recent developments since our last letter dated July 19 to the Exchange. As previously disclosed to you, the Compromise Agreement between Mondragon and Clark Development Corporation ("CDC") was approved by the Supreme Court on July 15, 1999. This agreement paves the way for the re-opening of the Mimosa Regency Casino upon receipt of CDC of the irrevocable Letter of Credit to secure the payment of the rental arrears to CDC and to effect the payment of the amounts owned to PAGCOR and the Bureau of Internal Revenue. We are finalizing all efforts for the financing package that will enable us to fund these payments. However, these efforts were delayed while awaiting the Supreme Court resolution approving the Compromise Agreement. Likewise, our discussions with potential investors were accordingly deferred pending this approval. LexLib We are pleased to inform you that our discussions with various parties for the required bridge financing as well as for equity investment in the Company are progressing very well. Although it may take us additional time to finalize these transactions due to the delay noted above, we have been assured that these will be completed very soon. The Compromise Agreement gave Mondragon 30 days from the signing of the agreement to comply by July 28, 1999 but the agreement further provides for a grace period from "MLRC's receipt of CDC's demand and after the expiration of a thirty (30)-day period from such receipt of demand . . . "This therefore means that another 30-day period is granted, from receipt of CDC's demand-after July 28. Meanwhile, the Company continues to make significant strides towards achieving a mutually beneficial agreement with PAGCOR. Both parties have put forth proposals for the final resolution of the differences between them. In a letter from PAGCOR Chairman Alice LL. Reyes to Mondragon dated July 27, 1999, Mrs. Reyes "lauded" Mondragon's determination to come to terms with PAGCOR for a new gaming license. She further stated, "we will be more than pleased to sit down with you to talk about these terms, as soon as Mondragon has unconditionally and conclusively settled all its obligations to the Bureau of Internal Revenue and to PAGCOR . . . " Mondragon looks forward to resolving all its differences with PAGCOR and to a future of cooperation between both parties. Sincerely yours, (SGD.) JOSE ANTONIO U. GONZALES Chairman and CEO