PSE Circular for Brokers No. 2099-98

September 9, 1998 PSE CIRCULAR FOR BROKERS NO. 2099-98 September 8, 1998 PLDT PRESS RELEASE The Philippine Long Distance Telephone Company released to the Philippine Stock Exchange today additional details relating to its Shareholders Rights Plan. The plan is intended to protect PLDT an unsolicited or hostile takeover by other groups. By putting the plan in place. PLDT hopes to induce potential acquirers to negotiate with it before proceeding with any takeover attempt. This would permit the Board to negotiate improved terms or consider other alternatives that may be more advantageous to the company and its shareholders. Under the plan, PLDT will grant holders of common stock the right (at one right per common share owned) to subscribe to a new series of preferred shares at the ratio of 1/100th of the new preferred shares at an exercise price of P4,000.00 per right. The rights will automatically trade with the underlying common shares as of the record date, but will Be dormant and may not be exercised or transferred until a triggering event occurs. The rights become exercisable when an investor, without PLDT board approval, does any of the following: a) acquires 10% or more of PLDT's common stock; b) makes a tender offer which would bring their holdings to 10% or more; c) in the case of a shareholder owning 10% or more as of the record date, subsequently accumulates another 5% of the shares. At that point, all shareholders, except the triggering investor, may either subscribe to the new preferred shares, or purchase additional common shares having a market value of twice the exercise price of each right. Thus, for each right owned a holder can purchase P8,000.00 worth of common shares at the price of P4,000.00. The rights have a term of ten years, and may be amended or redeemed by PLDT. The exercise price of P4,000.00 reflects the approximate value of each common share over the ten-year period. The PLDT board may also exchange the right to purchase preferred shares or common shares for one share of common stock for each right. Since none of these options will be available to the triggering investor, the shareholders rights plan would dilute the value and voting power of his holdings. PLDT believes the prospect of dilution would encourage potential acquirers to negotiate with it before proceeding. In that event, the board may rescind the plan by redeeming the rights, or amend the plan to accommodate the new investor. Shareholders rights plan are quite common in the United States, where corporate takeovers take place frequently. Some estimates place the number of companies with similar plans at 2,000. Studies have shown that the presence of a rights plan has not prevented takeovers, but has resulted in increased price premiums for the target companies. The higher premiums may be attributed to the improved negotiating leverage of management while shareholders rights plans are in effect. prcd PLDT intends to track ownership changes of its shares and monitor compliance with this plan through its transfer agents. It may also engage the services of specialized international investigative agencies that deal with such matters.