PSE Circular for Brokers No. 2289-98

October 1, 1998 PSE CIRCULAR FOR BROKERS NO. 2289-98 September 30, 1998 PHILIPPINE STOCK EXCHANGE, INC. Philippine Stock Exchange Centre, Exchange Road Ortigas Center, Pasig City, Metro Manila Attention: Mr . Ruben L . Almadro Vice-President - Compliance and Surveillance Group Gentlemen : In connection with the suspension of the acquisition by Ayala Land, Inc. ("ALI") of an equity position in C&P Homes, Inc. ("C&P"), please be advised that ALI filed today with the Securities and Exchange Commission (SEC") and amendment of the resolution of the SEC authorizing the issuance of shares to Fine Properties, Inc. ("Fine") dated April 14, 1998. The amendment, the approval of which ALI has applied for, will allow ALI to issue to Ayala Corporation ("AC") 205,941,727 shares of stock from the unissued capital stock of ALI for cash. The shares to be issued to AC are part of the 700,000,000 new shares which was authorized to be issued by the board of directors and stockholders of ALI in exchange for properties, whether in the form of equity or real properties, to be used by ALI in its development and landbanking activities. The stockholders of ALI have acknowledged that they did not have pre-emptive rights to subscribe to the same pursuant to Section 39 of the Corporation Code. The issuance by ALI of these shares was previously disclosed to the PSE under our letter dated February 27, 1998. aisadc It was previously intended that ALI issue shares to Fine in exchange for shares of stock of C&P which are owned by Fine. The shares, upon issuance to Fine, were to be purchased by AC for cash, pursuant to an agreement entered into by Fine with AC. These transactions were intended to be simultaneously effected upon completion of a due diligence examination of C&P. As previously disclosed to the PSE on March 19, 1998, AC, by way of temporarily assisting ALI in implementing the aforesaid transaction, sold on March 19, 1998 approximately US$200 Million worth of its holdings in ALI through a private placement to institutional investors, on the premise that it would be able to acquire approximately the same number of shares from Fine upon the completion of the exchange transaction, thereby preserving AC's holdings in ALI. Prior to the completion of the due diligence examination on C&P, however, ALI and Fine agreed to indefinitely suspend the transaction due to the drop in the price of shares of C&P in the stock exchange. Given, therefore, the suspension of the transaction, ALI wishes to issue shares directly to AC for the purpose of restoring the parties to status quo ante . ALI intends to issue the shares to AC at a subscription price of P14,567 per share, which is the equivalent effective purchase price which would have been derived under the terms of the original transaction, as adjusted for stock dividend and other transaction costs. Please be advised, however, that the issuance by ALI of the shares to AC is subject to the approval by the SEC. While it is not the policy of ALI to disclose any corporate act which otherwise requires prior government authority, this disclosure is made in the interest of the investing public in order to preclude any speculation which may be caused by the filing made by ALI with the SEC. Very truly yours, (SGD.) MERCEDITA S. NOLLEDO Senior Vice-President & Corporate Secretary