Victorias Milling Co., Inc.

September 28, 1999 PSE CIRCULAR FOR BROKERS NO. 2428-99 SUBJECT : Victorias Milling Co ., Inc . Please be informed that Victorias Milling Co., Inc. ("VMC") furnished the Exchange a summary of its Rehabilitation- Plan as approved under the Securities and Exchange Commission "Order" of August 17, 1999 noting its salient features and the effects of the requisite quasi reorganization on the Company's capital structure, as follows: cdll "1. Capital infusion of about P2.0 billion . . . 2. Debt restructuring as of August 31,1999 . . . 3. A quasi reorganization of the company under which the following will be undertaken: a. Reduction of the existing authorized capital and reduction of par value from P10.00 to P1.00 . . . Under the P10.00 to P1.00 reduction of the par value, each existing share of P10.00 par will entitle stockholders 2.91- new shares of the P1.00 par. Thus the total 170,432,189 shares issued and outstanding of the P10.00 par will be exchanged for 495,957,670 new shares of P1.00 par. The difference in the paid in capital of P1,208,364,220 between the original paid in of P1,704,321,890 and the new paid in of P495,957,670 will be set off against accumulated deficit. . . ." In view thereof, the change in its par value from P10.00 to P1.00 per share will be reflected in the Exchange's computer system (electronic board and ticker) on September 29, 1999. Attached is a copy of the features of VMC's Rehabilitation Plan for your reference. For your information. cdlex (SGD.) JOSE LUIS U. YULO, JR. President/CEO VICTORIAS MILLING COMPANY, INC. FEATURES OF REHABILITATION PLAN (Rehab Plan) (As approved by SEC's Order of August 17, 1999) a. Fresh cash infusion through stock rights offering to stockholders P567 million b. Convertible redeemable notes (CNs) at 8 percent interest from a portion of unsecured debt which will be converted into commonstock at P1.00 P1.5 billion per share multiples of P300 million yearly starting in year four (4) to year (8). Unconverted CNs are redeemable at the end of fifteen (15) years. Debt restructuring as of August 31, 1999 final amount to be determined at date of implementation) P4.65 billion Representing the balance (net of the P1.5 billion restructured into CNs as per item 1 above) of loan principal and accrued interest up to date of Rehabilitation Plan implementation from secured [33%] and unsecured [67%] creditors, into long-term debt repayable over a period of fifteen (15) years including a three (3)-year grace period as to principal, at interest of 10% for peso loans and 6% for foreign currency loans (all unsecured). A quasi reorganization of the company under which the following will be undertaken: a. Reduction of the existing authorized capital and reduction of par value per share from P10.00 to P1.00. No. of Shares Amount (i) from the existing P10.00 par 270,000,000 2,700,000,000 (of which issued and outstanding stood at) 170,432,189 1,704,321,890 (ii) to new P1.00 par at 2.91 new shares 495,957,670 P 495,957,670 exchanged to 1 existing share Under the P10.00 to P1.00 reduction of the par value, each existing share of P10.00 par will entitle stockholders to 2.91 new shares of the P 1.00 par. Thus the total 170,432,189 shares issued and outstanding of the P10.00 par will be exchanged for 495,957,670 new shares of P1.00 par. LexLib The difference in the paid in capital of P 1,208,364,220 between the original paid in of P 1,704,321,890 and the new paid in of P495,957,670 will be set off against accumulated deficit. b. Increase in authorized capital stock No. of Shares Amount (i) from the new shares at P1.00 par 495,957,670 P495,957,670 (ii) to the new total number of shares at P1.00 par resulting in the quasi reorganization 2,563,035,708 P2,563,035,708 In summary. the changes in the Company's capitalization structure, are as follows: No. of Shares Amount (%) Existing issued and 170,432,189 P1,704,321,890 100 outstanding of P10.00 par Exchanged for 2.91 shares 495,957,670 495,957,670 47 20 of P1.00 par to one of P10.00 par Stock rights offering 567,078,038 567,078,038 53 22 Total after rights issue 1,063,035,708 P 1,063,035,708 100 42 Common stock for CNs 1,500,000,000 1,500,000,000 58 conversion Total after quasi reorganization 2,563,035,708 P 2,563,035,708 100 Under the SEC "Order" of August 17. 1999 approving the Rehabilitation Plan and the stock offering, existing stockholders who would then be holding the 495,957,670 shares will be given the stock rights to subscribe proportionately at P1.00 per share at an equivalent of 1.1434 shares for every share held to raise the required cash infusion of P567,078,038. Stockholders are however allowed to subscribe for additional shores in excess of their proportional allocation to ensure the full take up of the P567 million. The existing stockholders have up to October 8. 1999 within which to pay their subscriptions. In case of shortfall the VMC Management will arrange to have the balance subscribed to raise the total cash requirement on or before November 5, 1999. Failure on the part of the stockholders/assignees to raise the total P567 million on November 5, 1999, VMC Mancom will sell the 567,078,038 shares at the minimum price of P 1.00 per share at public auction in accordance with the Rehab Plan's bidding guidelines and subscription payments will be returned without interest.