Metro Pacific Swaps Smart for Pldt Shares

September 28, 1999 PSE CIRCULAR FOR BROKERS NO. 2438-99 METRO PACIFIC SWAPS SMART FOR PLDT SHARES Metro Pacific Corporation (MPC) announced today that its 38.3 per cent holding in cellular phone company Smart Communications, Inc. (Smart), will be injected into Philippine Long Distance Telephone Company (PLDT), in exchange for 8 per cent or 13.4 million new shares of PLDT, valued at Pesos 14. 5 billion. The announcement follows the signing of a formal agreement today by PLDT, MPC, other Philippine affiliates of First Pacific Company Limited with an interest of 18.0 per cent, and NTT Communications Corporation (NTT) with an interest of 37.2 per cent. Completion of the transaction is subject to various regulatory, third party and shareholder approvals and is expected to occur in early 2000. Concurrent with the transaction, FPC will transfer its holding in Smart to PLDT in exchange for 6.3 million new shares in the Company valued at Pesos 6.8 billion raising the FPC's overall economic interest in PLDT to 22.8 per cent from 17.5 per cent. NTT has also agreed to take a 15 per cent holding in PLDT by exchanging its own 37.2 per cent interest in Smart and by subscribing for 12.2 million new shares worth Pesos 14.7 billion priced at Pesos 1,202 per share. This transaction will establish NTT as PLDT's strategic partner. The transaction integrates the Philippines' leading and largest fixed-line and cellular operators. The enlarged PLDT Group will start with more than 1.85 million fixed-line customers, and more than 1.34 million cellular customers which includes the existing subscriber base of Pilipino Telephone Company (Piltel). The agreement will also enable PLDT to benefit from NTT's world-class technology, products and services, as well as its experience running telecommunications operations in Japan and other countries in Asia. MPC President Napoleon Nazareno said, "The exponential growth of Smart since its establishment in 1994 has perhaps been one of MPC's greatest success stories. But the dramatic changes that are taking place in telecommunications technology and the wave of consolidation shaping up within this industry have created the impetus for Smart to join forces with PLDT." TRANSACTIONAL DETAILS Stake in Equivalent Transaction Smart Shares in PLDT Value (per cent) (m shs) (PhP billion) MPC 38.3 13.4 14.5 FPC 18.0 6.3 6.8 NTT 37.2 13.1 14.1 Others 6.5 2.3 2.5 Smart Valuation 100.0 35.1 37.9 NTT Cash infusion 12.2 14.7 Total Transaction 47.3 52.6