PSE Circular for Brokers No. 2461-99

September 30, 1999 PSE CIRCULAR FOR BROKERS NO. 2461-99 CADP Hikes Stake in Carlota Publicly listed sugar company Central Azucarera Don Pedro (CADP) will acquire an additional 114 million shares to be issued by its 49 percent-owned subsidiary Central Azucarera de La Carlota. La Carlota is increasing its authorized capital from P200 million to P400 million to pave the way for the issuance of new equity. CADP will convert advances it had made amounting to P400 million by subscribing to the new La Carlota shares. The new investment will effectively raise CADP's stake to 73 percent in the latter. La Carlota is also a publicly listed corporation. "La Carlota represents a strategic and critical investment for CADP," CADP chairman Pedro E. Roxas said. He explained that the twin moves to increase the capital base of La Carlota and consolidate CADP's holdings in the company is a thrust that will put the combined CADP-Carlota group in a strong position to achieve leadership in the sugar industry. He said that the sugar industry has to attain the size and economies of scale to effectively meet foreign competition in a liberalized economic environment. CADP acquired 49 percent equity in La Carlota in early 1998 some two years after it commenced to manage it under a five-year management contract. The equity infusion enabled La Carlota to partially pay loans incurred to fund its plant expansion and modernization. LexLib Under CADP's direction, La Carlota implemented the program that saw the installation of a 200 tons per hour John Thompson boiler the country's largest and most modern steam plant which is the heart of the milling operation and the automation of other boilers and set-up of support facilities. The expansion and modernization resulted in the upgrading of Carlota's milling capacity from about 8,000 tons cane per day to more than 11,000 tons and accomplishment of significant improvement in cane grinding efficiencies and productivity. CADP also undertook the operational integration of its Nasugbu plant and that of La Carlota during the crop year. "The initiative enabled us to achieve synergies in manufacturing operations, cane sourcing, logistics and marketing," Roxas declared. LexLib