Omico Corporation

October 30, 1998 PSE CIRCULAR FOR BROKERS NO. 2488-98 SUBJECT : Omico Corporation This has reference to Circular No. 2249-98 dated September 28, 1998 pertaining to Omico Corporation's ("OM") acquisition of the 52% equity holdings of Real Development Company, Inc. in Boracay Island Real Hotel Corporation in exchange for its 48% holdings in Cebu-Mactan Airport Real Hotel Corporation and Pines City Real Hotel Corporation. cdlex For further clarification, attached is a letter from OM in reply to the Exchange's request for additional information on the above-mentioned transaction. For your information. RAFAEL L. LLAVE Chief Operating Officer October 19, 1998 Philippine Stock Exchange, Inc. PSE Center, Exchange Road Ortigas Center, Pasig City Attention: Ms . Grace B . de Guia/Janet J . Alcala Listings and Disclosure Department Dear Ladies, We refer to your fax message of 9 October 1998, requesting clarification on Omico Corporation's acquisition of the 52% equity holdings of Real Development Co., Inc. (RDCI) in Boracay Island Real Hotel Corporation in exchange for its 48% holdings in Cebu-Mactan Airport Real Hotel Corporation and in Pines City Real Hotel Corporation. 1 . Reason/purpose of the acquisition and divestment In view of the severity of the current Asian-led economic crisis, the company made a strategic decision, with respect to its tourism-related investments, to consolidate and confine its attention, efforts and resources to just one project in the meantime. By "reverse-diversifying" its position from three prospective hotel properties to just one, Omico in effect also significantly reduced the level of funding it stands to commit in the future to the development of such properties. By acquiring full ownership of Boracay Island Real Hotel Corporation, Omico becomes the sole owner of a valuable piece of real estate at the famed "Long Beach area of Boracay Island, with a world-class beach frontage. This property is unencumbered. It has 10 cottages which is being patronized by tourists and which produces modest cash flow regularly. The divestment of Pines City Real Hotel Corporation, the sole property of which is and undeveloped piece of land in Mines View Park in Baguio City, was included in the transaction to make the exchange of shares (at cost) between the two parties possible without any cash payment being made by either party to the other (see reply to 2.c below). 2 . a Description/Valuation of the assets to be acquired and transferred The sole asset of Boracay Island Real Hotel Corporation is a property in Boracay Island's Long Beach. It was acquired for P106,686,174.00. It consist of 8,100 square meters. The only improvements on the property are simple cottages suitable for occupancy by tourists. They generate a monthly revenue of about P100,000.00. The sole property of Pines City Real Hotel Corporation is a 2004 square meter undeveloped land at Mines View Park in Baguio City. It was acquired for P37,070,000.00. Cebu-Mactan Airport Real Hotel Corporation owns a 4,114 square meter property at Mactan, near the Mactan International Airport, on which a 127 room hotel operated by Days Inn has been constructed. It is partially in operation and still in need of completion. The finishings of the hotel are not yet totally completed. The property is encumbered by a mortgage to secure a loan used to finance the construction of the hotel. LLjur 2 . b Profit/income of Boracay Island Real Hotel Corporation in comparison with the profit/income of Cebu-Mactan Airport Real Hotel Corporation and Pines City Hotel Corporation . The Boracay property is generating modest revenues every month. The facilities constructed thereon are basic cottages with no fancy amenities. On the other hand, Boracay Island Real Hotel Corporation is under no severe cost burden in operating these cottages. Omico intends either to develop or resell these properties depending on which recourse will provide it with larger gains or profits. The property of Pines City Real Hotel Corporation is still undeveloped and thus earns no income. The hotel at Mactan Airport is only partially operational and has yet to realize its full income potential. Its performance is adversely affected by the current economic crisis. prLL 2 . c Settlement method/terms of payment The shares in the three corporations involved in the exchange are all valued and will be transferred at cost. The considerations are as follows: Boracay Island real Hotel P56,620,810.00. (to Omico) Pines City Real Hotel P17,793,600.00 (to RDCI) Cebu-Mactan Airport Real Hotel P34,224,000.00 (to RDCI) 3 . Timetable/schedule for the effectivity of such transactions Enclosed is a photocopy of the letter-Agreement between Omico and Real Development Co., Inc. which describes the steps to be taken leading to the completion of the transactions. 4 . Effects of the transactions on the operations of OM As indicated in 2.c above, Omico stands to enjoy and advantage of P4,603,210.00 from the exchange. Truly yours, (SGD.) ATTY. PHILIP B. KING Corporate Secretary