PSE Circular for Brokers No. 2634-99

October 15, 1999 PSE CIRCULAR FOR BROKERS NO. 2634-99 14 October 1999 PHILIPPINE STOCK EXCHANGE Philippine Stock Exchange Center 4th Floor, PSE Centre Exchange Road, Ortigas Center Pasig City, Metro Manila Attention: Ms. Grace de Guia Assistant Manager, Disclosure Department Fax No. 636-0809 / 637-8811 Gentlemen: Further reference is made to our letter to the Philippine Stock Exchange on 28 August 1999 advising the PSE of the approval given by the Board of Directors of Waterfront Philippines, Inc. (WPI) at its meeting on 27 August 1999 (which was ratified by the stockholders' meeting on 28 August 1999), of the investment by WPI in Davao Insular Hotel and Fort Ilocandia Resort Hotel. In this connection, please be informed that at its meeting held today, October 14, 1999, the Board of Directors of WPI, based on the business prospects of the two hotels and the current valuation reports of independent appraisers of the existing facilities, approved the final terms of the acquisition of said investments in exchange for the issuance by WPI of new WPI shares, as follows: 1. WPI will acquire 14,885,765 shares of stock of Davao Insular Hotel Company, Inc., the owners and operators of Davao Insular Hotel ("Davao Insular") representing 98% of the issued and outstanding stock of Davao Insular, in consideration of, and in exchange sole for, the issuance by WPI of 496,578,575 shares of WPI's capital stock valued at P2.03 per share (average closing market prices of the WPI shares in the PSE for the 30-day period following the WPI stockholders meeting on August 28, 1999.) 2. WPI will acquire 4,075,000 shares of stock of Polar Peak Philippines, Inc., the owners and operators of Fort Ilocandia Resort Hotel ("Polar Peak") representing 54.33% of the issued and outstanding stock of Polar Peak, in consideration of, and in exchange solely for, the issuance by WPI of 391,888,128 shares of WPI's capital stock valued at P2.03 per share (average closing market prices of the WPI stockholders meeting on August 28, 1999.) 3. The WPI shares to be issued by WPI in exchange for the aforesaid investments in Davao Insular Hotel and Fort Ilocandia will be taken from the currently authorized but unissued capital stock of WPI as well as from the increase in the authorized capital stock of WPI from P2.0 billion to P5.0 billion. Completion of the acquisition, which is set within 90 days, is accordingly subject to approval by the SEC of WPI's application for the increase in its authorized capital stock to P5.0 Billion, and the subsequent listing with the PSE of the new shares to be issued. 4. The acquisition results in WPI acquiring a controlling interest in both Davao Insular Hotel and Fort Ilocandia and will allow WPI to integrate the operations of both hotels into its Cebu Waterfront Hotel Operations. Thank you. Very truly yours, (SGD.) ARTHUR R. PONSARAN Corporate Secretary