PSE Circular for Brokers No. 2670-98

November 27, 1998 PSE CIRCULAR FOR BROKERS NO. 2670-98 November 26, 1998 PHILIPPINE STOCK EXCHANGE, INC. Disclosure Department Listings and Disclosure Group Philippine Stock Exchange Center Exchange Road, Ortigas Center Pasig City Fax No. 636-0809 Attention: Ms . Grace De Guia Compliance Supervisor SUBJECT : RFM Corporation Offer to Swap RFM Common for Selecta Common Gentlemen : Pertinent to the above subject, please be informed that RFM Corporation will be offering to all Selecta Shareholders the option to swap their Selecta Common Shareholdings for RFM Common Shares starting December 1, 1998 up to and until 5:00 p.m. of January 15, 1999 at a swap ratio of one (1) RFM Common Share for every two (2) Selecta Common Shares. For your reference, we have attached the following forms/documents which the Company will be sending to all Selecta Shareholders starting tomorrow, November 27, 1998. 1. Letter to Selecta Shareholders on the Swap Offering; 2. Brief Information to RFM; 3. Application to Swap; and 4. Terms of the Share Swap Thank you very much. Very truly yours, (SGD.) RAYMOND B. AZCARATE Vice President Finance Division Nov. 27, 1998 Dear Selecta Stockholder : As we had publicly disclosed two months ago (Sept. 23, 1998), the parent company of Selecta, RFM Corporation, is planning to spin off the ice cream business of Selecta into a new company that will serve as the joint venture between Selecta and Unilever Philippines, Inc. We are pleased to inform you that discussions between the parties have progressed to the point where such spin-off is now considered imminent. The ice cream business of Selecta, which is valued at approximately P3.0 billion will be put into a new private company to be jointly owned (50-50) by Selecta and Unilever. Thus, Selecta will eventually become primarily a shareholding company in the new joint venture. LLphil In light of this development, RFM is offering an opportunity to all Selecta stockholders to exchange their Selecta shares. This is meant to give Selecta shareholders the chance to move into a more actively traded stock and more broadly diversified food company that RFM represents. At the same time, they will still stand to benefit from the proposed joint venture with Unilever, as RFM will continue to be the majority owner of Selecta. This exchange of shares is being offered to all Selecta shareholders on a purely voluntary basis. Taking into account the above-estimated valuation of the ice cream business, and its effect on the total value of Selecta and RFM respectively, the swap ratio is set at one (1) RFM common share for every two (2) Selecta common shares. Fractional shares arising from the exchange will be paid in cash at the rate of P3.00 per Selecta share. The offer period for the share swap is from December 1, 1998 up to and until 5:00 p.m. of January 15, 1999. Enclosed herewith is a brief information on a RFM which may help you assess the fundamentals and prospects of the company. Should you desire to exchange your Selecta common shares for RFM common shares, please accomplish the attached Application to Subscribe, and submit the same together with your Selecta Stock Certificates, duly endorsed in blank, to Securities Transfer Services, Inc., 4th Floor, Benpres Bldg., Exchange Road corner Meralco Ave. Pasig City. LexLib For inquiries about RFM and this offer, please call Mr. BJ Sebastian or Mr. Ramon Lopez of RFM at Tel. 631-8101. For inquiries about the number of shares you may have or may receive in the exchange, please call Mr. Eduardo Castro or Ms. Menchie Milleres of Securities Transfer Services at Tel. 631-8024 p to 30. Considering the benefits not only in the short term but also in the long term. I would like to encourage all Selecta stockholders to avail of this offer within the limited period available. Very truly yours, (SGD.) JOSE A. CONCEPCION III President & CEO, RFM Corporation Chairman & CEO, Selecta Dairy Products, Inc . I NFORMATION ON RFM CORPORATION Introducing RFM One of the largest diversified food and beverage companies in the Philippines Established 40 years ago (1958) as the pioneer of the flour-milling industry in the region. Strong brands known for quality and value in Philippine consumer market. One of Asia's Most Admired Companies (Asian Business) and Asia's 200 Leading Companies (Far Eastern Economic Review). Listed on the Philippine Stock Exchange. Market Share Leadership No. 1 in Flour No. 2 in Soft-drinks No. 1 in Flour Mixes No. 2 in Canned Meat No. 1 in Chicken No. 2 in Canned Tuna No. 1 in Bulk Ice Cream No. 2 in Chocolate Milk No. 1 in Tetra-packed Juices No. 2 in Chilled Meats RFM Core Competence Marketing & Distribution : We know the consumer market for F&B in the Philippines Operations : We have a tradition of quality and a discipline for least-cost operations. Management : We combine the best of entrepreneurship and professional management RFM Key Strategies Keep focus on food and beverage Sustain value proposition of products; strengthen brand equity. Explore opportunities for selective expansion/mergers/ acquisitions in the food business. Rationalize/move down to minority in non-food businesses. Strengthen the balance sheet Tighten up working capital usage to strengthen cash flows. Raise capital to pay down debt and build war chest. The Vision for RFM To become an index stock by the year 2000. And emerge as the leading food and beverage company in the Philippines. APPLICATION TO SWAP This application, together with the duly endorsed Selecta Common Stock Certificates, must be received not later than January 15, 1999, 5:00 p.m. Applications received thereafter or without the attachment specified below will be rejected. This application is deemed automatically accepted for payment at the end of the offer period unless sooner withdrawn in writing. The notice of withdrawal, to be effective, must be received by the Receiving Agent before the end of the Offer Period. LLpr The undersigned registered stockholder (the "Applicant") of SELECTA DAIRY PRODUCTS, INC. ("Selecta") hereby applies to exchange the number of Selecta Common Shares indicated herein below for RFM Corporation ("RFM" or the "Company") Common Shares at a swap ratio of One (1) RFM Common Share for every Two (2) Selecta Common Shares. Fractional Selecta Shares shall be paid P3.00 per share. Payment for the fractional shares shall be made within fifteen (15) trading days of after the end of the Offer Period. The Applicant has enclosed the attached Selecta Common Stock Certificate(s): Selecta Stock Certificate No. No. of Selecta Common Shares Total Selecta Shares: Swap Ratio: 2 Selecta: 1 RFM * Equivalent RFM Common: * Note: Equivalent RFM Common = Total Selecta Shares / 2 The Applicant, in executing this Application, warrants that he has read and understood, and has relied solely upon the Terms of the Offer set forth at the back of this Application. The Applicant understands that no person has been authorized to give any information of to make any representation with respect to the shares subject hereof. Applicant's Full Name (Print) Applicant's Address Applicant's Signature Tel. No(s). T.I.N. Nationality Requirements for Corporate Applicants : Notarized Secretary's Certificate setting forth the resolutions of the Applicant's Board of Directors or equivalent body authorizing swap of shares subject to this application, and designated signatories for the purpose. LexLib Acceptance . This application is hereby accepted subject to the terms and conditions set forth herein. Securities Transfer Services, Inc . Authorized Signature: Date: TERMS OF THE SHARE SWAP The Company: RFM Corporation Subject Shares: Selecta Common Shares. Receiving Agent: Securities Transfer Services, Inc. Offer to Swap: RFM Corporation is offering one (1) RFM Common Share in exchange for two (2) Selecta Common Shares. Fractional Selecta Shares shall be paid in P3.00 per share. The fractional shares shall be paid within fifteen (15) trading days after the end of the Offer Period. Offer Period: December 1, 1998 to January 15, 1999 Application: Selecta Stockholders who wish to exchange their Selecta Common Shareholdings for RFM Common Shares shall accomplish the Application to Swap and submit the same together with the relevant Selecta Stock Certificate(s), duly endorsed in favor of RFM Corporation, and sample signature card to the Receiving Agent, Securities Transfer Services, Inc. (STSI), not later than 5:00 p.m. on the date of closing of the Offer, at the 4th Floor, Benpres Building, Exchange road cor. Meralco Avenue, Pasig City, Tel. Nos. 631-8024 to 30. The Company, at its sole discretion, and without giving any reason thereto; shall have the right to reject or accept any Application to Swap. The Company has authorized the Receiving Agent to accept or reject, in whole or in part, any application. Shareholder Rights: The RFM Common Shares being offered in exchange for Selecta Common Shares have the same rights and privileges as any other outstanding RFM Common Share. Swap Expenses: The capital gains tax, stock broker's fees, VAT, PCD charges, documentary stamp tax, and stock certificate cost pertinent to the swap of Selecta Common Shares for RFM Common Share shall be for the sole account of the Company. Acceptance of Applications: Applications shall be deemed automatically accepted for payment at the end of the Offer Period unless sooner withdrawn in writing. The notice of withdrawal, to be effective, must be received by the Receiving Agent before the end of the Offer Period. Issuance of Stock Certificates and Check Payments for Fractional Shares: RFM Common Stock Certificates and check payments for fractional shares shall be made available within fifteen (15) trading days after the end of the Offer Period for pick-up by the applicant at the office of RFM Corporation's Transfer Agent, Far East Bank and Trust Company, 9/F FEBTC Centre, Senator Gil J. Puyat Ave. Extension, Makati City, Tel. Numbers 891-4752, 845-9484, 845-9477 & 845-9471. Stock certificates and checks that remain unclaimed after a period of thirty (30) days thereafter shall be sent by registered mail to the address stated in the application form at the risk of the applicants.