Southeast Asia Cement Holdings, Inc.

December 29, 1998 PSE CIRCULAR FOR BROKERS NO. 2830-98 SUBJECT : Southeast Asia Cement Holdings, Inc . This is with reference to Circular for Brokers No. 2630-98 dated November 23, 1998 pertaining Southeast Asia Cement Holdings, Inc.'s ("CMT") 6% dividend declaration. Quoted in part is CMT's reply to Exchange's query on the said matter: ". . . 2. The 1998 stock dividend declared by our Board and ratified by the stockholders amount to 305,810,000 common shares; however, there are 1,087 fractional shares as reported to us by our stock and transfer agent, the Security Bank, which will be dropped thereby reducing the actual shares for distribution to a total of 305,808,913 shares; 3. We confirm that the 305,810,000 common shares represent 6% stock dividend on the 5,096,833,330 outstanding shares as of the annual stockholders' meeting on June 27, 1998. However, the private placement of Acumex Management, Inc. and Calumboyan Properties, Inc. amounting to 988,000,000 common shares was approved by the Board of Directors on October 9, 1998. Therefore, as of record date of December 11, 1998, the shares of the private placement investors are already issued and outstanding. In the Order of SEC dated Dec. 3, 1998 approving our application for exemption of the 305,810,000 common shares to cover the stock dividend declared, SEC mandated us to issue the 305,810,000 common shares to all issued and outstanding shares as of record date, i.e., including the shares issued to private placement investors. Necessarily, this will mean a scaling down of the dividend rate from 6% to 5.025774469%. We gathered from the EAD that the policy of the SEC is to fix the amount of stock dividend based on the amount of issued and outstanding shares as of the Declaration Date, although all shareholders of record as of Record Date will be entitled to receive the stock dividend. According to EAD, the point to determine the identity of the shareholders and the number of shares entitled to the dividend should be reckoned from the Record date (a view confirmed by the MMOD), but the Company, based on SEC policy, will have to be limited to distributing the specific number of Dividend Shares. Thus, since there is subscriber to an additional 988,000,000 shares after the Declaration Date but before Record Date, the amount of P305,810,000 would be distributed to the shareholders of the P6,084,833,330 outstanding capital stock, no longer only to the holders of the P5,096,833,330 as of Declaration Date. The reason for the policy is that the SEC frowns upon the practice of declaring dividends as a rate of percentage (e.g., 6% of outstanding capital stock as of Record Date) rather than as an amount (e.g. P305,810,000). In fact, in case of a discrepancy in the rate/percentage (i.e., 6%) and the amount of stock dividends (i.e., P305,810,000 shares), the amount will prevail. According to the EAD, if the stock dividend were expressed as a rate or percentage, then the Company will have to go back to the EAD everytime there is a change in its outstanding capital stock and the EAD will have to reflect the change in its valuation report, thereby making the process endless. This is all the more so for publicly listed companies which may have outstanding convertible bonds and warrants which may be converted or exercised after the declaration date but before the record date . . ." aisadc For your information. (SGD.) RAFAEL L. LLAVE Chief Operating Officer