Objective of the Realignment of the Group's Businesses

November 15, 1999 PSE CIRCULAR FOR BROKERS NO. 2905-99 OBJECTIVE OF THE REALIGNMENT OF THE GROUP'S BUSINESSES The Keppel Philippines Group carried out a reorganization of its shipyard and property-related businesses in 1998. The Group restructuring exercise involved the transfer of Cebu Shipyard operations from Keppel Philippines Properties, Inc. (KPPI, formerly Cebu Shipyard and Engineering Works) to a newly formed company-Keppel Cebu Shipyard, Inc. (KCSI) on October 1, 1998. Further to that, on December 29, 1998, Keppel Philippines Marine, Inc. (KPM, formerly Kepphil Shipyard, Inc.) acquired KCSI, KPPI acquired a 15% stake in SM Keppel Land, Inc. (SMKL), and KPH enlarged its holdings in KPM. By the end of 1998 and as a result of the exercise, the Group consolidated the shipbuilding and shiprepair businesses under one of the publicly listed companies of the Keppel Philippines Group, i.e., KPM, and KPPI took its first step in housing the property-related investments of the Group. cdlex To date, KPPI continues to own some five percent (5%) of Subic Shipyard and Engineering, Inc.(SSEI) represented by 62,635,751 shares. It also continues to own 159,242,289 shares in KPM llcd On the other hand, KPH still has substantial ownership of KPPI shares in its books and Keppel Land/Swansville continues to own 250,000 shares of SMKL representing 25% ownership in the company. The objective of this succeeding round of realignment/restructuring is for shares in the marine businesses to be housed under KPM, for the property-related investments to be owned by KPPI, and for the locally listed KPPI shares to be owned substantially by Keppel Land/Swansville. llcd In this manner, group activity is further rationalized, allocation of resources more focused, tracking of earnings facilitated, and, hopefully, shareholder values more easily enhanced/defended. ELEMENTS OF THE REALIGNMENT PLAN The realignment of businesses within the Keppel Group will involve: Transfer of the ownership by KPPI in Subic Shipyard and Engineering, Inc. (SSEI) and Consort Land, Inc.(CLI) to KPM in exchange for shares of KPM. Transfer of KPM shares owned by KPPI to KPH in exchange for KPPI shares, which shares shall thereafter be transmitted to KL/Swansville; and Transfer of ownership by KL/Swansville in SMKL to KPPI in exchange for the KPPI shares (from KPH) mentioned above, as well as for new KPPI shares. cdll The following are the actions and approvals made by the Board of Directors of KEPPEL PHILIPPINES HOLDINGS, INC. (KPHI) in its meeting held at its principal office on 7 October 1999. Item 2. ACQUISITION OR DISPOSITION OF ASSETS Acquisition of KPM Shares in Exchange of KPPI Shares with Keppel Land Ltd./Swansville Pte. Ltd. (Keppel Land/Swansville) and Keppel Philippines Properties, Inc. (KPPI) under a Share Swap Agreement. KPHI will acquire 159,242,289 (valued at P143,318,060.10) and 100,508,087 (valued at P139,706,240.93) Keppel Philippines Marine, Inc. (KPM) shares from Keppel Philippines Properties, Inc. (KPPI) and KPM, respectively. In exchange, KPHI shall transfer its shareholdings of 65,666,492 shares (valued at P233,772,711.52) in KPPI to Keppel Land/Swansville. The proposition of the said share-for-transfer swap shall be 3.9556 KPM shares for each KPPI share, which is based on the following: LibLex a. 12 times average 3 years earnings for KPM cdll b. Discount of 40% of Net Asset Value (NAV) of KPPI prcd