PSE Circular for Brokers No. 2906-99

November 15, 1999 PSE CIRCULAR FOR BROKERS NO. 2906-99 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. 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. LexLib 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. prcd 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. llcd 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. cdlex Transfer of KPM shares owned by KPPI to KPH in exchange for KPPI shares, which shares shall thereafter be transmitted to KL/Swansville; and llcd 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. The following are the actions and approvals made by the Board of Directors of KEPPEL PHILIPPINES MARINE, INC. (KPM) in its meeting held at its principal office on 7 October 1999. cdlex Item 2. ACQUISITION OF ASSETS Acquisition of Subic Shipyard & Engineering, Inc. (SSEI) shares and Consort Land, Inc. (CLI) shares from Keppel Philippines Properties, Inc. (KPPI) under a Share Swap Agreement. KPM will acquire 62,635,751 SSEI shares and 656,838 CLI shares from KPPI. In exchange, KPM shall issue out of its capital stock 100,508,087 shares to KPHI. The proportion of said exchange shall be 1.5971 KPM shares for each SSEI share and 0.7194 KPM share for each CLI share. The value of the SSEI and CLI shares are valued as follows: llcd Subic Shipyard Shares P139,114,425.00 Consort Land Shares P656,838.00 Total P139,771,263.00