PSE Circular for Brokers No. 360-00

February 15, 2000 PSE CIRCULAR FOR BROKERS NO. 360-00 Cement merger gets SEC nod The Securities and Exchange Commission has approved the merger of the three publicly listed cement subsidiaries of Bacnotan Consolidated Industries, Inc., namely, Bacnotan Cement Corporation, Davao Union Cement Corporation and Hi Cement Corporation. Shareholders of the three cement companies earlier approved the merger unanimously. The surviving entity is Hi Cement, which has been renamed Union Cement Corporation, reflecting the name of its product brand, Union Cement. The merger creates the biggest cement company in the Philippines with an annual clinker capacity of 5.7 million metric tons. With its four plants one in La Union, two in Bulacan, and one in Davao and its marketing and distribution network, it is the only cement manufacturer that serves the market nationwide. The merger is expected to increase operating synergies, such as in sourcing products from different plants to serve different market areas. The SEC has also approved a change in the merged company's fiscal period to the calendar year starting in 2000. As a consequence of the merger, Union Cement Corporation (UCC) will issue new UCC shares in exchange for shares of Bacnotan Cement and Davao Union. The number of shares indicated in each Bacnotan Cement and Davao Union stock certificate will be multiplied by 3.815 and 0.571, respectively, in exchanging Bacnotan Cement and Davao Union shares for new UCC shares. This is in accordance with the exchange ratios stated in the Plan of Merger approved by the boards of directors of these companies, the shareholders, and the SEC. In accordance with the rules of the Philippine Stock Exchange, Bacnotan Cement and Davao Union shareholders have the option, without exchanging their shares for new UCC shares, to hold and trade their Bacnotan Cement and Davao Union shares as if they were UCC shares at the above mentioned ratios within 30 calendar years from listing date of UCC shares, which will be announced soon. After the lapse of the 30-day period, Bacnotan Cement and Davao Union shares can no longer be traded on the PSE as UCC shares unless the shares are first exchanged for new UCC shares. The Bacnotan Cement and Davao Union shares, however, can be exchanged for new UCC shares at the abovementioned ratios at any time by surrendering the stock certificates to UCC's stock transfer agent, Stock Transfer Service Inc., with office address at the ground floor of AsianBank Center, 328 Sen. Gil J. Puyat Avenue (formerly Buendia), Makati City. As the surviving entity, Union Cement Corporation will assume all outstanding debts of Bacnotan Cement and Davao Union, including the convertible notes that the two companies issued in the first half of 1999. Holders of convertible notes of Bacnotan Cement or Davao Union may either hold on to their notes subject to the same original terms under which these were issued, or convert their notes to UCC shares at any time before maturity. The conversion of such notes will involve two steps: first, the theoretical conversion into Bacnotan or Davao Union shares in accordance with the original terms of their issue, and second, the actual conversion into UCC shares, applying the exchange ratios mentioned above. UNION CEMENT CORPORATION (Formerly Hi Cement Corporation) February 11, 2000 NOTICE TO SHAREHOLDERS AND HOLDERS OF CONVERTIBLE NOTES OF BACNOTAN CEMENT CORPORATION AND DAVAO UNION CEMENT CORPORATION This is to inform you, as shareholders/noteholders of Bacnotan Cement Corporation (BCC) and Davao Union Cement Corporation (DUCC), that the merger of BCC and DUCC into Hi Cement Corporation as the surviving corporation has been accomplished with the approval of the Securities and Exchange Commission (SEC) dated February 8, 2000. cdlex Following SEC approval given on the same date, Hi Cement Corporation is now known as Union Cement Corporation (UCC). As a consequence of the merger, UCC will issue new UCC shares in exchange for BCC and DUCC shares. The number of shares indicated in each BCC stock certificate will be multiplied by three and 815/1000 (3.815) in exchanging BCC shares for new UCC shares. The number of shares indicated in each DUCC stock certificate will be multiplied by 571/1000 (0.571) in exchanging DUCC shares for new UCC shares. This is in accordance with the exchange ratios stated in the Plan of Merger approved by BCC's and DUCC's Boards of Directors and shareholders as well as by the SEC. In accordance with the rules of the Philippine Stock Exchange (PSE), BCC and DUCC shareholders have the option, without exchanging their shares for new UCC shares, to hold and trade their BCC/DUCC shares as if these were UCC shares at the abovementioned ratios within thirty (30) calendar days from PSE Listing Date, which will be announced soon. After the lapse of the said period of 30 days, BCC and DUCC shares can no longer be traded on the PSE as UCC shares unless the BCC and DUCC shares are first exchanged for new UCC shares. Your BCC and DUCC shares, however, can be exchanged for new UCC shares at the abovementioned ratios at any time by surrendering your BCC/DUCC stock certificates to UCC's stock transfer agent, Stock Transfer Service, Inc. with office address at the Ground Floor, AsianBank Center, 328 Senator Gil Puyat Avenue (formerly Buendia), Makati City. cdlex As the surviving entity, UCC will assume all outstanding debts of BCC and DUCC, including the convertible notes that the two companies issued in the first half of 1999. Holders of convertible notes of BCC and/or DUCC may either hold on to their notes subject to the same original terms under which these were issued, or convert their notes to UCC shares at any time before maturity. The conversion of such notes will involve two steps: first, the theoretical conversion into BCC or DUCC shares in accordance with the original terms of their issue, and second, the actual conversion into UCC shares, applying the exchange ratios mentioned above. (SGD.) JUAN J. DIAZ Corporate Secretary