PSE Circular for Brokers No. 398-99

March 4, 1999 PSE CIRCULAR FOR BROKERS NO. 398-99 March 3, 1999 Securities & Exchange Commission Director Linda A. Daoang Money Market Department S.E.C. Building, EDSA Mandaluyong City Philippine Stock Exchange Disclosure Department Listing and Disclosure Group 4/F PSE Center, Exchange Road Ortigas Center, Pasig City Gentlemen : Please be informed that the Board of Directors of Ayala Corporation, in its meeting held today, 03 March 1999, approved the following: a. The declaration of a 20% stock dividend. b. The creation and issuance of a new class of common shares. The new class will be called Common X shares. Stock Dividend : The stock dividends which will be paid out from the currently authorized but unissued common shares will have a record date May 14, 1999 and a payment date of June 23, 1999. The payment of the stock dividend will be subject to the rules of the Securities & Exchange Commission and the Philippine Stock Exchange. Common X Shares : The par value of the new Common X shares will be ten pesos (P10.00), which is ten times the par value of the existing common shares. Consequently, the dividends on and the preemptive rights of, each Common X share will be proportionately greater (i.e. 10 times more) than those of each existing common share. This translates into an economic ownership that is ten times that of an existing common share, given that the par value of the Common X shares is ten times greater. Each Common X share will carry the same vote as one existing common share. LibLex The Board believes that the Common X shares will give the Company the flexibility, over the long term, to raise additional equity capital from the international investment community. The current economic situation has created significant opportunities for those with access to capital resources. The Company intends to position itself to be able to take advantage of potential strategic opportunities that may arise in the near future. Going forward, the Board expects the Common X shares to be used as the primary fund-raising vehicle for equity offerings by Ayala Corporation. No timetable for any issuance of Common X shares has been determined, and the timing of any such issuance will depend on a variety of factors, including market conditions and the Company's financing needs. If and when issued, the Company intends to apply for the listing of the Common X shares on the Philippine Stock Exchange ("PSE") and have the new class of shares trade and settle in the same manner as the existing common shares. The Company expects that the Common X shares will qualify for inclusion in the PSE index. The Board also approved that if and when the Common X share are issued, holders of existing common shares shall have the opportunity to convert their common shares into Common X shares for an initial period of up to one (1) year from listing of the Common X shares on the PSE. The details of the conversion will be determined by the Board at the time of the issuance of the Class X common shares. In order to effect the creation of the new Common X shares, the Board approved the following related matters: (i) the increase in the authorized capital stock of the Company from the present P17 Billion to P20 Billion, the increase to consist of 300 Million Common X shares with a par value of P10.00/share, cdlex (ii) the reclassification of the existing and unissued 1 Billion Preferred C shares with a par value of P 1.00/share into 100 Million Common X shares with a par value of P10.00/share, (iii) the issuance of such number of Common X shares through an initial public offering to meet the legal subscription requirement of the capital increase. The Board also approved the amendment of the Amended Articles of Incorporation of the Company to reflect such appropriate changes related to the creation of such Common X shares. To achieve a successful initial public offering, the approval of existing stockholders will likewise be sought so that no preemptive rights will be granted with respect to the issuance of the Common X shares in such offering, conversion of existing common shares to Common X shares, and other issuances that may be offered to existing common shareholders as part of the conversion feature. LLjur Stockholders' Approval : Both the creation of the Common X shares, inclusive of the capital increase and the corresponding amendments to the amended Articles of Incorporation and the declaration of a 20% stock dividend, will be submitted for the consideration and approval of the stockholders at their annual general meeting scheduled on 23 April 1999. This disclosure is being submitted in compliance with the rules of the SEC and the PSE. cdll Stock Dividend Stock 20% Ex-Stock May 10, 1999 Record Date May 14, 1999 Date Payable June 23, 1999 Very truly yours, (SGD.) RENATO O. MARZAN Managing Director