Philippine Tobacco Flue-Curing and Redrying Corporation Record Date and Work Program for 1.33:1 Pre-emptive Rights Offering

March 11, 1999 PSE CIRCULAR FOR BROKERS NO. 460-99 SUBJECT : Philippine Tobacco Flue-Curing and Redrying Corporation Record Date and Work Program for 1.33:1 Pre-emptive Rights Offering Further to Circular for Brokers No. 2341 dated December 9, 1997, please be informed that the record date of the 1.33:1 Pre-emptive Rights Offering of PHILIPPINE TOBACCO FLUE-CURING and REDRYING CORPORATION (the "Company") has been set on April 5, 1999 . The details are as follows: cdll Terms of the Offering Ratio : one and one-third (1 & 1/3) Offer Shares for every one (1) common share held Offer Shares : 9,991,900 common shares, consisting of: Treasury Shares : 0,427,185 common shares Unissued Shares : 9,564,715 common shares Par Value : P1.00 per share Offer Price : P10.20 per share Record Date : April 5, 1999 Ex-Date : March 26, 1999 Offer Period Start of the Offer : April 8, 1999 End of the Offer : April 14, 1999 Additional Subscription- Second Round Offering : Each Qualified Shareholder who fully subscribes to his pre-emptive rights shall also be invited to signify his interest to purchase additional shares. In the event that the total number of unsubscribed shares after the end of the Offer Period is insufficient to satisfy all subscriptions for additional shares, the number of unsubscribed shares shall be allocated among the shareholders who availed of their pre-emptive rights and applied for additional shares on a pro-rata basis proportionate to their shareholdings as of Record Date. Eligible Investors : The Offer Shares may be subscribed to and held by existing Qualified Shareholders as of Record Date. Payment terms : 100% of the Subscription Price of the shares subscribed under the 1st and 2nd Round shall be payable in full upon submission of the duly accomplished and executed Subscription Agreement form by cash or separate checks drawn against a bank within Metro Manila clearing, payable to "PTFC RIGHTS OFFERING," dated as of the date of the Subscription Agreement and crossed "For Account of Payee only." Issue Manager and Underwriter : RCBC Capital Corporation Stock Transfer Agent : Stock Transfer Service, Inc. USE OF PROCEEDS The net proceeds to the Company, estimated to be approximately P199,979,957.00 after deducting expenses associated with the rights offering, will be used for repayment of outstanding accrued interest payables and short-term and long-term debts of the Company. Attached is a copy of the Company's projected financial statements covering the fiscal year 1999. LexLib For your information and guidance. (SGD.) JOSE LUIS U. YULO, JR. President & CEO PHILIPPINE TOBACCO FLUE-CURING & REDRYING CORPORATION & ITS SUBSIDIARY PROJECTED CONSOLIDATED BALANCE SHEET AUGUST 31, 1999 ASSETS Current Assets Cash 6,792,265 Short term investments Receivables Trade Others 3,055,897 Inventories 86,171.576 Prepaid expenses 8,507,705 Other current assets 31,147,466 __________ Total current assets 135,674,909 __________ Investments 27,527,333 Property, plant, equipment net of accumulated depreciation 262,748,321 Other assets Claims receivable 64,504,883 Other deposits and advances 11,794,849 Total other assets 76,299,732 __________ 502,250,295 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable and accrued expenses 5,546,307 Other taxes payable 11,993,372 Advances and other current liabilities 51,684,033 Total current liabilities 69,223,712 Long-term debt 166,600,766 Minority interest 3,953,409 Stockholders' equity Capital stock 219,590,204 Retained earnings 42,882,204 _________ Total 262,472,408 Cost of treasury stock __________ Net stockholders' equity 262,472,408 __________ 502,250,295 ========= PHILIPPINE TOBACCO FLUE-CURING & REDRYING CORPORATION & ITS SUBSIDIARY PROJECTED CONSOLIDATED STATEMENT OF INCOME AND EXPENSES FOR THE FISCAL YEAR ENDED AUGUST 31 , 1999 REVENUE: Tobacco Sales 178,721,987 Cost of Sales 161,034,531 17,687,474 Rental Rental income 63,872,110 Rental expenses 36,850,000 _________ 27,022,110 _________ 44,709,584 EXPENSES: Selling 5,998,715 Administrative 16,567,054 _________ 22,565,769 _________ INCOME FROM OPERATIONS 22,143,815 OTHER INCOME (CHARGES) Interest Income 1,270,000 Interest expense (17,403,125) Miscellaneous income 290,000 __________ (15,843,125) INCOME BEFORE INCOME TAX 6,300,690 PROVISION FOR INCOME TAX 1,676,897 INCOME BEFORE NET EARNINGS APPLICABLE TO MINORITY INTEREST 4,623,793 MINORITY INTEREST 253,696 NET INCOME 4,370,097 PHILIPPINE TOBACCO FLUE-CURING & REDRYING CORPORATION AND ITS SUBSIDIARY NOTES TO FINANCIAL STATEMENTS A. Tobacco Operations 1. Total Production (kg) 2,262,800 2. Sales Volume (kg) 2,678,235 3. Gross Profit Margin Ratio 10% The lower profit margin in 1999 is due to lower recovery rate experienced in 1998, of which most of the inventory was sold in 1999. B. Rental Business Rate Rate 1999 Projections 70% P95 C. Interest Expenses The substantial reduction in interest expenses in 1999 is due to the repayment of loans out of the proceeds of the Rights Offering. D. Current Liabilities It is projected that the proceeds of the Rights Offering will be received during the fiscal year 1999. The expected total amount of approximately P200.0 million will be used to pay off current loans. LLjur E. Long Term Debt The balance of the proceeds after paying off the current liabilities will be applied to the long term debt. CERTIFICATION I have prepared the accompanying Projected Consolidated Financial Statements of PTFC&RC for the fiscal year ending August 31, 1999. The projected income was based on past performances and indications from our various customers locally and abroad, after taking into account economic factors that may affect such income. Operating and Administrative expenses were derived from adjusted figures of budgeted and actual expenses experienced over a period of years. In my opinion, the accompanying Projected Consolidated Financial Statements present a fair and reasonable estimate of the financial condition and the results of operation of PTFC&RC for the fiscal year ending August 31, 1999. (SGD.) EVANGELINE O. ADRIANO Controller