PSE Circular for Brokers No. 488-98

March 26, 1998 PSE CIRCULAR FOR BROKERS NO. 488-98 March 20, 1998 SECURITIES AND EXCHANGE COMMISSION SEC Building, EDSA, Greenhills Mandaluyong City Attention : Ms . Adelfa A. Villegas Chief SE Specialist SERD-3 RE : Disclosure of Board of Directors' Approvals on modification of Securities and corresponding amendment of Charter as part of SCC's Quasi-Reorganization related procedures (SEC FORM 11- For items 6 and 9) Gentlemen: In Compliance with the Revised Securities Act (RSA) full Disclosure Rules, we are pleased to inform your office of the following Board of Director's approvals relative to the above captioned matters in its meeting held on March 19, 1998, namely: cdlex a. Increase in the Authorized common capital stock from P2,686,075,339.17 divided into 268,607,533,917 common shares, par value of P0.01 per share to P2,686,280,098.00 divided into 268,628,009,800 common shares, per value of P0.01 per share, thereby amending Article VII of the Amended Articles of Incorporation of the Corporation. b. Increase in the par value of the common shares from P0.01 to P2.0147 per share, thereby reducing the number of the authorized common capital stock from 268,628,009,800 common shares, par value of P0.01 per share, to 1,333,340,000 common shares, par value of P2.0147 per share, and amending for that purpose, Articles VII of the Amended Articles of the Corporation. c. Decrease in the par value of the common shares from P2.0147 per share to P1.00 per share, thereby decreasing the authorized common capital stock from P2,686,280,098.00 divided into 1,333,340,000 common shares with par value of P2.0147 per share to P1,333,340,000.00 divided into 1,333,340,000 shares par value of P1.00 per share, of which the amount of P1,300,370,000.00 worth of common shares would be issued and fully paid, using the reduction surplus of P1,319,485,439 to wipe out the deficit of the Corporation as of December 31, 1997, and amending furthermore Article VII of the Amended Articles of Incorporation. The Board of Directors likewise agreed on the plan to increase the Authorized Capital Stock by about 400M consisting of common shares with par value of P1.00 per share also in conjunction with the Quasi-Reorganization related procedures subject to SEC approval. The Board also approved the 1998 budget projecting coal production of 1.5 million MT, coal sales of 1.485 MT, revenue of P1,471 B, collection of P1,198 B. The total Investment of P648 M on Capital Expenditures (418) and Materials and Supplies (230) is required and financing of the same shall be on the basis of Supplier's Credit. Projected Income for 1998 is P379 M. LLphil Finally the Board authorized the holding of a Special Stockbrokers Meeting for the purpose of ratifying the Board actions which needs Stockholders approval and the holding of the Regular Annual Meeting of the Stockholders on May 4, 1998 as provided for in its By-Laws. We hope this will meet your requirements regarding the RSA Full Disclosure Rules. Thank you. Very truly yours, (SGD.) BENIGNO F. MORALES Corporate Secretary