Hi Cement CorporationRecord date and work program forPre-emptive Rights Offering

March 23, 1999 PSE CIRCULAR FOR BROKERS NO. 565-99 SUBJECT : Hi Cement Corporation Record date and work program for Pre-emptive Rights Offering Further to Circular for Brokers nos. 2378-98 and 2610-98, please be informed that the record date of the Pre-emptive Rights Offering of 1,537,000,440 common shares and a maximum of P768,500,220.00 worth of Convertible Notes of HI CEMENT CORPORATION ("HCC") has been set on April 13, 1999 . The details are as follows: dctai A.Pre-emptive Rights Offering Amount of Proceeds P1,537,000,440.00 Offer Ratio Shareholders holding more than 1,000 shares as of Record Date shall be entitled to subscribe to a maximum of 2,000 Rights Shares for every 1,000 common shares held as of Record Date and a maximum of another 2,000 Rights Shares for any incremental holdings of less than 1,000 common shares held as of Record Date. Shareholders owning less than 1,000 common shares held as of Record Date shall likewise be entitled to subscribe to a maximum of 2,000 Right Shares. Minimum subscription of shareholders of Record Date in the exercise of their respective entitlement to subscribe shall be 2,000 Rights Shares, while the minimum subscription to additional Rights Shares shall be 1,000 Rights Shares. Subscription in excess of the foregoing shall be increments of 100 Rights Shares. Offer Shares, par value 1,537,000,440 common shares P1.00 par value Offer Price P1.00 per share Record Date April 13, 1999 Ex date April 6, 1999 Offer Period To be announced Additional Subscription Subject to availability of Rights Shares, Second Offering shareholders as of Record Date shall have the right to subscribe to additional Rights Shares which were not otherwise subscribed to by the other shareholders. The allocation and distribution of such additional Rights Shares shall be decided by the Issuer whose decision shall be final. Payment Terms Payable in full upon submission of the application form Underwriter AB Capital and Investment Corporation Stock Transfer Agent Stock Transfer Service, Inc. B. Underlying Shares of Convertible Notes Amount of Proceeds from Maximum of P768,500,220.00 Issuance of Convertible Notes Convertible Notes Maximum of P768,500,220.00 worth of Convertible Notes, due 2004 The Underlying Shares of the Offered Notes, upon conversion, will be listed will the PSE, while the Offered Notes will not be listed. B. Underlying Common Shares of Maximum of 768,500,220 common shares Convertible Notes Offer Price 100% of the face value of the Notes Notes Entitlement The Convertible Notes will be offered on a pro- rata basis to shareholders as of Record Date which have subscribed to a minimum of 2,000 Rights Shares (the "Qualified Shareholders"). All Qualified Shareholders shall have the right to purchase a maximum of P1,000 worth of Convertible Notes for every 2,000 Rights Shares subscribed to by such shareholder, and accepted by the Issuer and a maximum of another P1,000 worth of Convertible Notes for incremental subscriptions of less than 2,000 Rights Shares accepted by the Issuer. In addition, subject to availability of Rights Shares, Qualified Shareholders shall have the right to purchase additional Convertible Notes not otherwise purchased by the other Qualified Shareholders. The allocation and distribution of such additional Convertible Notes shall be decided by the Issuer, whose decision shall be final. Minimum purchase shall be P1,000 worth of Convertible Notes, and all purchase in excess thereof, inclusive of purchases of additional Convertible Notes, shall be in increments of P100 worth of Convertible Notes. Proposed Issue Date To be announced Conversion Ratio The number of common shares to be issued upon conversion of the Notes (the "Underlying Shares") shall be determined by dividing the principal amount of the Notes to be converted by the Conversion Price in effect on the Conversion Data. Fractions of the underlying shares will not be issued on conversion and no cash adjustments will be made in respect of any such fraction. Conversion Price Subject to pertinent adjustments in certain events as provided in the prospectus, the conversion price per each underlying common share shall be at: (1) a par value of P1.00 per share for the first 3 years from Issue Date; (2) P1.20 per share or a 20% premium to HCC's par value from the 1st Banking Day after the 3rd year anniversary date of the Convertible Notes up to the 4th year Anniversary date of the Convertible Notes; and (3) P1.50 per share or a 50% premium to HCC's par value from the 1st Banking Day after the 4th year anniversary date of the Convertible Notes. up to the 5th year anniversary date of the Convertible Notes. Maximum Term of the Notes/ 5 years from Issue Date Maturity Date Conversion Period Starting on the 1st Banking Day after the issuance of the Permit to Sell for the Underlying Shares from the SEC and the approval by the PSE on the listing of the said Underlying Shares and up to and including the end of the close of business on the 5th Banking Day before Prepayment Date thereof. Interest Payment Dates Quarterly Gross Coupon Rate The Convertible Notes shall bear interest of 6% p.a. from Issue Date up to the end of the 3rd year from Issue Date. Thereafter, the Notes shall bear interest at 8% p.a. up to the end of the 5th year from Issue Date. Interest will be paid quarterly in arrears and accrued on the basis of 360 calendar days. Put Option The Note holders shall have a one time option to put back to the Issuer within the Put Option Period the outstanding Notes and the accrued interest thereon if the Issuer fails to obtain the approval of the PSE by the 360th calendar day from Issue Date, the approval for the listing of the Underlying Shares. Put Option Period Starting on the 361st calendar day from the Issue Date to the 540th calendar day from Issue Date. Interest on the Put Option Interest on the principal amount of the Convertible Notes which was put back by the Note Holders shall be computed to realize a yield equivalent to the 360-day Philippine T-Bill auction results immediately prior to the Issue Date plus a spread of 1%. The said amount of interest shall be computed to reflect the regular interest payment(s) covering the period from the previous Interest Payment Period to and up to the exercise of the Put Option. Call Option (Early Redemption) The Issuer may wholly or partially prepay the outstanding principal amount of the Convertible Notes plus accrued interest of the Notes on any Banking Day after the lapse of 730 days from Issue Date, by giving at least 30 days prior written notice to the Note Holders through the Trustee; provided that the Notes are deemed convertible into common shares and weighted average market price of the common shares for 20 consecutive trading days, the last of which occurs not more than 10 days prior to the date upon which the notice for early redemption is given, is at least 130% of the Conversion Price in effect on the last such Trading Day, provided further that the notice of prepayment shall be irrevocable once given and shall specify the date of redemption; provide furthermore, that the notice of prepayment may be given before the lapse of the above-mentioned 730 calendar day period. The early redemption notice to the Note Holder given by the Issuer will specify; i.) the conversion Price as at the date of the notice; ii.) the Market Price of the common shares of the Issuer as at the latest practicable date prior to the giving of the notice; iii.) the redemption date; iv.) if less than all outstanding are to be redeemed the aggregate principal amount of the Notes to be redeemed and the aggregate principal amount of the Notes which will be outstanding after such partial redemption; and v.) the place where the Notes certificate, the Annex "A" to the Notes certificate and Interest/Principal Coupon rate to be surrendered. Amount of Prepayment Minimum of P50,000,000.00 and prepayment in excess of the minimum shall be in multiples of P50,000,000.00 Underwriter AB Capital and Investment Corporation The net proceeds from the offering of approximately P2.239 Billion, will be used to refinance a portion of HCC's outstanding debt obligations originally incurred to finance the Company's working capital requirement, capital expenditure and expansion project which began full commercial operations in October 1997. aisadc Attached is a copy of the Company's projected financial statements covering the fiscal year June 30, 1998-1999. For your information and guidance. (SGD.) JOSE LUIS U. YULO, JR. President & CEO HI CEMENT CORPORATION INCOME STATEMENTS For the fiscal year ended June 30, 1999 Amount 000's Per Bag Sales Volume PORTLAND-BAG 21,588 69.96 PORTLAND-BULK 11,659 69.92 POZZOLAN 2,372 62.92 EXPORT SALES 2,750 36.08 TOTAL 38,368 67.08 NET SALES 2,347,101 61.17 VARIABLE COST OF SALES 1,278,276 33.32 VARIABLE GROSS PROFIT 1,068,825 27.86 FIXED AND SEMI-VAR. COST 438,814 11.44 INVENTORY EFFECT-FAC (28,792) (0.75) GROSS PROFIT FROM CEMENT 658,804 17.17 GAIN FROM SALE OF CLINKER 16,798 10.30 GAIN FROM SALE OF CEMENT TO BCC 0 0.00 TOTAL GROSS PROFIT 675,602 17.61 OPERATING EXPENSES 183,972 4.79 MANAGEMENT & DIRECTOR'S BONUS 0 0.00 EBITDA 491,630 12.81 FINANCIAL CHARGES 563,506 14.69 PROVISION FOR CONTINGENCIES 17,603 0.46 OTHER CHARGES/(INCOME)-NET (5,640) (0.15) EXTRAORDINARY ITEM 15,262 0.40 PROVISION FOR INCOME TAX 0 0.00 CASH INCOME (LOSS) (99,101) (2.58) DEPRECIATION & AMORTIZATION 573,505 14.95 NET INCOME (LOSS) BEF. EQUITY (672,606) (17.53) IN NET EARNINGS OF INVESTED TAPGC INCOME 82,289 2.14 ACMC INCOME(LOSS) (23,973) (0.62) NET INCOME (LOSS) (614,290) (16.01) The projections have been prepared by the Company based on facts and conditions existing and known to management as of January 27, 1999. They are subject to continuing review, and where necessary, revisions, by management. Certified Correct: (SGD.) CARLOS I. ARGUELLES VP-Comptroller HI CEMENT CORPORATION CASH FLOW STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 1999 PROJECTED AUDITED 30-June-99 30-JUNE-98 OPERATING ACTIVITIES: Net Income (614,290) (7,695) Adjustments to reconcile net income to cash provided by operating activities: Depreciation and Amortization 572,871 522,661 Equity in Net (Income) Loss of Affiliates (58,423) (69,916) Decline on a Value on Marketable Securities 0 21,120 Changes in Current Assets and Liabilities (Increase) Decrease in Receivables 270,831 (97,799) Decrease in Inventories 89,986 38,089 Decrease in Prepaid Expenses 44,422 10,933 Increase(Decrease) in Other Assets (16,160) (1,492) Increase(Decrease) in Accounts Payable (170,464) (224,973) Cash provided (used in) by Operating Activities 117,772 190,988 INVESTING ACTIVITIES: Long-term Investments (0) (46,944) Marketable Securities 0 (45,970) Additions to PPE (236,013) (803,675) Cash provided (used in) by Investing Activities (263,013) (896,589) FINANCING ACTIVITIES: Proceeds of Short Term Loans 1,426,159 1,255,632 Proceeds of Long Term Debt 307,151 780,470 Payment of Short Term Loans (1,860,909) (432,899) Payment of Long Term Debt (2,137,516) (804,971) Convertible Debts (768,500) 0 Proceeds from Stock Subscription 1,540,750 1,250 Cash Dividends 0 (76,850) Cash provided (used in) by Financing Activities 44,135 722,632 NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENT (74,105) 17,031 CASH AND CASH EQUIVALENT, BEGINNING 174,105 157,074 CASH AND CASH EQUIVALENT, ENDING 100,000 174,105 The projections have been prepared by the Company based on facts and conditions existing and known to management as of January 27, 1999. They are subject to continuing review, and where necessary, revisions, by management. cdt Certified Correct: (SGD.) CARLOS I. ARGUELLES VP-Comptroller HI CEMENT CORPORATION PROJECTED BALANCE SHEET JUNE 30, 1999 PROJECTED AUDITED 6/30/99 6/30/98 ASSETS CURRENT ASSETS Cash and Cash Equivalents 100,000 174,105 Marketable Securities 52,188 52,188 Accounts Receivable-Trade 276,527 510,910 Accounts Receivable-Others 105,174 141,622 Inventories-net 552,807 641,794 Prepaid Expenses-Others 17,680 62,102 Total Current Assets 1,104,376 1,582,721 INVESTMENTS 449,887 391,464 PROPERTY, PLANT & EQUIPMENT-NET 6,923,226 7,243,924 TOTAL ASSETS 8,477,489 9,218,109 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes Payable 553,896 988,647 Accounts Payable and Acc. Expenses 263,643 434,107 Current Portion of Long Term Debt 166,667 1,835,382 Total Current Liabilities 984,205 3,258,136 LONG TERM DEBT 2,277,969 1,671,118 DEFERRED INCOME TAX 125,368 125,368 TOTAL LIABILITIES 3,387,542 5,054,622 STOCKHOLDERS EQUITY Capital Stock Common Stock 2,305,500 768,500 Preferred Stock 5,000 1,250 Additional Paid-In Capital 2,353,280 2,353,280 Deposit for future stock subscription 0 0 Retained Earnings 426,166 1,040,457 TOTAL STOCKHOLDERS' EQUITY 5,089,946 4,163,486 TOTAL LIABILITIES AND EQUITY 8,477,489 9,218,109 CURRENT RATIO 1.12:1 9.49:1 DEBT/EQUITY RATIO 0.67:1 121:1 EARNINGS PER SHARE -0.27 -0.01 RETURN ON EQUITY -12% 0% BOOK VALUE PER SHARE 2.21 5.42 The projections have been prepared by the Company based on facts and conditions existing and known to management as of January 27, 1999. They are subject to continuing review, and where necessary, revisions, by management. Certified Correct: (SGD.) CARLOS L. ARGUELLES VP-Comptroller HI CEMENT CORPORATION ASSUMPTIONS FISCAL YEAR 1198-1999 Projected Total 1. Exchange Rate $1 41.19 2. Selling Prices Portland-bag 69.96 Porland-bulk 69.92 Pozzolan 62.92 Export 36.08 Average 67.08 3. Sales Volume Portland-bag 21,588 Portland-bulk 11,659 Pozzolan 2,372 Export 2,750 Total 38,368 4. Clinker Sales Volume 1,628,644 Price 38.40 5. Variable/Fixed and Semi-Variable Cost Variable Cost Portland-bag 36 Portland-bulk 31 Pozzolan 36 33 Fixed and Semi Variable Repairs and Maintenance 198,140 Employee's Costs 120,924 Others 119,751 Depreciation 567,909 Total 1,006,724 6. Sales Collection 35 days 7. Bulk Materials Payment Terms 15 to 30 days 8. Debt Service MetroBank 167 LTCP 375 Foreign Loans 1,210 Long Term Notes 385 2,137 9. Interest Rates MetroBank 16% LTCP 15% Foreign Loans 8% Cash Bond 14% Long Term loans 17% 9. Cash/Temporary Investments In Millions 100 The data for July-December 1998 are based on actual results. The projections have been prepared by the Company based on facts and conditions existing and known to the management as of January 27, 1999. They are subject to continuing review and where necessary, revisions, by management. dctai Certified Correct: (SGD.) CARLOS I. ARGUELLES VP-Comptroller