Macroasia Corporation

March 23, 2000 PSE CIRCULAR FOR BROKERS NO. 758-00 SUBJECT : MACROASIA CORPORATION Record Date and Work Program for 1:4 Stock Rights Offering with 2:1 Warrants Offering Further to Circular for Brokers No. 2941-99 dated November 17, 1999, please be informed that the record date of the 1:4 stock rights offering with 2:1 warrants offering of MACROASIA CORPORATION ( the "Company" ) has been set on April 12, 2000. The details are as follows: A. 1:4 Stock Rights Offering Offer Ratio : One (1) rights share for every four (4) common shares held Offer Shares, par value : 250,000,000 common shares, P1.00 per share Offer Price : P2.00 per share Eligible Subscribers : All shareholders as of Record Date. Record Date : April 12, 2000 Ex-date : April 6, 2000 Offer Period : April 24 - 28, 2000 Payment Terms : Full payment upon subscription Underwriter : Allied Banking Corporation Trust & Investments Division Financial Adviser and Issue Manager : Securities 2000, Inc. ("SEC2000") Stock Transfer Agent : Allied Banking Corporation Trust Banking Division B. 2:1 Warrants Offering Number of Warrants : 500,000,000 warrants Description of : Attached to and detachable from stock Warrants : rights shares Ratio : Two (2) Warrants for every one (1) rights share subscribed Cost of Warrants : P0.10 Exercise Period : Within ten (10) trading days immediately prior to the end of three years from Listing Date of the Warrants Expiry Date : End of the Third Year from the Listing Date C. Underlying Shares of Warrants Number of Underlying Common Shares of Warrants : 500,000,000 common shares Conversion Ratio : One (1) warrant is convertible to one (1)common share Exercise Price : Range of P6.00 to P9.00 The final Exercise Price shall be determined by the Board of Directors of the Company and SEC2000 and shall be announced Adjustments to the Exercise Price is provided for in Annex "A" The net proceeds from the rights offering and warrants offering of approximately P520 million shall be utilized as follows: Purpose Amount Timing of (P million) Disbursement Equity contribution in joint venture project with Lufthansa Technik 470 2nd Quarter Working Capital for MacroAsia-Eurest Catering Services, Inc. (MECS) 25 2nd Quarter Working Capital for MacroAsia-Ogden Airport Services Corp. (MASC) 25 3rd Quarter Total 520 Attached as Annex "B" is a copy of the Company's projected financial statements covering the year 2000. For your information and guidance. (SGD.) MARIA ISABEL T. GARCIA OIC, Listings and Disclosure Group ANNEX A Adjustments to the Exercise Price (a) The Exercise Price may from time to time be adjusted, with prior notice to and approval of the Exchange, if any of the following events occur prior to the exercise of the Rights granted under the Warrants. Should any event giving rise to any such adjustment be such as would be covered by more than one of the paragraphs (1) to (5) inclusive, it shall be deemed to be covered by the first applicable paragraph to the exclusion of the remaining paragraphs: (1) If there shall be a change in the par value of the Shares, the New Exercise Price shall be determined as follows: Exercise Price x New Par Value Old Par Value Each such adjustment shall be effective from the close of business on the business day when such reduction or increase in par value shall have been approved by the SEC. (2) If and whenever the company shall issue stock dividends, effective on the Record Date of the stock dividends, the New Exercise Price shall be determined as follows: Exercise Price x 100% 100% + % of Declared Stock Dividends (3) If as a result of a merger, consolidation and/or quasi reorganization the Company shall make (whether on a reduction of capital or otherwise) any capital distribution to shareholders other than regular or special cash dividends which the Company may from time to time declare the New Exercise Price shall be determined as follows: Exercise Price x Market Capitalization - Amount of Capital distributed Market Capitalization (4) If and whenever the Company the Company shall grant to shareholders the right to acquire for cash, assets of the Company, the New Exercise Price shall be-determined as follows: Exercise Market Market - Fair Market Value of Price x Capitalization Assets Disposed Market Capitalization "Fair market value of the assets disposed" shall be determined by a reputable independent appraiser which shall be appointed by the Company. (5) If and whenever the company shall offer to all shareholders new shares at a price lower than the Exercise Price, then the New Exercise Price shall be the price per share offered by the Company. (b) Any adjustment to the Exercise Price shall be made to the nearest five centavos (P0.05 being rounded down) in addition to any determination which may be made by the Board of Directors, every adjustment to the Exercise Price shall, save as otherwise expressly provided herein, be certified either (at the option of the Company) by the Auditors or such other financial institution or adviser as may be later appointed by the Company. (c) Notwithstanding anything contained in this Instrument or the Warrant Certificates, no adjustment shall be made to the Exercise Price in any case in which the amount by which the same would be reduced in accordance with the foregoing provisions of this Section would be less than five centavos (P0.05), and any adjustment that would otherwise be required then to be made shall be carried forward. (d) Whenever the Exercise Price is adjusted as herein provided, the Company shall give notice to the Warrantholders that the Exercise Price has been adjusted (setting forth the event giving rise to the adjustment, the Exercise Price and the effective date thereof) and shall at all times thereafter, so long as any of the Rights remains exercisable, make available for inspection by Warrantholders at the Company's principal office and place of business, where copies of the same may be obtained, a signed copy of the said certificate of the Auditors or (as the case may be ) of such other appointed financial institution or adviser and a certificate signed by the president of the Company setting forth particulars of the event giving rise to the adjustment, the Exercise Price in effect prior to such adjustment, the adjusted Exercise Price and the effective date thereof and shall, on request, send a copy thereof to any Warrantholder. (e) Notwithstanding the provisions referred to in subsections (a) and (b) above, in any circumstance where the Company shall consider that an adjustment to the Exercise Price provided for under the said provisions should not be made or should be calculated on a different basis or that an adjustment to the Exercise Price should be made notwithstanding that no such adjustment is required under the said provisions or that an adjustment should take effect on a different date or at a different time from that provided for under the said provisions, the Company shall appoint the Auditors or such other financial institution or advisor to consider whether for any reason whatsoever the adjustment to be made (or the absence of adjustment) would or might not fairly and appropriately reflect the relative interests of the persons affected thereby and, if the Auditors or such other appointed financial institution shall consider this to be the case, the adjustment shall be modified or nullified, or an adjustment made instead of no adjustment, in such manner (including, without limitation, making an adjustment calculated on a different basis) and/or the adjustment shall take effect from such other date and/or time as shall be certified by the Auditors or such other appointed financial institution to be in its opinion appropriate. SCEHaD ANNEX "B" MACROASIA CORPORATION AND SUBSIDIARIES INCOME PROJECTIONS YEAR 2000 MAJOR ASSUMPTIONS MACROASIA CORPORATION (PARENT) The greater parts of revenues are mostly from Interest on Savings and Money Market placements. Average interest rate is 8% (net of wtx). The company projected 15% increase in labor cost annually. Five (5%) percent annual increase was projected for all expenses. MACROASIA AIR TAXI SERVICES, INC. 384 average flying hours annually projected, with PhP 2,000 yearly increase in rate per flying hour and PhP500 yearly rate increase in waiting hours. The company projected 15% increase in labor cost annually. Five (5%) percent annual increase was projected for all other expenses. A wholly owned subsidiary of MacroAsia Corporation. MACROASIA-OGDEN AIRPORT SERVICES CORPORATION The company is to service Air Philippines, and then 4 new foreign airlines targeted for year 2000. MAC's share for consolidation purposes is 70%. Capital expenditures for year 2000 Php 25M. MACROASIA-EUREST CATERING SERVICES. INC. Assumed 83% of the total revenues is generated from the present regular 14 airline clients and 17% is generated from the three (3) potential clients. An 80% passenger load factor is assumed spread over the year based on lean and peak seasons of traveling from Manila. Food costs are budgeted at an average of 33% of meal revenue. Overhead and other expenses have been budgeted centrally patterned after 1999 actual costs. The company projected 5% increase in labor cost. Department expenses have been budgeted based on number of clients, flights schedules and frequencies and number of meals. Exchange Rate is 1 USD = PHP 40.00 Interest Rate (T-bill) 9% Inflation rate is 2% Estimated capital expenditure for facility expansion is Php 40 million. MAC's share for consolidation purposes is 67%. CEBU PACIFIC CATERING SERVICES Assumed 6% increase in revenue based on the actual 1999 revenues Direct material cost is 33% of net revenue in anticipation of price increase for year 2000. Direct labor cost 10% increase on all levels of staff. All other expenses were based on the average expenses for the year 1999 with an additional increase based on its related historical data. MAC's equity share is 40%. MACROASIA CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET PROJECTIONS - YEAR 2000 Cash This includes available cash fund deposited on savings and money market placements earning at an average rate of 2% and 8 %. Accounts Receivable Accounts receivable principally consists of trade sales. Credit terms are expected to be 30 days. Inventories MECS' inventories are stated at the lower of cost or market. Cost is determined using the simple average method. Land held for Development Land held for development are carried at acquisition cost. Actual expenditures and borrowing costs related to the acquisition and development of the land are capitalized. Investment and Advances to Subsidiaries The parent company carries its investment in shares of stock of Cebu Pacific Catering Services. Inc. (CPCS) at cost, increased or decreased by the parent company's equity in net earnings or losses of CPCS. Advances are mainly for the purpose of working capital and completion of kitchen facility. Property and Equipment Property and equipment represent the net book value of assets held by the Company that are not for resale. Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation is computed on the straight-line method over the estimated useful lives of the assets. Leasehold improvements-are amortized over the term of the lease or the life of the asset, whichever is shorter. Pre-operating Expenses Costs incurred related to the development of each of the projects of the parent company are deferred and will be amortized once the project starts commercial operations. Certain expenses incurred by the parent company and its subsidiaries prior to start of commercial operations which have been deferred are amortized over 5-year period from the start of commercial operations. Accounts Payable and Accrued expenses Accounts payable and accrued expenses represent payment to suppliers and other operating expenses. The Company projected average payment period of 30 days. Long-term debt These are loans from associated banks to be used for capital expenditures and to finance future potential projects. MACROASIA CORPORATION AND SUBSIDIARIES ASSETS CURRENT ASSETS CASH AND CASH EQUIVALENT P544,729,801 INVENTORIES 236,902,838 ACCOUNTS RECEIVABLE 122,153,271 OTHER ASSETS 50,746,358 TOTAL CURRENT ASSETS 954,532,268 =========== LAND FOR DEVELOPMENT 143,852,303 INVESTMENT AND ADVANCES TO SUBSIDIARIES 644,216,638 PROPERTY AND EQUIPMENT - NET 435,882,514 PREOPERATING AND OTHER ASSETS 31,599,313 TOTAL ASSETS 2,210,083,036 ========== LIABILITIES AND STOCKHOLDERS EQUITY CURRENT LIABILITIES ACCOUNTS PAYABLE AND ACCRUED EXPENSES 216,906,093 LONG-TERM DEBT 128,024,055 ADVANCES FROM AFFILIATES 122,341,771 MINORITY INTEREST 106,312,614 TOTAL LONG-TERM LIABILITIES 356,678,440 ========= STOCKHOLDERS' EQUITY CAPITAL STOCK 1,250,000,000 ADDITIONAL PAID-IN CAPITAL 250,000,000 RETAINED EARNINGS 136,498,503 TOTAL STOCKHOLDERS' EQUITY 1,636,498,503 TOTAL LIABILITIES & STOCKHOLDERS EQUITY 2,210,083,036 ========== Prepared by: (SGD.) Dennis R. Fontanilla Project Dev't. Accountant Date: December 15, 1999 MACROASIA CORPORATION AND SUBSIDIARIES PROJECTED CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2000 REVENUES INFLIGHT CATERING P441,989,452 GROUND HANDLING 218,254,877 CHARTER FLIGHT REVENUE 11,664,000 EQUITY IN NET EARNING OF AFFILIATE 6,878,618 678,786,947 EXPENSES COST OF SALES P246,303,031 OPERATING EXPENSES 209,196,132 455,499,163 DEBIT P223,287,784 DEPRECIATION/AMORTIZATION 49,809,290 INTEREST EXPENSE, NET 39,719,140 INCOME BEFORE INCOME TAX P133,759,354 PROVISION FOR INCOME TAX 1,030,398 NET INCOME BEFORE MINORITY INTEREST P132,728,956 MINORITY INTEREST (46,019,102) NET INCOME P86,709,854 RETAINED EARNINGS, BEG. 49,788,649 RETAINED EARNINGS, END P136,498,503 ========= Prepared by: (SGD.) Dennis R. Fontanilla Project Dev't. Accountant Date: December 15, 1999 MACROASIA CORPORATION PROJECTED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDING DECEMBER 31, 2000 CASH FLOWS FROM OPERATING ACTIVITIES Net Income/(Loss) 86,709,854 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortizations 49,809,290 Preoperating and other assets 8,522,015 Minority Interest 46,019,102 Changes in operating assets and liabilities: (Increase)/Decrease in: Accounts receivable and others (13,822,671) Inventories (34,597,496) Increase/(Decrease) in: Notes Payable (20,400,000) Accounts Payable and accrued expenses (15,337,369) Net cash used in operating activities 106,902,725 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property & equipment Property & Equipment mainly consist of; MacroAsia Corporation & existing subsidiaries MacroAsia-Eurest Kitchen Facility Expansion (40,000,000) MacroAsia-Ogden's Acquisition of Ground Handling Equipment (20,000,000) Decrease (increase) in investment and advances (644,053,528) Net cash used in investing activities (704,053,528) TOTAL NET CASH USED IN OPERATING & INVESTING ACTIVITIES (597,150,803) CASH FLOWS FROM FINANCING ACTIVITIES Loans and advances from affiliates 5,453,956 Proceeds (Payment) of: Long-term debt 94,293,121 Issuance of capital stock 500,000,000 Net cash provided by financing activities 599,747,077 NET INCREASE/DECREASE IN CASH AND CASH EQUIVALENTS 2,596,274 CASH AND CASH EQUIVALENTS AT BEG. OF THE YEAR 542,133,527 CASH AND CASH EQUIVALENTS END OF THE YEAR 544,729,801 Prepared by: (SGD.) Dennis R. Fontanilla Project Dev t Accountant Date: December 15,1999