Atty. Romeo B. Batino

May 15, 1982 Atty. Romeo B. Batino Suite 203, Ermita Center Roxas Boulevard, Ermita Manila Dear Sir: This is with regard to your letter dated February 16, 1982, requesting information from this Commission on how to effect quasi-reorganization. Stated herewith are the guidelines for approval of Quasi-Reorganization as prepared by our Examiners and Appraisal Department: prcd A. Guidelines for Approval of Quasi-Reorganization 1. That only companies which are financially in distress, may be allowed to undergo quasi-reorganization. 2. That the company has substantial increment in the market value of its fixed assets as appraised by a reputable licensed appraiser which is adequate to absorb its accumulated past losses. 3. That the appraisal increment to be considered in the plan shall be limited to real properties, permanently installed fixed assets, and other machineries and equipment directly needed and actually used in the operations of the company. 4. That the appraisal increment of fixed assets undergoing repair or will acquire repair before the same can be put into productive use shall not be included in the appraisal of assets for purposes of quasi-reorganization. 5. That the company shall present a project study on its future operations to support its quasi-reorganization. 6. That the remaining appraisal surplus set up in the books of the company after the deficit shall have been offset will not be used to the out losses that may be incurred in the future without prior approval of the Commission. 7. For purpose of dividend declaration, the retained earnings of the company shall be restricted to the extent of the deficit wiped out (and not recovered by accumulated depreciation on appraisal increment) by the appraisal surplus. 8. That after the quasi-reorganization of the company has been affected and approved by the Commission, the company shall disclosed in all its financial statements for a minimum period of three (3) years the mechanics, purpose and effect of such quasi-reorganization on the financial condition of the company. cdll B. Requirements for Quasi-Reorganization 1. Submit the following: a) An appraisal report rendered by a duly licensed appraiser covering the corporate assets specified in Item A No. 3 of the above GUIDELINES, together with supporting schedules showing the details of such properties and their costs, book values, appraised values, sound values, and appraisal increment as well as the estimated remaining useful life of each of the depreciable properties appraised. b) A project study on the company's future operations showing the yearly projected balance sheets, income statements and cash flow statements for a minimum period of five (5) years starting from the year immediately following the application for quasi-reorganization. c) The latest audited financial statements of the corporation prior to the write-off of the existing deficit, together with the long-form audited report of the certifying auditor/s. d) A list of directors and officers of the corporation as of the present date, duly certified by the corporate Secretary. Please be guided accordingly. prcd Very truly yours, (SGD.) JULIO A. SULIT, JR. Associate Commissioner