MRT 7 Project Presentation June 2007 The MRT

MRT – 7 Project Presentation June, 2007

The MRT – 7 Project Multi-purpose Transportation Solution with Real Estate Development Component A lead Infrastructure Project Metro Manila, Philippines June 2007

Enhancing infrastructure priority development project thru partnership between the private and public sectors

MRT - 7 Project • Elevated MRT – 12. 11 Km • At-Grade MRT – 6. 655 Km • Open-Cut MRT – 1. 445 Km • Tunnel MRT – 0. 785 Km • 6 Lane Road – 22. 0 Km

MRT-7 Stations • Elevated – 8 Stations • At-Grade – 3 Stations • Depressed – 3 Stations

Project Costs In Million US Dollars $1. 235 B

MRT -7 Project Mission v Transportation - not only providing reliable connection for Commonwealth, Fairview and Bulacan commuters, but uniquely addressing decongestion of EDSA by providing an alternative route for the provincial buses from the North. v Decongestion - of Metro Manila thru obligation for the construction of the satellite town in San Jose del Monte. v Ridership Risk - Uniquely and first time undertaking of private sector to assume full responsibility for the ridership risk and the O&M cost.

MRT -7 Project Mission v Energy Savings – NEDA study indicates project causes $2. 4 Billion in Forex savings over the concession period base on crude oil price of $50 per barrel. v Employment – the project and the satellite township undertaking will create over 20, 000 new jobs throughout the concession period. v Housing – uniquely creating for the low and middle class income group an affordable housing linked by transportation arteries to their work destinations.

MRT -7 Project Mission v Air Pollution – Significantly reducing air pollution over the Metropolis v Investment – opening opportunities in the project and its real estate development for $3 Billion foreign and local investment pump priming of the economy.

Financial Overview PROJECT COST $1. 235 B SOURCES EQUITY $ 309 Million USES PROJ. CONSTRUCTION & EPC CONTRACT (about)$ 1, 000 Million ECA LOANS $ 800 Million OTHER LOANS $ 126 Million OTHER PROJ. COST (about)$235 Million Total $ 1. 235 Billion

FINANCIAL & ECONOMIC VIABILITY (BASIC) v v Project EIRR Project FIRR Investors FIRR Government FIRR 21. 8%* 11. 5% 11. 9% Deficit Neutral * Excluding Road and Real Estate Development

Fund Source US$309 M US$926 M $100 M $126 M $800 M of EPC = $1, 000 M DEBT $109 M EQUITY $100 M

Intermodal Terminal v v Sixty (60) slots for simultaneously bus loading / unloading. ü Train underground ü Second floor providing facilities for up to 3, 000 waiting passengers for their rides Complex provide eleven (11) sets of escalators for rapid movement of commuters.

Real Estate Development Opportunities v v Private investors to develop 2 Million sq. meters residential space 900, 000 sq. meters commercial space, malls, and community development facilities throughout the concession period.

Investors Recovery v v v US$ 108 Million per year capacity fee payment for 20 years 70% Sharing of net passenger revenue after O&M 80% Sharing in advertising and commercial development over the stations. Real Estate Development Income Capacity fee of US$100, 000 from year 2032 to 2037 Government commits to fare adjustments

Government Recovery of Amortization Payment v v v 30% Sharing of net passenger revenue after O&M 20% Sharing in advertising and commercial development over the stations. 20% Sharing on Real Estate Development Project and real estate development projected taxes Increase ridership to Government operated rail system. NPV (10%) of total Government undertaking $620 Million. v v Mere payment for gradual transfer of the assets worth US$1. 2 Billion. Government to recover its entire exposure thru tax benefits from the various activities generated by the project and the real estate development

Passenger Fare v v v Unified fare is assumed per km for all existing Mass Transit project Fare is based on LRT-1 and MRT-3, 2003 per km and adjusted to reflect inflation and foreign exchange fluctuation. Agreed formula for incremental fare adjustment Per agreed concession agreement, if actual fare is not adjusted to agreed fare, Government shall pay the difference thru deduction from other government revenues resulting from the project. Extra ordinary fare adjustment is provided for in the concession agreement when circumstances require.

Philippine Macro Economics v v v v v Balanced deficit is consistently reduced Balanced budget projected by 2008 – two years ahead of schedule Continuously reduced foreign debt Inflation much restrained ü (from Double Digit in the 90’s to around 3% at present) Larger inflow of stable foreign remittances (OFW) Larger tax collection Economic growth in the first quarter of 2007 reached 6. 9%, best in 17 years Credit rating is improving and expected to rise next quarter. Overall economic outlook best since 1978 much better than 2001 when proposal was made.

Project Risks v v v Country risk ü Philippine Outlook much improved Sovereign risk and risk of repatriation can be insured thru OPIC/MIGA and the like Construction cost is mitigated thru single point of responsibility contract with an EPC contractor at fixed price. Cost overruns due to delays and inflation (ROP faults) adjustment provided in the contract O & M Cost ü Agreements with maintenance and project engineering management groups ü In-house Experienced Team Market risk thru conservative ridership assumption and agreed fare structure (Metro Manila traffic is overwhelming).

Project Schedule TARGET DATES: Complete Swiss Challenge v Project Awarding v Contract Signing v Financial Closing v Start of Construction of Rail v Start of Real Estate Construction v Rail Project Completion v - June 2007 - October 2007 - December 2008 - July 2010 - July 2011 - July 2012

Project Task Completed v ACHIEVEMENTS (February 2001 – February 2007): – Ridership studies – Endorsement by DOTC of ULC (BVI) as the Original Proponent – NEDA-ICC first and second pass approvals – NEDA Board approval for publication of Swiss Challenge – Department of Justice clearance of the Terms of Reference for Swiss Challenge – Publication of Swiss Challenge bid closing date on June 2007

Project Task v PENDING (April 2007 – December 2007): – Finalize pending negotiations for the following agreements: ü Engineering and Procurement Contract ü Operations and Maintenance Contract ü Project Engineering Management Contract ü Financial Services Contract – Matching, if necessary, of possible Swiss Challenger – Negotiate details of the Concession Agreement ü Performance Bond on Real Estate Development

Invest in ULC (HK), the SPC (excluding investments in the Real Estate Company and the Vertical Development) BASIC ASSUMPTION Cash Flows from Capacity Fees and Net Passenger Revenues with 300, 000 initial ridership (in million US$) Year -3 -2 -1 0 1 2 3 4 5 10 12 15 20 25 IRR Equity Infusion (120. 0) (100. 0) (88. 9) Projected Gross Pax Rev. GOP Share in Pax Rev. Capacity Fees - - - 44. 0 (2. 7) 108. 0 52. 5 (4. 7) 108. 0 61. 5 (6. 9) 108. 0 70. 9 (9. 1) 108. 0 80. 8 (11. 8) 108. 0 137. 1 (27. 4) 108. 0 163. 3 (34. 7) 108. 0 175. 8 (37. 6) 108. 0 198. 9 (43. 0) 107. 9 225. 0 (49. 1) 0. 1 @ 12 years 4. 6% @ 15 years 8. 6% @ 20 years 11. 2% O&M - - (35. 0) (36. 8) (38. 6) (40. 5) (41. 3) (45. 6) (47. 5) (50. 4) (55. 6) (61. 4) @ 25 years 11. 8% Loan Repayment - (100. 1) (115. 7) (37. 5) (21. 9) - Income Tax - - - (27. 0) (34. 6) (39. 2) (58. 0) (32. 3) Net Flow to ULC (120. 0) (100. 0) (88. 9) 14. 2 19. 0 24. 0 29. 2 35. 6 29. 4 116. 9 119. 1 128. 3 82. 4

Invest in ULC (HK), the SPC (excluding investments in the Real Estate Company and the Vertical Development) Project Sensitivities Project Cost O & M (initial year, escalating at 5% every year) Investors’ FIRR at US$ 1. 235 B at US$ 35 M 11. 8% at US$ 1. 235 B 10% decrease at US$ 31. 5 M 12. 2% 10% decrease at US$ 1. 110 B at US$ 35 M 14. 0% 10% decrease at US$ 1. 110 B 10% decrease at US$ 31. 5 M 14. 4%

Invest in ULC (HK), the SPC (excluding investments in the Real Estate Company and the Vertical Development) Project Sensitivities Project Cost O & M (initial year, escalating at 5% every year) Investors’ FIRR at US$ 1. 235 B at US$ 35 M 11. 8% at US$ 1. 235 B 10% increase at US$ 38. 5 M 11. 4% 10% increase at US$ 1. 358 B at US$ 35 M 10. 0% 10% increase at US$ 1. 358 B 10% increase at US$ 38. 5 M 9. 6%

Project Proponents v Universal LRT Corporation v(with 15 local and international investors) v. A consortium of Alstom and Bouygues of France v. O&M service provider, SMRT Singapore v Subsequent to Swiss Challenge price matching mechanism as provided by the BOT Law, several institutional investors including the IFC are expected to join.

Universal LRT (BVI) Corporation Board of Directors v Mr. Antonio A. Henson President, SM Investment Corporation Chairman of the Board v Mr. Eli Levin Managing Director (CEO) Chairman, E. L. International Holdings (BVI) Ltd. v Mr. Vicente V. de Villa Executive Director, E. L. Enterprise, Inc. v Mr. George Y. Uy Executive Director, E. L. Enterprise, Inc. Executive Director v Ms. Imelda D. Bautista Director Chairwoman & CEO, Premier Gold Group Ltd. v Mr. Roberto F. de Ocampo Director Former President, Asian Institute of Management v Mr. Roberto Jose L. Castillo President and COO, EEI Corporation Director v Mr. Sergio Ortiz – Luis Director Former Chairman, Export and Industry Bank

Universal LRT (BVI) Corporation Board of Directors v Mr. Geronimo F. Velasco, Jr. President, Hollington Management Ltd. Director v Mr. Claudio B. Altura Chairman of the Board, TCGI Engineers Director v Mr. Jovencio F. Cinco Director President and CEO, Penta Capital Investment Corporation v Mr. Geronimo Velasco, Sr. Chairman, Hollington Management Ltd. Director v Mr. Jose Tan Sio Exec. Vice President & CFO, SM Investment Corporation Director v Mr. Wellington Y. Tong Representative, Merlin Capital, Inc. Director v Mr. George Go Director

Intermodal Animation

THANK YOU