Land Restructuring

STRICTLY CONFIDENTIAL

DRAFT

Project Phoenix

Land restructuring options

August 2010

DRAFT Recap of land restructuring

Proposed holding structure Comments  Given the 40% foreign ownership restriction on owning property, land restructuring will have to be undertaken

Retirement Fund (RF)

60% 40%

SMYPC

Restriction

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LandCo

Proposed restructuring plan

The initial proposed restructuring will involve the creation of a new holding company (“LandCo”) to which all the properties of the Packaging Business would be transferred LandCo will then be owned 60% by the RF and 40% by SMYPG

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Properties Considerations on proposed restructuring

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Initial considerations involved confirming whether the RF has sufficient funds to acquire the properties – confirmed RF does not have sufficient funds to acquire 60% stake in LandCo via the “normal way”, however funding problem can be solved using preferred share structure If funds were to be sufficient, substantial % of funds is invested in land

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The preferred share structure and other considerations will be further explained in subsequent slides Other factors considered include tax liability, timing, funding and control

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1

DRAFT Restructuring considerations

Advantages Disadvantages  Incorporation of single LandCo adds the added complexity of determining relative holding(s) by RFs, as land from different BUs are pooled –  each BU sells land to a single LandCo instead of multiple LandCos

Each structure has different implications in terms of Single LandCo

vs  tax liability

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 timing

Multiple LandCos?

Single LandCo vs Multiple LandCos?

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Incorporating single LandCo minimises tax – incorporation of each LandCo involves DST on par value of shares (0.05% of par value)

 funding  control

Straight sale1 vs tax deferred transfer (TDT)2?

Straight sale is quickest – no BIR ruling required as opposed to TDT, which lengthens restructuring process by...