Development Bank of the Philippines Presentation Re procurement of 23% MRTC shares and 75% of MRT Notes (2010)

Metro Rail Transit Line 3

Project Background

and Issues

MRT3 Project DescriptionMRT3 Project Description

Metro Manila Mass Transit System

Operating Mass Transit Metro Manila

LRT1: Yellow Line (Taft Corridor)LRT2: Purple Line (Aurora Corridor MRT3: Blue Line (EDSA Corridor)Orange Line North Rail to South Rail Linkage Project

MMUTIS Report shows that EDSA Corridor is the heaviest Traffic Corridor of Metro Manila

PNR Northrail-Southrail Linkage Phase 1(Caloocan-Alabang, 34 km)

MRT3

M RT 8

MRT2

LRT1

MRT7Northrail

MRT4

LRT 1 NORTH EXT (Closing the Loop).

PNR Northrail-Southrail Linkage Phase 2(Alabang-Calamba, 27 km)LR

T Li

ne I

Sout

h

LRT

Line

I So

uth

Exte

nsio

nEx

tens

ion

MRT3 Background InformationMRT3 Background Information

Build, Lease and Transfer Agreement Build, Lease and Transfer Agreement was signed between Department of was signed between Department of Transportation and Communication Transportation and Communication (DOTC and Metro Rail Transit (DOTC and Metro Rail Transit Corporation Ltd (HK) in August 1997Corporation Ltd (HK) in August 1997

Approved Project Cost is US$ 679.0 Approved Project Cost is US$ 679.0 million but Actual Project Expense is: million but Actual Project Expense is: US$ 675.0 millionUS$ 675.0 million

16.6 kilometers with 13 stations and a 16.6 kilometers with 13 stations and a depot in EDSA corner North Avenuedepot in EDSA corner North Avenue

73 Light Rail Vehicles (Trains) Model 73 Light Rail Vehicles (Trains) Model RT8 D5M (Czech Made)RT8 D5M (Czech Made)

350,000 passengers a day capacity 350,000 passengers a day capacity and having operating with peak and having operating with peak capacity of 500,000 passengers a day capacity of 500,000 passengers a day

Project Owner: Metro Rail Transit Project Owner: Metro Rail Transit Corporation which invested US$ 190.0 Corporation which invested US$ 190.0 million with a backmillion with a back--ended 25ended 25--year year Equity Repayment ProfileEquity Repayment Profile

Project Lenders: Japan Bank for Project Lenders: Japan Bank for International Cooperation (JBIC), International Cooperation (JBIC), Czech ECA and FCDU who lent Czech ECA and FCDU who lent $485.5 million$485.5 million

EPC Contractor: Sumitomo EPC Contractor: Sumitomo CorporationCorporation

Maintenance Provider: Sumitomo Maintenance Provider: Sumitomo CorporationCorporation

Operator: DOTCOperator: DOTC

Comparison of Comparison of Net Economic Benefit and Actual ERP Payment by DOTC Net Economic Benefit and Actual ERP Payment by DOTC

• Total ERP over 25 years: US$ 2,209,999,966.00

• Total DOTC Payments Inclusive of Delayed Payment: 279,249,982

• Additional DOTC Payment to Preserve Net Economic Return of 15%: US$ 26,581,101.99 (if settled by the end of 2009)

• Additional DOTC Payment to Preserve Net Economic Return of 15%: US$ 30,466, 663.00 (if settled by the end of 2010)

YEAR Annex A-1,Table-2 (Original Schedule)

Equity Rental Payments (Actual and

Projected)

1995 (96,144,684.00) (96,144,684.00)1996 (71,875,167.00) (71,875,167.00)1997 (21,980,149.00) (21,980,149.00)1998 0.00 0.001999 0.00 0.002000 9,166,665.00 7,333,332.002001 9,999,996.00 8,499,997.002002 9,999,996.00 10,833,329.002003 19,166,670.00 14,349,989.502004 20,000,004.00 15,740,165.722005 38,333,330.00 13,333,335.002006 39,999,996.00 41,551,352.122007 39,999,996.00 61,212,438.862008 39,999,996.00 50,477,144.792009 44,583,333.00 47,918,898.012010 118,333,337.00 118,333,337.002011 129,583,330.00 129,583,330.002012 129,999,996.00 129,999,996.002013 129,999,996.00 129,999,996.002014 139,166,670.00 139,166,670.002015 140,000,004.00 140,000,004.002016 144,583,330.00 144,583,330.002017 144,999,996.00 144,999,996.002018 144,999,996.00 144,999,996.002019 144,999,996.00 144,999,996.002020 149,583,333.00 149,583,333.002021 150,000,000.00 150,000,000.002022 150,000,000.00 150,000,000.002023 150,000,000.00 150,000,000.002024 150,000,000.00 150,000,000.002025 12,500,000.00 12,500,000.00

15.0000% 14.8457%

Actual Actual RidershipRidership and Capacity Expansion Project Comparisonand Capacity Expansion Project Comparison (Phase 1 Only)(Phase 1 Only)

-

200,000.00

400,000.00

600,000.00

800,000.00

1,000,000.00

1,200,000.00

1,400,000.00

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Unconstrained Demand21 Brand New Trains by 201054 Brand New Trains by 2014Actual Ridership

MRT3 Phase has a potential MRT3 Phase has a potential ridershipridership of 1.3 million passengers a day of 1.3 million passengers a day Today with 73 Light Rail Vehicles (Trains) capacity is 350,000Today with 73 Light Rail Vehicles (Trains) capacity is 350,000 passengers a daypassengers a dayWith an additional 21 Light Rail Vehicles (Trains) by 2010 capacWith an additional 21 Light Rail Vehicles (Trains) by 2010 capacity will increase to 600,000 ity will increase to 600,000 passengers a day when demand will be 633,000 passengers a daypassengers a day when demand will be 633,000 passengers a dayWith and additional 54 Light Rail Vehicles (Trains) by 2015 capWith and additional 54 Light Rail Vehicles (Trains) by 2015 capacity will increase to 980,000 a acity will increase to 980,000 a day when demand will be 780,000 passengers a dayday when demand will be 780,000 passengers a day

Present and Capacity Expansion Revenue (PhP 12.50 average fare)

and MRT Project Expenses Comparison (excludes Debt Payment)

-

50,000,000.00

100,000,000.00

150,000,000.00

200,000,000.00

250,000,000.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26-

50,000,000.00

100,000,000.00

150,000,000.00

200,000,000.00

250,000,000.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

MRT Operating and MaintenanceExpenses

Farebox Revenue based on PhP12.50 Fare with 54 additionalbrand new trains

Farebox Revenue based on PhP12.50 Fare and Actual Ridership(US$ per annum)

Farebox Revenue based on PhP12.50 Fare and UnconstrainedRidership (US$ per annum)

Farebox Revenuebased on PhP12.50 Fare with 21 additionalbrand new trains

Present and Capacity Expansion Fare Box (PhP 25.00 average fare)

and MRT Project Expenses Comparison (excludes Debt Payment)

MRT3 Revenue and Expenses

based on Present and Expanded Capacity

BLT Agreement Provisions Relevant to MRTCL, MRTC, MRTDC and MoRTC

(as of 14 April 2009)

In 1991 the DOTC bidded out the MRT 3 Project. As a result the project is classified as a SOLICITED project for a complete rail-based mass transport system from Baclaran to Monumento along EDSA.

February 1991 to April 1991 - DOTC issued the Terms of Reference (“TOR”) for the MRT Line 3 Project.

Section I of the TOR expressly declared that the Project “involves thedevelopment of complete rail-based mass transport system from Baclaran (Taft Avenue, Pasay City) to Monumento in Caloocan City.”

MRT3 as a Solicited Project

On November 7, 1991, the Republic of the Philippines, acting thrOn November 7, 1991, the Republic of the Philippines, acting through DOTC, ough DOTC, and EDSA LRT Corporation, LTD. (previously EDSA LRT Consortium),and EDSA LRT Corporation, LTD. (previously EDSA LRT Consortium), entered entered into the AGREEMENT TO BUILD, LEASE AND TRANSFER A LIGHT RAIL into the AGREEMENT TO BUILD, LEASE AND TRANSFER A LIGHT RAIL TRANSIT SYSTEM FOR EDSA (TRANSIT SYSTEM FOR EDSA (““Original BLT AgreementOriginal BLT Agreement””). ).

On April 6, 1995, the Supreme Court On April 6, 1995, the Supreme Court en bancen banc promulgated its landmark ruling in promulgated its landmark ruling in the case of TATAD vs. GARCIA. The ruling recognized and affirmedthe case of TATAD vs. GARCIA. The ruling recognized and affirmed the validity the validity of the nature and technicalities of the project procurement procof the nature and technicalities of the project procurement process for the LRTS ess for the LRTS Line No. 3, as well as the rights of the parties under the BLT ALine No. 3, as well as the rights of the parties under the BLT Agreement.greement.

MRT3 Project as a Solicited Project and 1st BLT Agreement dated November 7, 1991 was upheld by Supreme Court

On 08 August 1997, the Republic of the Philippines, acting On 08 August 1997, the Republic of the Philippines, acting through DOTC, and MRTCL executed through DOTC, and MRTCL executed the Revised and Restated BLT Agreement. the Revised and Restated BLT Agreement.

The BLT Agreement also recognized that MRTCL made equity invThe BLT Agreement also recognized that MRTCL made equity investment of in the total amount estment of in the total amount US$ 190.0 million as indicated in the definition of Net economicUS$ 190.0 million as indicated in the definition of Net economic return (page 10 BLT Agreement)return (page 10 BLT Agreement)

Signing of revised and restated dated August 8, 1997BLT Agreement between MRTCL and DOTC

Contractual relationships as of August 8, 1998

Recognition of the MRTC’s Role as Lessorand DOTC’s Role as Lessee in a Real Estate Taxes Case

Hearing between Makati City and the Republic of the Philippines

MRTC and the DOTC entered into a Completion Agreement on 15 July 2000, which confirmed that the entire LRTS Phase I has been duly handed over to DOTC.

Triggering Provision in BLT Agreement for the payment of Rental Fees

For all purposes of the BLT Agreement, Completion Date occurred on 15 July 2000 and equity rental fees has become due and demandable.

Rental Fees include:Rental Fees include:

Debt Rental Payments Debt Rental Payments –– paid by DOF to Lenders through the paid by DOF to Lenders through the IntercreditorIntercreditor agentsagentsEquity Rental Payments Equity Rental Payments –– paid by DOTC to MRTCpaid by DOTC to MRTCAdministrative and Staffing Cost Administrative and Staffing Cost –– paid by DOTC to MRTCpaid by DOTC to MRTC–– Subject to EscalationSubject to Escalation

Maintenance Fees Maintenance Fees –– paid by DOTC to MRTCpaid by DOTC to MRTC–– Subject to EscalationSubject to Escalation–– Adjustments during the first 10 years of the revenue period Adjustments during the first 10 years of the revenue period –– MRTC MRTC

shall pay liquidated damages if there are less than 54 shall pay liquidated damages if there are less than 54 LRVsLRVs. DOTC . DOTC shall pay bonuses if there are more than 60 shall pay bonuses if there are more than 60 LRVsLRVs..

Reimbursements for all payments made by MRTC other than AdministReimbursements for all payments made by MRTC other than Administrative rative and Staffing Cost and share in the payment of the cost of the Exand Staffing Cost and share in the payment of the cost of the Expert.pert.

On 17 October 1997, MRTC signed a Common Agreement (Omnibus LOn 17 October 1997, MRTC signed a Common Agreement (Omnibus Loan oan Agreement) with the MRT3 Phase1 Lenders which required MRTC to bAgreement) with the MRT3 Phase1 Lenders which required MRTC to be a e a Single Purpose Vehicle to complete Phase1. Single Purpose Vehicle to complete Phase1.

A relevant feature of the Common Agreement is that MRTC shall not permit the Core Shareholders (Fil-Estate, Ayala, Anglo, Ramcar, Greenfield) to own in the aggregate, either directly or indirectly, less than 51% of the voting stock of the Borrower. (Section 6.11)

MRTC Covenants Under Omnibus Agreement

Assignment of Rights under the BLT Agreement and its Attached Documents

Assignment Of LRTS Phase 1 Rights under Assignment and Assumption Agreement (MRTCL and MRTC)

On August 8, 1997, DOTC gave its consent to the assignment betweOn August 8, 1997, DOTC gave its consent to the assignment between MRTCL and MRTC of the en MRTCL and MRTC of the formerformer’’ss rights and obligations under the BLT Agreement relating to Phasrights and obligations under the BLT Agreement relating to Phase1 (Annex He1 (Annex H--2 of the 2 of the BLT Agreement). BLT Agreement).

DOTC also gave its consent to the Assignment and Assumption AgreDOTC also gave its consent to the Assignment and Assumption Agreementement

Accession Undertaking of LRTS Phase 1 Rights under BLT Agreement (MRTCL, MRTC & DOTC)

Assignment Of LRTS Phase 1 Rights under BLT Agreement (MRTCL and MRTC)

On the same day August 8, 1997, DOTC, MRTCL and MRTDC (then knowOn the same day August 8, 1997, DOTC, MRTCL and MRTDC (then known as EDSA LRT Development Corp.) n as EDSA LRT Development Corp.) entered into a a tripartite agreement where DOTC recognized thatentered into a a tripartite agreement where DOTC recognized that MRTDC has the sole obligation to pay the MRTDC has the sole obligation to pay the Development Rights Payment and exercise development rights (e.g.Development Rights Payment and exercise development rights (e.g. develop commercial premises and airspace, develop commercial premises and airspace, lease or sublease interests or assign such interests, and obtainlease or sublease interests or assign such interests, and obtain advertising income from depot and airspace).advertising income from depot and airspace).

Assignment Of Rights (Development, Makati Loop & Monumento Rights) under Tri-partite Agreement (DOTC, MRTCL and MRTDC)

Original Ownership and Holding Structure and Restructuring of MRTCL

MRTCL Dissolution and AssignmentMRTCL Dissolution and Assignment

a.a. MRTC letter to DOTC December 6, 2000 regarding:MRTC letter to DOTC December 6, 2000 regarding:(1)(1) the dissolution of MRTCL, the dissolution of MRTCL, (2)(2) assignment to assignment to MonumentoMonumento Rail Transit Corporation Rail Transit Corporation –– a a

whollywholly--owned subsidiary of MRTCL owned subsidiary of MRTCL –– of all the rights and of all the rights and obligations under the BLT Agreement relating to Phase 2 obligations under the BLT Agreement relating to Phase 2 and the and the MakatiMakati Loop, and Loop, and

(3)(3) assignment of residual rights and obligations under Phase 1 assignment of residual rights and obligations under Phase 1 to MRTC.to MRTC.

–– Paragraph 21.3 (b) of the BLT Agreement states that Paragraph 21.3 (b) of the BLT Agreement states that MRTCL may assign any of its rights to any other subsidiaries of MRTCL may assign any of its rights to any other subsidiaries of MRTCL without DOTC consent.MRTCL without DOTC consent.

–– b. b. DOTC letter December 20, 2000 to MRTCL regarding DOTC letter December 20, 2000 to MRTCL regarding DOTCDOTC’’ss consent to the dissolution of consent to the dissolution of MRTCL and its MRTCL and its assignment of residual rights and obligations under Phase 1 to assignment of residual rights and obligations under Phase 1 to MRTCMRTC

Before Dissolution as of December 20, 2000

After Dissolution October 15, 2001

MRT3 Bond Structure

Parties: (1) Sellers – Fil-Estate Corporation, Fil-Estate Properties, Inc., RailcoInvestments, Inc., Anglo Philippine Holdings Corporation, Sheridan LRT Holdings Inc., DBH Incorporated, (2) Metro Rail Transit Holdings, Inc., (3) Metro Rail Transit Holdings II, Inc., and (4) Metro Rail Transit Corporation.

Highlights of the Cooperation Agreement:

• MRTC agreed not to allow any transfers of its shares. • MRTC agreed to not engage in any business activity apart from the building, leasing,

operating and maintaining of LRTS Phase I. • MRTC agreed that it shall promptly collect from DOTC that amounts representing

payments to the Lenders (Debt Service Rental payments) and the Equity Rental Payments, and any other amounts due under the BLT Agreement.

• MRTC agreed not to voluntarily sell, convey, assign or otherwise transfer the Project or any part thereof other than as a result of exercise of an Equity Value Buyout or Residual Value Buyout under the BLT Agreement or as a result of an asset transfer agreement with the DOTC, provided that the purchase price shall not be lower than an amount equivalent to 130% of the accreted value of the Notes outstanding at the time of the transfer, which in any event shall not be lower than the Equity Value Buyout Price, plus MRTC’s outstanding obligations to the Lenders.

MRTC Shareholders entered into a Cooperation Agreement in 07 August 2002.

ERP Flowchart

Additional Payment Required to Preserve the 15% Net Economic Benefit of MRTC due to non-Payment of ERP

YEAR Annex A-1,Table-2 (Original Schedule)

Equity Rental Payments (Actual

and Projected)

1995 (96,144,684.00) (96,144,684.00)1996 (71,875,167.00) (71,875,167.00) (1)1997 (21,980,149.00) (21,980,149.00)1998 0.00 0.001999 0.00 0.002000 9,166,665.00 7,333,332.002001 9,999,996.00 8,499,997.002002 9,999,996.00 10,833,329.002003 19,166,670.00 14,349,989.502004 20,000,004.00 15,740,165.722005 38,333,330.00 13,333,335.002006 39,999,996.00 41,551,352.122007 39,999,996.00 61,212,438.862008 39,999,996.00 50,477,144.792009 44,583,333.00 47,918,898.01 (2)2010 118,333,337.00 118,333,337.002011 129,583,330.00 129,583,330.002012 129,999,996.00 129,999,996.002013 129,999,996.00 129,999,996.002014 139,166,670.00 139,166,670.002015 140,000,004.00 140,000,004.002016 144,583,330.00 144,583,330.002017 144,999,996.00 144,999,996.002018 144,999,996.00 144,999,996.002019 144,999,996.00 144,999,996.002020 149,583,333.00 149,583,333.002021 150,000,000.00 150,000,000.002022 150,000,000.00 150,000,000.002023 150,000,000.00 150,000,000.002024 150,000,000.00 150,000,000.002025 12,500,000.00 12,500,000.00

15.0000% 14.8457%

Additional Payment from DOTC in Order to Preserve 15% Net Economic Benefit of MRTC is US$ 26,741,101.99 by year end 2009.

Thank you Thank you

Ownership StructureOwnership Structure

Ownership StructureOwnership Structure

Ownership StructureOwnership Structure