Announcement of Philippine Debt-Equity Conversion Fund Launch on June 15, 1988

Otporation )433 A June 15, 1988 CONTACTIMonique Amaudry Press release no. 88/49 (202) 473 93 31 PHILIPPINE DEBT-EQUITY CONVERSION FUND LAUNCHED Shearson Lehman Hutton Inc. and the International Finance Corporation (IFC) have launched the First Philippine Capital Fund, L.P., an investment vehicle for new equity investments based on the Philippine government's debt-equity conversion program. The initial amount of the Fund is the equivalent of $65.5 million, representing 65.5 units of a face value of $1 million each. The Fund plans to invest in a range of Philippine enterprises, particularly in export-oriented sectors such as electronics and agribusiness. The investments will be in newly-issued shares only, often in joint ventures between Philippine and foreign partners. Other likely investment targets include privatized state enterprises, venture capital companies and Philippine corporations in need of financial restructuring. The Fund has been established with the specific encouragement of the Philippine government, which sees it as a vehicle for ensuring that the official debt-equity conversion mechanism will generate new investment in priority sectors. IFC, an affiliate of the World Bank, is the leading source of equity and loan finance for private sector investment projects in the developing world. -2- The Fund takes the form of a Delaware limited partnership, of which Shearson Lehman International Investments, Inc. (SLII) is the General Partner and IFC the Special Limited Partner. Seven other financial institutions from Europe, the US and Japan have become limited partners. SLII is a wholly-owned investment subsidiary of Shearson Lehman Hutton. It will be responsible for the identification of investment opportunities and the day-to-day management of the Fund. IFC has subscribed to the Fund in cash, while the other partners have contributed Philippine public sector external debt. IFC currently has a portfolio of loan and equity investments in the Philippines totalling the equivalent of approximately $93 million, mainly in the communications, agribusiness and manufacturing industry sectors. -0-