NEWSFLASH

FORT ILOCANDIA MANAGEMENT STAYS

Laoag City, July 23, 2000 - Fort Ilocandia Resort Hotel remains a vital part of William Gatchalian's Wellex group despite the decision of hotel and casino operator Waterfront Philippines Inc. to rescind a buy-in agreement.

Wellex chief financial officer Donato Almeda clarified that despite the pull out of Waterfront from a planned equity swap with Polar Peak Philippines Inc. (now Grand Ilocandia Resort and Development Inc.), the majority owner of Fort Ilocandia, was merely an investment decision.

"Waterfront still has the management contract to run Fort Ilocandia. However, we deemed it a strategic move to minimize our exposure in Fort Ilocandia given the weak state of the tourism industry and focus instead on our operations in Cebu and Davao," Almeda said.

Polar Peak, in fact, is part of the Wellex Group. It controls 54 percent of Fort Ilocandia, privatized in 1991, with the remaining equity in the hands of the Ablan family and a group of Taiwanese investors.

Under the botched equity swap, Waterfront was to take over Polar Peak's 54 percent block for a direct stake in Fort Ilocandia. In turn, Polar Peak eould will be entitled to over 391 million shares in Waterfront worth P795 million.

Waterfront told the Securities anbd Exchange Commission that it was rescinding the contract with Polar Peak due to the non-viability of its investment in the short and medium term.

"Considering the current anticipated material business losses of the hotel amid the continuing adverse condition of the Philippine economy, the very sluggish tourism industry, the uncertain peace and order situation and the depressed stock market," Waterfront explained.

Almeda said Waterfront will be redirecting its efforts toward strengthening its hotel and casino operations in Cebu, Mactan and Davao, where the company has built up an edge over other competitors.