MEMORANDUM. T h e P h i l i p p i n e S t o c k E x c h a n g e, I n c. Disclosures Stockholders Meeting Others:

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1 LA - No To : THE INVESTING PUBLIC Subject : BDO UNIBANK, INC. 1:3 Stock Rights Offering Date : May 24, 2012 Please be informed that The Philippine Stock Exchange, Inc. (the PSE or the Exchange ) approved on May 23, 2012, the application of BDO UNIBANK, INC. (the Bank or BDO ) for the additional listing of up to 896,000,000 common shares, with a par value of per share, to cover its 1:3 Stock Rights Offering ( SRO, Rights, or the Offer ) to all stockholders of record as of June 14, The Offer Price will be computed based on the [10-15] trading day volume-weighted average price ( VWAP ) of the Bank s common shares listed on the PSE prior to June 5, 2012, the Pricing Date, subject to a discount of up to [20-25]%. The foregoing approval is subject to the following conditions: 1. The Bank submits a duly executed Underwriting Agreement in compliance with Article V Part B Section 3 of the Revised Listing Rules at least two (2) trading days prior to the start of the Offer Period; 2. The Bank s Corporate Secretary submits a sworn Undertaking prior to the commencement of the Offer Period stating the following: a. The Bank shall submit a sworn Corporate Secretary s certification that all fully paid SRO shares as of the end of the Offer Period will be duly lodged with the Philippine Depository and Trust Corporation ( PDTC ) on the scheduled listing date. This certification should refer to the number of shares for listing and the application covering the shares; and b. The Bank shall submit a sworn Corporate Secretary s certification on the results of the SRO within ten (10) calendar days from the end of the Offer Period stating whether the issue was fully subscribed, oversubscribed or undersubscribed. If undersubscribed, the Bank, through its Escrow/Receiving Agent, shall cause the full refund of the payments for all Application to Purchase submitted by the eligible shareholders. The Certification should contain a detailed breakdown of the results of the first and second rounds of the offering and the number of fully paid SRO shares. The breakdown must also indicate the number of SRO shares taken up by BDO Capital & Investment Corporation (the Issue Manager and Domestic Underwriter ) and Citigroup Global Markets Inc., Deutsche Bank AG, Hong Kong Branch, J.P. Morgan Securities Ltd. and United Overseas Bank Limited (the Joint International Lead Managers and Underwriters ), if any, after the second round of offering. Page 1 of 6

2 3. The Bank submits a sworn Undertaking to submit via the Exchange s Online Disclosure System ( ODiSy ) the following disclosures to ensure transparency in the use of the IPO proceeds: a. Any disbursements made in connection with the planned use of proceeds from the SRO; b. Quarterly Progress Report on the application of the proceeds from the SRO on or before the first fifteen (15) days of the following quarter. The Quarterly Progress Reports should be certified by the Bank s Chief Financial Officer or Treasurer; c. Annual summary of the application of the proceeds on or before January 31 of the following year. The Annual Summary Report should be certified by the Bank s Chief Financial Officer or Treasurer; d. Approval by the Bank s Board of Directors of any reallocation on the planned use of proceeds, or of any change in the Work Program; and e. Should the Bank s Board of Directors approve any reallocation on the use of proceeds, the actual disbursement or implementation of such reallocation must be disclosed by the Bank at least thirty (30) days prior to the said actual disbursement or implementation. The quarterly and annual reports required in items (b) and (c) above must include the following: i. External auditor s certification on the accuracy of the information reported by the Bank to the Exchange in the Bank s quarterly and annual reports; ii. Detailed explanation for any material variances in the actual disbursements with the Work Program or the represented Use of Proceeds in the IPO Prospectus. The detailed explanation must state the approval of the Bank s Board of Directors as required in item (d) above. The applicable sanctions under the Penalties and Fines of the Revised Disclosure Rules will apply should the Bank (i) fail to promptly disclose a deviation from the represented use of proceeds equivalent to twenty percent (20%) of the original amount appropriated, or (ii) fail to promptly update or correct prior disclosures within ten (10) minutes from receipt of the information of any discrepancy to such previously issued disclosures. Page 2 of 6

3 The details of the Bank s SRO are as follows: Estimated Offer Proceeds USD 1 billion 1 Offer Shares, Up to 896,000,000 Common Shares, Par value per share Offer Price The Offer Price will be computed based on the [10-15] trading day volume-weighted average price ( VWAP ) of the Bank s Common Shares listed on the PSE prior to the Pricing Date, subject to a discount of up to 20-25%. Rights Entitlement Each eligible holder of Common Shares is entitled to subscribe to one (1) Rights Share for every three (3) Common Shares held as of the Record Date (the Entitlement Shares ). The offer process in relation to the Entitlement Shares shall be known as the first round of the Offer. Additional Subscription If an applicant fully subscribes to his Entitlement Shares, and subject to the availability of unsubscribed Rights Shares arising from the failure of the other eligible stockholders to fully exercise their Rights Shares entitlement, the applicant may simultaneously apply for an additional subscription of the unsubscribed Rights Shares (the Additional Rights Shares ). The Additional Rights Shares are payable in full upon submission of the Application. If the aggregate number of Additional Rights Shares available for subscription equals or exceeds the aggregate number of Additional Rights Shares so subscribed for, an applicant will be allocated the number of Additional Rights Shares indicated in his Application. If the aggregate number of Additional Rights Shares available for subscription is less than the aggregate number of Additional Rights Shares so subscribed for, the available Additional Rights Shares will be allocated to applicants who have applied to subscribe for such Additional Rights Shares. Such allocation will be made at the discretion of the Bank primarily based on each applicant s original shareholdings in the Bank as of the Record Date relative to the original shareholdings of all other applicants for Additional Rights Shares as of such Record Date, provided that no applicant for Additional Rights Shares shall be allocated more Additional Rights Shares than the number for which such applicant has applied. There can be no guarantee made as 1 As announced in Circular No dated April 2, Page 3 of 6

4 Use of Proceeds to the number of which such applicant has applied. There can be no guarantee made as to the number of Additional Rights Shares an applicant may be allocated. A subscription for Additional Rights Shares is irrevocable on the part of the applicant and may not be cancelled or modified by such applicant. The Offer would strengthen the core Tier 1 (equity) capital of the Bank, further solidifying the Bank s capital adequacy and financial strength, positioning it to support critical strategic growth initiatives, including (i) extending its credit and the balance sheet to meet increased demand from the growing economy, (ii) deepening and expanding customer relationships while developing new business segments, (iii) broadening the product and services offered to the Bank s growing customer base and (iv) evaluating and pursuing any inorganic growth opportunities as they arise. Timetable of Offer Activities Pricing Date June 5, 2012 Ex-Date June 8, 2012 Record Date June 14, 2012 Offer Period June 18, 2012 June 27, 2012 Tentative Listing Date July 4, 2012 Eligible Shareholders Payment Terms Other Terms of the Offer The Rights Shares are being offered to eligible existing holders of record of Common Shares as of the Record Date. Holders of Common Shares who are eligible to participate in the Offer are: (i) holders located inside the Philippines and (ii) holders located in jurisdictions outside the Philippines and the United States where it is legal to participate in the Offer under the securities laws of such jurisdiction. The Common Shares of the Bank may be held by any person or entity, regardless of nationality, subject to the right of the Bank to reject an Application or reduce the number of Rights Shares applied for subscription or purchase if the same will cause the Bank to be in breach of the Philippine ownership requirement under relevant Philippine laws. The Rights Shares must be paid for in full to the designated BDO Rights Offer settlement account upon submission of the Application. Payment must be made by (i) check drawn Page 4 of 6

5 Issuance and Transfer Taxes Acceptance/Rejection of Applications against any BSP-authorized agent Bank in Metro Manila or (ii) debit to an existing BDO account. Certificated shareholders residing outside of the Philippines and outside of the United States may submit by way of remittance in favor of the Receiving Agent. Check payments must be dated as of the date of submission of the Application and crossed Payee s Account Only. Check payments for regional clearing will not be accepted. All documentary stamp taxes applicable to the original issuance of the Rights Shares shall be for the account of the Bank. The Bank has full discretion to accept or reject all or a portion of any Application under the terms and conditions of the Offer. The actual number of Rights Shares to which any applicant may be entitled is subject to the confirmation of the Bank. Applications where checks are dishonored upon first presentment and Applications which do not comply with the terms of the Offer shall be rejected. Moreover, payment received upon submission of an Application does not constitute approval or acceptance by the Bank of the Application. Refunds An Application, when accepted, shall constitute an agreement between the Applicant and the Bank for the subscription to the Rights Shares at the time, in the manner and subject to terms and conditions set forth in the Application and those described in the Prospectus. Notwithstanding the acceptance of any Application by the Bank, the actual subscription and/or purchase by an applicant of the Rights Shares will become effective only upon listing of the Rights Shares on the PSE. If such condition is not fulfilled on or before the periods provide above, all application payments will be returned to the applicants without interest and, in the meantime, the said application payments will be held in a separate bank account with the Receiving Agent. In the event that an Application is rejected or the number of Rights Shares to be received is less than the number covered by his Application, then the Bank shall refund payment made thereon, without interest, within five (5) Banking Days from the end of the Offer Period via check payable to the relevant applicant. Such refund checks shall be made available for pick up at the offices of the Receiving Agent, Stock Transfer Service, Inc. at the 34 th Floor, Rufino Pacific Tower, 6784 Ayala Avenue, Makati Page 5 of 6

6 Registration and Lodgment of Shares with the Philippine Depository and Trust Corporation Issue Manager and Domestic Underwriter Joint International Lead Managers and International Underwriters Stock Transfer Agent and Receiving Agent Independent Auditor External Legal Counsel to the Bank City. Refund checks that remain unclaimed after 30 days from the date such checks are made available for pick up shall be mailed at the applicant s risk to the address indicated in the Application. The Rights Shares are required to be lodged with the PDTC. Applicants must provide the required information in the Application to effect the lodgment. Applicants may request their shares in certificated form and receive stock certificates evidencing their investment in the Rights Shares through their respective brokers after full payment, lodgment and listing of the Rights Shares and in accordance with existing procedure. Any expense to be incurred in connection with such issuance of certificates shall be borne by the applicant. BDO Capital & Investment Corp. Citigroup Global Markets Inc. Deutsche Bank AG, Hong Kong Branch J.P. Morgan Securities Ltd. United Overseas Bank Limited Stock Transfer Service, Inc. Punongbayan & Araullo Martinez Vergara Gonzalez & Serrano Attached as Annex A is a copy of the Bank s projected financial statements and the assumptions thereto covering the period ended December 31, For your information and guidance. (Original Signed) J.V. B. ZUÑO III OIC, Listings Department Noted by: (Original Signed) MARSHA M. RESURRECCION Head, Issuer Regulation Division Page 6 of 6

7 Annex "A"