78JZ Sg Issuer 25

RNS Number:7624Q
First Pacific Capital (1997) Ld
30 January 2002



FIRST PACIFIC COMPANY LIMITED

PRESS RELEASE



Thursday, 31 January 2002

FIRST PACIFIC TO RECORD PROVISIONS TOTALLING US$1.7 BLN

Non-cash adj. to align book with year-end values; no impact on finances or 
outlook
Action follows earlier steps to repay debt via sale of non-core assets, raising 
new debt

First Pacific announced today that, in order to ensure that its balance sheet
better reflects the 31 December 2001 year-end values of its underlying
investments, it will record asset impairment provisions totalling US$1.7
billion. These provisions, which are non-cash in nature, will affect neither
First Pacific's sound financial position, nor the long-term growth potential of
its principal investments.

First Pacific, in accordance with its conservative approach to financial
reporting, regularly reviews the book values of its portfolio of assets against
market and discounted cash flow valuations. In conducting such a review for the
year ended 31 December 2001, First Pacific's Board of Directors concluded that,
at the year-end, it would be prudent to revise downward the book values of
certain of its investments.

First Pacific's Chief Financial Officer, Michael J.A. Healy, said: "During the
past few months our management has taken several important actions, most notably
decisively and conclusively addressing the repayment of our convertible bonds
through the timely sales of non-core assets and the raising of new debt. We then
turned our attention to our balance sheet. Here, given the reality of prevailing
circumstances, we have diligently reviewed book values and decided to make
provisions that reflect our most pessimistic view of regional asset values at
this point in time."

In reaching this decision, First Pacific considered a number of factors, many of
which are a direct result of the prolonged, negative sentiment that has
overshadowed the region since the onset of the Asian crisis. In particular,
given that First Pacific's reporting currency is the U.S. dollar, historic
recorded investment values in U.S. dollars are no longer appropriate against
current exchange rates. In this regard, First Pacific's investments in MPC
(since 1986) and in PLDT (since 1998) were made at weighted average exchange
rates of Pesos 33 and Pesos 41 to the U.S. dollar, respectively, while its
investments in Indofood (since 1999) were made at a weighted average exchange
rate of Rupiah 8,330 to the U.S. dollar. This compares with the close of
business exchange rates on 31 December 2001 of Pesos 51.6 to the U.S. dollar and
Rupiah 10,400 to the U.S. dollar.

Furthermore, the country risks associated with the Philippines and Indonesia
have adversely affected equity values in these countries and, in addition, MPC's
investment in BLC has been significantly and adversely affected by the
protracted decline in the Philippine property market.

Accordingly, carrying values of MPC, PLDT and Indofood have been written down by
US$744 million, US$563 million and US$286 million, respectively. The individual
provisions have the effect of reducing book values for these investments to the
lower end of their respective estimated value ranges. In addition, First Pacific
has recorded a US$100 million general risk provision.

The total US$1.7 billion provision comprises impairments relating to goodwill of
US$858 million, foreign exchange of US$270 million and net tangible assets of
US$565 million.

Executive Chairman Manuel V. Pangilinan commented: "There is still inherent
value in the significant shareholdings that First Pacific holds in our
investments and I believe there is still excellent potential for long-term value
development. Indeed, more realistic values afford the basis for sensible
financial performance measures going forward and, being non-cash accounting
allocations, the provisions have no impact on First Pacific's fundamentally
sound financial position."

As a consequence of the proposed provisions, First Pacific's shareholders'
equity, at the Company level, will be revised to approximately US$856 million on
31 December 2001. Consolidated shareholders' equity will be reduced by
approximately US$565 million to approximately US$(248) million at 31 December
2001, after the deduction of goodwill of approximately US$1.0 billion which has
been eliminated against reserves in prior years.

Details are attached of the proposed provisions and the pro forma impact on
First Pacific's shareholders' equity.

At the end of 2001, First Pacific held cash in excess of US$210 million and had
zero bank debt. Subsequent to the 2001 year-end, First Pacific initiated the
early repayment of its convertible bonds, originally issued in the principal
amount of US$350 million, funded through a combination of cash and bank debt.
Subsequent to providing for the full settlement of its convertible bonds, First
Pacific will hold cash in excess of US$50 million and bank debt of US$190
million.

Mr. Pangilinan noted that notwithstanding the need for prudent provisioning at
this time, First Pacific will continue to channel its management efforts into
developing strong fundamentals. "Indofood continues to deliver strong, recurring
cash flows sufficient to internally fund capital expenditure, dividend payments
and its on-going share buy back program, while PLDT is progressing with measures
taken to address its financial position, while nurturing and developing
diversified revenues to sustain and generate future revenues and cash flows.
First Pacific will continue to manage all of its investments in the pursuit of
long-term value enhancement. These provisions ensure that our balance sheet
better reflects the underlying values of the investments that will underpin our
future growth."

                                     * * *

For further information, please contact:
First Pacific Company Limited
Rebecca Brown                                           Tel: (852) 2842 4301
Executive Vice President
Group Corporate Communications


Information about First Pacific can also be accessed on:
Web Site:        www.firstpacco.com
Email:           info@firstpac.com.hk



Attachment: Proposed provisions and pro forma impact


Proposed provisions

The proposed provisions are detailed below. All financial information provided
below is provided as at 31st December, 2001 and on a consolidated basis.

As at 31st December, 2001                Pre-adjusted book        Provision    Adjusted book  Market value (2)
                                                  value(1)                             value
US$ million
Impairment provisions
MPC (3)                                                842            (744)               98               87
PLDT(4)                                              1,122            (563)              559              334
Indofood(4)                                            793            (286)              507              264
Escotel(5)                                             (9)                -              (9)              n/a
Infrontier                                               4                -                4              n/a
Metrosel(6)                                              -                -                -              n/a
                                                      ____            _____             ____
                                                     2,752          (1,593)            1,159
Provisions for other exposures(7)                                     (100)
                                                                    (1,693)
                                                                      =====


 1. Representing acquisition cost plus the Company's attributable share of
    post-acquisition reserves.


 2. Market value is based on the closing prices of the listed shares of MPC, PLDT
    and Indofood on their respective stock exchanges on 31st December, 2001.
    Escotel, Infrontier and Metrosel are not listed.


 3. Adjusted book value represents US$90 million of loan, and US$8 million of
    accrued interest due from MPC.


 4. Adjusted book value represents Pesos 700/share and Rupiah 1,200/share for
    PLDT and Indofood, respectively.


 5. The negative book value represents the amount by which the share of
    post-acquisition losses of US$72 million exceeds the investment cost of
    US$63 million.


 6. Full impairment provision made in 1998.


 7. General risk, including provision for the potential effect of further
    depreciation in the peso and the rupiah.


Pro forma impact
US$ million                 Company                                        Consolidated

                                         Share capital                                Sub-total
                                           and premium
                                                            Revenue       Exchange      (before      Goodwill
                                                                                      goodwill)
                                                            reserve        reserve                    reserve     Total
Shareholders' equity

At 30 June 2001                    2,487           941        1,658          (385)        2,214       (1,897)       317
Impairment provisions            (1,631)             -      (1,693)            270      (1,423)           858     (565)
                                  ______          ____       ______           ____       ______        ______      ____
Pro-forma at                         856           941         (35)          (115)          791       (1,039)     (248)

31 December 2001                    ====           ===         ====            ===         ====          ====       ===

Number of ordinary shares
in issue (millions)                3,140



                      This information is provided by RNS
            The company news service from the London Stock Exchange

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