Fraport's Bender Urges the Philippine Government to Honor Legal Contracts and Be a Reliable Partner

Frankfurt/Main, Germany 25.10.2002 (PROTEXT/ots) - Fraport AGcontinues to work on re- transferring the Manila airport terminalproject (International Passenger Terminal 3) in tandem with amanagement contract. Fraport AG's executive board chairman Dr.Wilhelm Bender explained this today in an interview with theFrankfurter Allegmeine Zeitung (FAZ), Germany's authoritativenational newspaper. Bender further indicated that Fraport AGwould not tolerate being damaged by the Philippine government'sstance. "The government is questioning the validity of contractagreements that we signed with the previous government in 1999,"said Bender. As a result, the economic viability and funding ofthe project is no longer possible. "Thus, the Philippinegovernment will jeopardize future privatization projects as wellas the country's international reputation as an investmentlocation," said Bender. "We will not be afraid to bring thePhilippine government back on the path of honoring legalcontracts and of being a reliable partner for this, the biggestforeign investment project in the Philippines," Bender continued.Bender explained that the write down of about EURO 60 millionmade last year was just an accounting precaution of Fraport AG."This write down does not mean that we will give up a singlecent vis-ŕ-vis the Philippines," Bender said.

"Furthermore, wethere is no reason for us to make further write downs." Benderappealed to the Philippines to continue negotiating on theprevious basis and not to announce a decision which will bedetrimental to all parties concerned. Bender incidentally referred to the German-PhilippineInvestment Guarantee Treaty, which provides investor protectionfor Fraport AG. Note to Editors: The full text of Dr. Bender's interview in the FAZ follows. Interview with Fraport AG's Executive Board Chairman Dr. Wilhelm Bender English translation of the interview published in today'sedition (25.10.02) of the Frankfurter Allgemeine Zeitung (FAZ),Germany's authoritative national newspaper. Fraport AG has put $378.8 million, including loan guarantees,into the Manila airport project. Are you any closer to asolution? Bender: Since the summer we have found a basis of discussion with thePhilippine government. This involves buying back the terminaland thus re-transferring the project in tandem with a managementcontract for Fraport. We still regard this as being a suitablebasis for making progress in the project. What are the major difficulties? Bender: The major difficulties are actually the same old ones. Thegovernment is questioning the validity of contract agreementsthat we signed with the previous government in 1999. There arefour essential elements, which place the financial viability ofthe entire project in doubt. The first element is the $20departure tax for passengers, which is now supposed to be $11.Secondly, the vitally important exclusivity of duty free salesin the international terminal is being refused. Thirdly, therelocation of Philippine Airlines to the new terminal has becomeuncertain, and eventually the exclusivity of internationaltraffic at this terminal could slip away. When all of theseelements are in jeopardy, this project is no longer economicallyviable and thus cannot be financed. Thus, the government wouldrenounce its own original decision and that of the previousgovernment to run a privatization project. This would endangerfuture privatization projects. Does this mean that if the status quo prevails Fraport willdrop out of the project? Bender: No, for me "dropping out" is really the wrong expression. Iwill say this quite clearly: Fraport will not tolerate beingdamaged by acts of whatever government. We will fight. We arepreparing a lawsuit as well as political measures via the Germangovernment. Furthermore, we are planning initiatives viainternational institutions to make it crystal clear that thePhilippine government is on the way to endangering the country'sinternational reputation as an investment location. Of course,we do not like doing this. However, if we are left with noother choice we will not be afraid to do so in order to bringthe Philippine government back on the path of honoring legalcontracts and of being a reliable partner for this, the biggestforeign investment project in the Philippines. What kind of lawsuit would it be? Bender: It would be an "action for damages" that will protect usagainst being ousted from a nearly completed terminal project.Whoever believes that it is possible to arrogate, withoutcompensation, a terminal that was financed primarily by us willcause damage to the Philippines. We have many possibilities tofight this. Do you now have to make allowance for balance sheetadjustments, after writing down about 60 million last year? Bender: This write down does not mean that we will give up a singlecent vis-ŕ-vis the Philippines. This was an accountingprecaution of Fraport AG, which in no way changes our legalposition. In addition, at this time there is no reason for us tomake further write downs. We know that the Philippine presidenthas announced a decision for October 30. I would like to takethis opportunity to appeal publicly to the Philippines tocontinue negotiating on the previous basis and not to announce adecision on October 30, which will be detrimental to all partiesconcerned. Incidentally, I refer to the German-PhilippineInvestment Guarantee Treaty that protects us as an investor. Are there any potential, well-financed buyers for your 30-percent share in the project? Bender: There are interested private investors, also in thePhilippines. In consultation with the government, we have haddiscussions with these investors. If necessary, we willcontinue these discussions. ots Original Text Service: Fraport AG Internet:http://www.presseportal.de Pressekontakt: For More Information,Please Contact: Fraport AG Frankfurt Airport Services WorldwideAttn: Robert A. Payne - Manager International Press 60547Frankfurt am Main, Germany Tel.: +49 69 690 -78547 / Fax:+49 69 690 -60548 E-Mail: r.payne@fraport.de Internet:www.fraport.com

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