Energy Development : Final Tender Offer Report

Item 1. Subject Company and Class of Security Subject to the Tender Offer

• (a) The subject company is Energy Development Corporation (EDC or the Company or the Bidder), a corporation organized and existing under the laws of the Republic of the Philippines, with principal office address at One Corporate Centre, Julia Vargas corner Meralco Avenues, Ortigas Center, Pasig City, Philippines 1605.

• (b) As of 7 August 2018, the Company has an authorized capital stock amounting to Thirty Billion One Hundred Fifty Million Pesos (P30,150,000,000.00) divided into (i) Twenty Seven Billion (27,000,000,000) common shares with a par value of One Peso (P1.00) per share (the Common Shares), (ii) Fifteen Billion (15,000,000,000) voting preferred shares with a par value of One Centavo (P0.01) per share (the Voting Preferred Shares), and (iii) Three Hundred Million (300,000,000) non-voting preferred shares with a par value of Ten Pesos (P10.00) per share (the Non-Voting Preferred Shares). Out of the authorized capital stock, a total of (i) Eighteen Billion Seven Hundred Thirty Seven Million Ten Thousand (18,737,010,000) Common Shares, and (ii) Nine Billion Three Hundred Seventy Five Million (9,375,000,000) Voting Preferred Shares are outstanding and fully paid-up.

• (c) On 7 August 2018, the Board of Directors of the Company approved the voluntary delisting (the Delisting) of the Common Shares from the Main Board of the Philippine Stock Exchange, Inc. (PSE). On the same date, in relation to the Delisting and in accordance with the delisting rules and regulations of the PSE (the Delisting Rules), the Board of Directors of the Company approved the conduct by the Bidder of a tender offer (the Tender Offer) for up to 2,040,006,713 Common Shares held collectively by all shareholders of the Company other than Red Vulcan Holdings Corporation (Red Vulcan), First Gen Corporation (First Gen), Northern Terracotta Power Corp. (NTPC), and Philippines Renewable Energy Holdings Corporation (PREHC), subject to the following conditions:

(i)the obligation of the Bidder to purchase the Common Shares through the tender offer will be under the condition (among other conditions that the Bidder may prescribe) that during the course of the tender offer, at least 1,162,000,000 Common Shares will have been:

• (1) validly tendered by the Bidder's shareholders other than Red Vulcan, First Gen, NTPC, and/or PREHC,

• (2) eligible for or otherwise capable of being purchased by the Bidder, and

• (3) accepted for purchase by the Bidder,

in each case, in accordance with the terms and conditions of the tender offer as prescribed by the Bidder (the Tender Threshold Condition); and

(ii) upon completion of the tender offer, at least 95% of the total listed and outstanding Common

Shares of the Bidder shall collectively be held by Red Vulcan, First Gen, NTPC, and PREHC.

On 19 September 2018, the Bidder filed a petition for the Delisting (the Delisting Application) with the PSE.

Subject to the Tender Threshold Condition and the terms and conditions of the tender offer attached as Exhibit A hereof (collectively, the Tender Offer Conditions), and pursuant to the Delisting Application and the Delisting Rules, the Bidder proposes to acquire, through a tender offer (the Tender Offer) up to 2,040,006,713 Common Shares (the Tender Offer Shares) held collectively by all shareholders of the Company other than Red Vulcan, First Gen, NTPC, and PREHC.

The Tender Offer is being made at the price of P7.25 per Common Share (the Tender Offer Price), which is payable in cash to shareholders through check payments as hereafter provided.

The Tender Offer Price does not include selling charges, which shall be for a tendering shareholder's account. After deducting customary selling charges1 from a tendering shareholder's account, the net Tender Offer Price per Tender Offer Share will be P7.2050.

Further, the customary selling charges that will be deducted by the Bidder do not include any selling broker's commission and/or any taxes thereon, which shall be payable by a tendering shareholder and/or his/her/its broker.

The Tender Offer gives existing shareholders of the Company the opportunity to sell their Common Shares through the facilities of the PSE prior to the Delisting, and realize their investment at a premium to (meaning an amount that is more than) the trading price of the Common Shares as of 7 August 2018, the date on which the Board of Directors of the Company approved the Delisting and Tender Offer. The Tender Offer Price of P7.25 per Common Share represents a 46% premium over the closing share price of P4.95 on 7 August 2018, and a 40% premium over the three-month volume weighted average price (VWAP) of P5.18.

A holder of the Common Shares should be aware that following completion of the Tender Offer, assuming that the Tender Threshold Condition is met and the Delisting is approved by the PSE, all of the issued and outstanding Common Shares will be delisted from the PSE. Once delisted, any Common Shares will no longer be available for trading on the PSE, and this may impact the ability of a holder of the Common Shares to sell his/her/its Common Shares. In addition, any subsequent sale or transfer of his/her/its Common Shares will be subject to the prevailing capital gains tax (on any capital gain generated by such holder through such sale or transfer) and documentary stamp tax as provided in Section 3(b)(i) of this Report, instead of the stock transaction tax applicable to sales of listed shares of stock transacted through the PSE.

The Bidder has engaged R.G. Manabat & Co. (the IFA) to deliver a fairness opinion on the valuation of the Tender Offer Shares and the fairness of the Tender Offer (this is called the Fairness Opinion Report). The IFA was of the opinion that the range of values of the

Company's Common Shares that is fair from a financial point of view is P5.58 per share to P7.18 per share as of 31 May 2018. The Tender Offer Price is above the range provided by the IFA. A copy of the Fairness Opinion Report dated as of 7 August 2018 is attached as Exhibit F.

The Tender Offer will start at 9:00 A.M. on 24 September 2018 and end at 12:00 P.M. on 22 October 2018 (the Tender Offer Period). The Bidder reserves the right to extend the Tender Offer Period (subject to prior approval from the Securities and Exchange Commission (SEC) and the PSE).

Tendering shareholders holding stock certificates who wish to offer all or a portion of their Common Shares for acceptance and sale to the Bidder should, within the Tender Offer Period: (i) present their original stock certificates to BDO Unibank, Inc. - Trust and Investments Group (the Stock Transfer Agent) for authentication by the Stock Transfer Agent, (ii) upon due authentication by the Stock Transfer Agent, submit their original stock certificates duly endorsed in blank and the duly accomplished Application to Tender Shares (the Application), together with all the requirements stated therein, to the Tender Offer Agent at its address as stated below.

1 The customary selling charges, which amount to 0.621% of the total transaction value (excluding broker's selling commissions and/or taxes thereon which may be passed on by the broker), include:

Type of Fee	% of value of the transaction
Stock transaction tax	0.600%
Fees payable to the Securities Clearing Corporation of the Philippines	0.010%
Stock Investment Protection Fund	0.001%
SEC Fees	0.005%
PSE transaction fees	0.005%

BDO Securities Corporation
Address:	20/F South Tower, BDO Corporate Center
7899 Makati Ave., Makati City 0726, Philippines
Attention:	Ms. Michelle Gaspar / Mr. Donald Buensuceso
Tel No.:	[phone] loc. 32104, 33667
[phone]
Fax No.:	[phone], 878 4553

Tendering shareholders whose shares are lodged with the Philippine Depository & Trust Corp. (PDTC) must instruct their brokers (Participating Brokers) to accomplish and submit, on their behalf, the duly accomplished Application, together with all the requirements stated therein, to the Tender Offer Agent, and instruct their Participating Broker to electronically transfer their shares to the Tender Offer Agent for receipt by the Tender Offer Agent prior to 12:00 P.M. on 22 October 2018 in order to participate in the Tender Offer.

All the tendered and accepted Tender Offer Shares will be purchased by the Bidder via a block sale through the facilities of the PSE, subject to the approval of the PSE, on or around 5 November 2018 (the Cross Date), unless the Tender Offer Period is extended with the prior approval of the SEC. In this case, the block sale for the Tender Offer Shares (subject to approval of the PSE) will be on or around the 8th trading day after the end of the extended Tender Offer Period.

The maximum total purchase price for the Tender Offer Shares that the Bidder could pay based on the Tender Offer Price is approximately P14,790,048,669.25. J.P. Morgan Securities (Asia Pacific) Limited has confirmed that as of 9 September 2018, the Bidder has sufficient funds or financial resources, including cash available out of its unrestricted retained earnings, to satisfy payment of the Tender Offer Shares that may be offered under the Tender Offer. A document confirming this is attached as Exhibit C.

(d) The Common Shares are presently listed and traded on the Main Board of the PSE under the symbol "EDC". The high and low transacted prices of the Common Shares for each quarterly period during the past two years are as follows:

Closing Price Per Common Share (in P)
High	Low
2018	1st quarter	6.01	5.51
	2nd quarter	5.56	5.14
2017	1st quarter	6.12	5.08
	2nd quarter	6.15	5.85
	3rd quarter	7.30	4.80
	4th quarter	5.88	5.46
2016	1st quarter	6.34	5.15
	2nd quarter	5.98	5.20
	3rd quarter	6.09	5.50
	4th quarter	5.98	4.90

Disclaimer for US Holders

The Tender Offer is made for the securities of a non-U.S. company. The Tender Offer is subject to the disclosure and procedural requirements of the Philippines, which are different from those of the United States (the "U.S."). Financial statements and financial information (if any) included herein are prepared in accordance with Philippines accounting standards that may not be comparable to the financial statements or financial information of the U.S. companies. The Tender Offer Report is available at the PSE Electronic Disclosures Technology portal

(http://edge.pse.com.ph). Energy Development Corporation (the "Issuer" or the "Offeror") will disseminate the Tender Offer Report (with the terms and conditions thereof) as required by applicable law, and the shareholders of Energy Development Corporation should review the Tender Offer Report and all other Tender Offer documents carefully.

The Offeror and any advisor, broker or financial institution acting as an agent or for the account or benefit of the Offeror may, subject to applicable Philippines securities laws, rules and regulations, make certain purchases of, or arrangements to purchase its shares from its shareholders who are willing to sell their shares outside the Tender Offer from time to time, including purchases in the open market at prevailing prices or in private transactions at negotiated prices. The Offeror will disclose promptly any information regarding such purchases of its shares in the Philippines through the electronic media and/or the stock exchange and in the U.S. by means of a press release, if and to the extent required under applicable laws, rules and regulations in the Philippines.

It may be difficult for U.S. holders to enforce their rights and any claim arising out of U.S. federal securities laws, since we are located in a non-U.S. jurisdiction, and some or all of our officers and directors may be residents of a non-U.S. jurisdiction. U.S. holders may not be able to sue a non-U.S. company or its officers or directors in a non-U.S. court for violations of the U.S. securities laws. Further, it may be difficult to compel a non-U.S. company and its affiliates to subject themselves to a U.S. court's judgment.

The receipt of cash and stock consideration in the Tender Offer by a U.S. shareholder will generally be a taxable transaction for U.S. federal, state and local income tax purposes. Each U.S. shareholder is urged to consult his independent professional adviser immediately regarding the tax consequences of acceptance of the Tender Offer.

Securities may not be offered or sold in the U.S. absent registration or an exemption from registration under the U.S. Securities Act. It is expected that the Tender Offer will be subject to a Tier I exemption pursuant to Rule 14d-1(c) of the U.S. Securities Exchange Act of 1934, as amended.

Neither the U.S. Securities and Exchange Commission nor any securities commission of any State of the U.S. has (a) approved or disapproved of the Tender Offer, (b) passed upon the merits or fairness of the Tender Offer, or (c) passed upon the adequacy or accuracy of the disclosure in the pre-announcement. Any representation to the contrary is a criminal offense in the U.S.

Item 2. Identity and Background

The Bidder, Energy Development Corporation, was incorporated and registered with the SEC on 5 March 1976 to primarily engage in the business of exploring, developing, operating, and utilizing geothermal energy and other indigenous renewable energy sources for electricity generation. It maintains its registered address at One Corporate Centre, Julia Vargas corner Meralco Avenues, Ortigas Center, Pasig City 1605.

Beginning 13 December 2006, the Common Shares of the Bidder were listed and traded on the PSE.

As of 7 August 2018, the Bidder has an authorized capital stock amounting to Thirty Billion One Hundred Fifty Million Pesos (P30,150,000,000.00) divided into (i) Twenty Seven Billion (27,000,000,000) Common Shares, (ii) Fifteen Billion (15,000,000,000) Voting Preferred Shares, and (iii) Three Hundred Million (300,000,000) Non-Voting Preferred Shares. Out of the authorized capital stock, a total of (i) Eighteen Billion Seven Hundred Thirty Seven Million Ten Thousand (18,737,010,000) Common Shares, and (ii) Nine Billion Three Hundred Seventy Five Million (9,375,000,000) Voting Preferred Shares are outstanding and fully paid-up.