SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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/ / Preliminary Proxy Statement
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/ / Definitive Proxy Statement
/x/ Definitive Additional Materials
/ / Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
THE FIRST AUSTRALIA FUND, INC.
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(Name of Registrant as Specified In Its Charter)
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The First Australia Fund, Inc.
(AMEX: IAF, PCX: IAF)
Shareholders of The First Australia Fund, Inc. have been sent proxy material
asking them to vote on proposals put forward by management and certain dissident
shareholders at the Fund's Annual General Meeting of shareholders to be held on
April 23, 1999.
As we anticipate that your clients may have questions on these proposals, we
would like to explain them in greater detail.
VOTE FOR PROPOSALS 1 AND 2: The Fund is seeking the support of shareholders for
Proposals 1 and 2: the re-election of the Fund's current 5 Class II Directors
and the ratification of the selection of Independent Public Accountants.
VOTE AGAINST PROPOSALS 3, 4, 5 AND 6: The dissident shareholders, Deep Discount
Advisors and Ron Olin Investment Management Company (together, "DDA"), which
represent less than 5% percent of the Fund's outstanding shares, have now
targeted First Australia Fund as part of their ongoing attack on the closed-end
fund industry. DDA has submitted four proposals that the Board of the Fund
considers would harm the interests of all shareholders and could lead to the
liquidation of your Fund. These proposals include the replacement of five
current Directors of the Fund and the termination of the Manager, EquitiLink.
The Board of Directors unanimously believes that DDA's proposals are not in the
best interests of shareholders and are harmful to the Fund. We strongly urge you
to encourage your clients to support the Fund's position by voting FOR Proposals
1 and 2 and AGAINST DDA's Proposals 3, 4, 5 and 6
Please ask your clients to sign, date and return the WHITE proxy card which has
been sent to them. Remember, to support Management's recommendations, your
clients must vote both FOR Proposals 1 and 2 as well as AGAINST Proposals 3, 4,
5 and 6.
URGE SHAREHOLDERS TO VOTE FOR PROPOSALS 1 AND 2
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Proposal 1 - URGE SHAREHOLDERS TO VOTE FOR THE RE-ELECTION OF CLASS II DIRECTORS
- - WITH AN AVERAGE OF 30 YEARS EXPERIENCE AS BUSINESS AND COMMUNITY LEADERS.
The five current Fund Directors DDA seeks to replace have broad and deep
experience with the Fund and the Australian and world economies, and are
committed to representing the best interests of all shareholders. These
individuals have an average of more than 30 years experience as business and
community leaders.
In essence, DDA holds less than 5% of the Fund, but wants to control almost 40%
of the Fund's Board.
Proposal 2 -THE DIRECTORS ALSO URGE SHAREHOLDERS TO VOTE FOR PROPOSAL 2, THE
RATIFICATION OF THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS.
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URGE SHAREHOLDERS TO VOTE AGAINST PROPOSALS 3, 4, 5 AND 6.
- ----------------------------------------------------------
PROPOSAL 3 - URGE SHAREHOLDERS TO VOTE AGAINST PROPOSAL 3 -- PREVENT THE
TERMINATION OF THE INVESTMENT MANAGEMENT AGREEMENT WITH EQUITILINK INTERNATIONAL
MANAGEMENT LIMITED.
EquitiLink is uniquely qualified to serve as investment manager for the Fund.
Equitilink Australia Limited, the Fund's investment adviser, is one of the
largest independent asset management firms in Australia. DDA seeks to remove
EquitiLink as the investment manager. Even more troubling, DDA does not propose
any alternative as to who would manage the Fund's portfolio.
For DDA to recommend that the Manager be summarily dismissed indicates to us
that DDA does not have the interests of shareholders in mind, but is seeking to
cause disruption to, and eventual destruction of, the Fund.
PROPOSAL 4 - URGE SHAREHOLDERS TO VOTE AGAINST PROPOSAL 4 - DEFEAT DDA'S EFFORT
TO FORCE THE FUND TO REALIZE NET ASSET VALUE IN AN ARBITRARILY SHORT TIME FRAME,
REGARDLESS OF THE CONSEQUENCES TO ALL SHAREHOLDERS.
DDA's proposal 4 recommends that the Board take "whatever steps necessary" to
give shareholders the option of receiving net asset value within 60 days.
First Australia Fund's closed-end structure makes the Fund the best possible
vehicle for U.S. citizens to invest in Australia. In the Fund's view,
open-ending or liquidation may result in short-term gains for opportunistic
arbitrageurs like DDA, but will harm long-term investors looking to invest in
the growing Australian economy and in solid Australian companies.
PROPOSAL 5 - URGE SHAREHOLDERS TO VOTE AGAINST PROPOSAL 5 - DEFEAT DDA'S ATTEMPT
TO FORCE RESIGNATION OF DIRECTORS WHO OPPOSE DDA'S EFFORTS TO REAP SHORT-TERM
GAINS AT THE EXPENSE OF OTHER SHAREHOLDERS.
DDA is recommending that all First Australia Fund Directors who don't agree with
the "taking whatever steps necessary" proposal, resign. In our view, this is an
attempt to "blackmail" Directors to do DDA's bidding.
The Fund's Directors have serious fiduciary responsibilities to all
shareholders. Clearly, reducing the discount is a very important issue and the
Fund's Board continues to address it as a top priority, in the interest of all
Fund shareholders.
PROPOSAL 6 - URGE SHAREHOLDERS TO VOTE AGAINST PROPOSAL 6 - DEFEAT DDA'S
SELF-SERVING EFFORT TO HAVE THE SHAREHOLDERS PAY FOR DDA'S EXPENSES.
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Finally, DDA is seeking to be reimbursed for certain of its expenses in
connection with its solicitation of proxies. The Board considers it
inappropriate to burden all shareholders with DDA's expenses for its
self-serving agenda.
