PRESS RELEASE
Shareholders of Dresdner RCM Global Strategic Income Fund Reject
Recommendation by ISS and Vote to Open-end
New York October 30, 2000 -- Opportunity Partners L.P. announced
today that preliminary results indicate that stockholders of
Dresdner RCM Global Strategic Income Fund, Inc. (DSF) have voted
overwhelmingly to approve its proposal to convert DSF from a
closed-end fund to an open-end fund. Prior to submission of the
Opportunity Partners proposal, DSF's shares had traded at a
discount in excess of 20% below their net asset value (NAV). If
the proposal is implemented, stockholders will be able to redeem
their shares at any time at NAV.
The open-ending proposal was opposed by both DSF's board of
directors and Institutional Shareholder Services (ISS), the
nation's leading proxy advisory firm. Nevertheless, it was
approved by shareholders by a margin of roughly 2 to 1. In a
statement issued today, Phillip Goldstein, portfolio manager of
Opportunity Partners said: "This vote is further evidence that
ISS is out of touch with many shareholders of closed-end funds
and other companies whose stocks are trading below their
intrinsic value. ISS often fails to appreciate the economic
benefit to shareholders of closing a persistent gap between a
stock's market price and its underlying value and is more
tolerant than shareholders of a lack of meaningful action by
management to close that gap."
Goldstein accused ISS of employing an "ivory tower" approach to
analyzing proxy contests that emphasizes corporate governance
theory rather than measures to increase shareholder value. In
addition to DSF, he cited two other examples where he alleges ISS
produced a flawed analysis that led to an embarrassingly wrong
recommendation. Last March, ISS agreed with the management of
the Foreign and Colonial Emerging Middle East Fund that
shareholders should vote against a proposal to permit them to
realize NAV. The proposal received more than 90% of the votes
cast by shareholders. "When shareholders and ISS wind up 180
degrees apart, it obviously calls their analysis into question,"
Goldstein commented.
In another instance cited by Goldstein, ISS supported management
in a proxy contest launched in 1997 by a dissident shareholder of
Baldwin Piano and Organ Company who had sought to have the
company sold. Despite Baldwin's prolonged underperformance and a
consensus view that its stock price of $13-to $14 was
significantly less than its breakup value, ISS recommended that
shareholders support the incumbent board of directors saying,
"[W]e believe management's efforts to turn the company around
have been considerable, and we believe Baldwin has significant
potential in the future . . . Baldwin has made significant
strides toward modernizing its manufacturing capabilities and
improving the overall operation of the company. ISS concurred
with Baldwin management that disrupting its strategic plan by
replacing the board would not be in shareholders' best interests,
adding, ". . . the strategic plan and the improved results are
moving Baldwin in the right direction."
Baldwin's board was re-elected in accordance with ISS's
recommendation but the company's financial performance continued
to deteriorate. Baldwin's stock price is currently around $3.25
per share but ISS denies any responsibility for the loss of
shareholder value. Its standard disclaimer for its work product
states that "we assume no liability with respect to the
consequences of relying on [our analysis or recommendation] for
investment or other purposes." Goldstein called the ISS
disclaimer "an attempt to distance itself from any recommendation
it makes that leads to losses for shareholders." "How," he
asked, "can ISS in good conscience deny that its poor judgment
may have been a factor in the dramatic loss of value that Baldwin
shareholders have suffered?"
Goldstein urged ISS and its competitors to focus on providing
proxy-voting advice that will enhance shareholder value. "After
all, of what value is a recommendation that does not even purport
to answer the key question that most shareholders care about when
voting a proxy: `How should I vote to increase the value of my
investment?'"
Opportunity Partners L.P. is a New York based investment
partnership with assets of $46 million.
Contact: Phillip Goldstein at (914) 747-5262 or [email protected].
