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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Portugal Fund Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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THE PORTUGAL FUND, INC.
153 East 53rd Street
New York, New York 10022
Dear Portugal Fund Shareholder:
As previously announced, the Portugal Fund's Annual Meeting of
Shareholders was adjourned from May 1999 to October 15, 1999 in order to afford
the Fund's Directors additional time to explore ways to address the discount at
which the Fund's shares have been trading. Having done so, the Board now
supports open-ending the Fund, an action we firmly believe to be in the best
interests of shareholders.
You should have received recently the Fund's proxy statement relating
to the October meeting. This proxy statement was accompanied by a WHITE proxy
card and explains the Board's proposal to open-end the Fund. If this proposal is
approved, the Fund's shareholders would be entitled at any time after conversion
to redeem their shares for cash at a price equal to the underlying net asset
value, less a 1.5% redemption fee applicable only during the first twelve months
following conversion. To illustrate, if this proposal was effective now, shares
which currently trade on the New York Stock Exchange at $12.5625 per share
(based on yesterday's closing sales price), could be redeemed for $14.02 per
share, which is the underlying net asset value at that date less a redemption
fee of $0.21 per share.
For your convenience in voting, we have enclosed a duplicate WHITE
proxy card with this mailing. IF YOU HAVE NOT ALREADY VOTED, OR IF YOU HAVE
VOTED A GREEN PROXY CARD, WE URGE YOU TO MARK, SIGN, DATE AND RETURN THE
ENCLOSED WHITE PROXY CARD IN THE ENCLOSED POSTAGE PREPAID ENVELOPE. WE URGE YOU
NOT TO RETURN A GREEN PROXY CARD. YOUR VOTE WILL BE COUNTED AT THE MEETING IF
YOU MARK, SIGN, DATE AND RETURN JUST THE WHITE CARD.
You may also have received a second proxy statement prepared by Ronald
G. Olin and accompanied by a GREEN proxy card, which includes a number of
proposals that Mr. Olin intends to present at the Annual Meeting, as well as a
letter from him elaborating on his proposals and criticizing Fund management.
Mr. Olin currently controls over 31% of the Fund's outstanding shares. Thus the
manner in which he votes his shares on the Fund's open-ending proposal will
likely have a determinative effect on whether that proposal passes. Under the
Fund's Articles of Incorporation the affirmative vote of two-thirds of the
Fund's outstanding shares is required to open end the Fund. We recommend that
you DO NOT RETURN A GREEN PROXY CARD.
In reviewing Mr. Olin's proxy materials, shareholders should note that:
- - Mr. Olin says the Board's open-ending proposal "will likely fail," without
saying how he intends to vote the shares he controls on this proposal.
Indeed, he says he is "not making any recommendation as to how you should
vote" on this proposal. If Mr. Olin votes his 31%+ position in favor of the
open-ending, there is a reasonable likelihood that it will pass, since the
Fund would only need about half of the other shareholders to vote in favor
of the proposal. Mr. Olin's charge that the open-ending proposal lacks
credibility is curious. If it passes, it will occur. The proposal is not a
"recommendation," it is a mandate.
- - Mr. Olin also says that if any shareholder returns his GREEN proxy card
without affirmatively voting for the open-ending proposal, he will cause
that shareholder's votes to
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ABSTAIN on the proposal. Please note that this will have the same effect as
a vote AGAINST open-ending. Accordingly, any shareholder who intends to
vote using Olin's GREEN proxy card (which we recommend against) and who is
in favor of the open-ending proposal must be sure to mark that card "FOR"
Proposal 1(a).
- - Mr. Olin objects to the 1.5% redemption fee. The Board of Directors of the
Fund carefully considered whether to impose such a fee as part of the
open-ending proposal. Ultimately, the Board concluded that a modest fee
payable to the Fund (not the manager) for a limited period to defray the
expenses incurred in the process and to discourage a large volume of
redemptions from occurring immediately after conversion was appropriate and
in the best interests of the Fund's long-term shareholders. Many other
funds that have converted from a closed-end to an open-end format have
reached the same conclusion, many of their redemption fees in the 2.0%
range. Mr. Olin, who acquired most of his Fund shares within the past two
years, does not disclose his intentions regarding redemption of his shares
if the open-ending proposal (or any alternative plan to realize net asset
value) is adopted. Mr. Olin also would have an option to avoid the
redemption fee. Any shareholder, such as Mr. Olin, owning more than
$250,000 of shares may elect to redeem shares in-kind free of the
redemption fee, and could either keep the portfolio securities distributed
in-kind or incur the costs of disposing of them without imposing those
costs on shareholders that choose to remain invested in the Fund. Mr. Olin
also does not reveal whether he would take advantage of this option, but
either way, the shareholders who choose not to redeem would not be saddled
with the cost of disposition triggered by Mr. Olin's or anyone else's
decision to redeem.
- - Mr. Olin has said that the bundling of the redemption fee with the
open-ending proposal "will likely cause many shareholders to oppose the
open-ending." Leaving aside the effect of the bundling on Mr. Olin's own
voting decision, the Board does not believe that the bundling should have
this effect. Rather, the Board believes that shareholders who carefully
consider the proposal will understand and appreciate the importance of
balancing the interests of shareholders who desire to redeem with the
interests of shareholders who desire to remain as shareholders.
- - Your Board is charged with a careful balancing of all shareholder interests
on an ongoing basis. Shareholder interests can vary depending on factors
such as when and at what price the shareholder purchased his or her shares,
and whether a shareholder desires to hold the investment or liquidate it.
In reaching the proposals presented here, your Board has carefully
considering the interests of all shareholders, including Mr. Olin's
interests as a significant shareholder. In recent months, several of the
Directors have met with Mr. Olin in person and by telephone in an effort to
try to reconcile his interests with those of all shareholders. Ultimately,
your Board believes that the proposals made in the proxy materials
accompanied by the WHITE proxy card are the most equitable after
considering all shareholders' interests. We do not know, and may not know
until the votes are counted, whether Mr. Olin will vote for or against the
proposals in the WHITE card. Although Mr. Olin has criticized the Board,
the adviser and some of the features of the open-ending proposal, he has
not yet revealed how he intends to vote on the open-ending proposal. Your
Board urges you to vote in your own best interest, without regard to how
Mr. Olin may or may not vote his shares.
- - Mr. Olin's proxy statement includes a proposal that, if the Fund's
open-ending proposal fails to pass but a majority favors open-ending, "the
shareholders recommend that the Board provide shareholders with an option
to receive Net Asset Value, with no redemption penalty,
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as soon as possible." His materials go on to note that the Board of
Directors should "evaluate a variety of methods for delivering NAV to those
shareholders who want it." As stated in the Fund's proxy statement, the
Directors have already resolved that if the open-ending proposal fails,
they will adopt an enhanced and aggressive share repurchase program, much
as Mr. Olin proposed in his May 1999 proxy solicitation to Fund
shareholders. Mr. Olin's materials do not describe to any extent what other
methods he or the other nominees he is supporting for election as directors
would advocate. Although he mentions the possibility of a self-tender
offer, and some of the adverse consequences of a tender offer on
shareholders who choose to remain, he says he would defer to the Board.
Your Board considered a self-tender, but ultimately determined that the
open-ending proposal presented in management's proxy materials was more
equitable.
- - Your Board has already determined that if the open-ending proposal fails,
an enhanced and aggressive repurchase program would help achieve a balance
between the interests of shareholders who elect to liquidate their
investment and the interests of remaining shareholders. Your current Board
is committed to this course if the open-ending proposal does not pass. In
another curious comment in Mr. Olin's materials, he criticizes the Board
for accepting and approving the same kind of repurchase program that Mr.
Olin proposed and recommended in his May proxy. Again, although Mr. Olin
says this proposal "lacks credibility," the proposal is not a
"recommendation," it is a mandate.
- - If the Fund's proposal to open-end is approved, the shareholders are being
presented with two opposing slates of directors. Of the six directors being
presented by Fund management, four are independent of Credit Suisse Asset
Management, the Fund's investment adviser, and the remaining two directors
include the Fund's portfolio manager and the Chief Executive Officer of the
adviser. The independent Directors believe this composition provides an
appropriate balance between "inside" and "outside" directors and affords a
forum to receive valuable input from those persons charged with the
day-to-day management of the Fund. This composition far exceeds the
independent director requirements imposed by law and is consistent with
industry "best practices."
- - If shareholders elect Mr. Olin's nominees, four of the Directors would be
employees of Mr. Olin's company, Deep Discount Advisors, only two would be
unaffiliated with Mr. Olin, and there would be no representation from the
individuals who are most familiar with the daily activities of the Fund.
The current Directors are concerned that the obligations of Mr. Olin and
his fellow DDA employees to act in the best interests of DDA clients may
conflict in very real ways with their duty to act in the best interests of
all Fund shareholders. DDA's stated investment specialty is seeking "to
exploit inefficiencies in the price of" securities, which include
closed-end fund shares. This specialty suggests reasons for DDA (and the
four DDA employees nominated by Mr. Olin for the Fund's Board) to oppose
open-ending initiatives, even when they make sense for a majority of a
fund's shareholders. Moreover, although discount reduction benefits all
shareholders equally, if a fund's discount is reduced or eliminated by
actions of a fund's board so that DDA's clients no longer have
opportunities to exploit pricing inefficiencies, Mr. Olin's obligations to
his clients may compel him to liquidate their investments on a widespread
basis, regardless of the effect of such liquidations on other shareholders.
Even assuming Mr. Olin's and DDA's employees' best intentions, these types
of conflicts can be very difficult to reconcile. Given that the Board's
fundamental responsibility is to carefully balance the interests of all
shareholders, do the
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shareholders really want a Board so dominated by a group of individuals who
are faced with these kinds of conflicts? Again, we urge you to vote in your
own best interest. IN ORDER TO PROTECT YOUR INVESTMENT, WE URGE YOU TO VOTE
FOR ALL OF THE PROPOSALS ON THE ENCLOSED WHITE PROXY CARD. WE RECOMMEND
THAT YOU NOT SEND IN A GREEN PROXY CARD. IF YOU HAVE ALREADY SENT IN A
GREEN PROXY CARD, WE URGE YOU TO REVOKE THAT CARD BY MARKING, SIGNING,
DATING AND RETURNING THE ENCLOSED WHITE CARD.
We appreciate your continuing support.
Sincerely,
The Independent Directors of The Portugal Fund, Inc.
/s/ Enrique R. Arzac
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/s/ James J. Cattano
- -------------------------
/s/ Jonathan W. Lubell
- -------------------------
/s/ Martin M. Torino
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PROXY
THE PORTUGAL FUND, INC.
This Proxy is Solicited on Behalf of the Board of Directors
P The undersigned hereby appoints Hal Liebes and Michael A. Pignataro
as Proxies, each with the power to appoint his substitute, and hereby
R authorizes them to represent and to vote, as designated on the reverse
side and in accordance with their judgment on such other matters
O as may properly come before the meeting or any adjournments thereof,
all shares of The Portugal Fund, Inc. (the "Fund") that the undersigned
X is entitled to vote at the annual meeting of shareholders to be held
on October 15, 1999, and at any adjournments thereof.
Y
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/SEE REVERSE/ CONTINUED AND TO BE SIGNED ON REVERSE SIDE /SEE REVERSE/
/ SIDE / / SIDE /
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-----
/ / Please mark
/ X / votes as in
/ / this example.
-----
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy
will be voted "FOR" Proposals 1(a), 1(b), "FOR" the nominees in Proposals 2(a),
2(b), and "FOR" Proposal 3.
The Board of Directors recommends a vote "FOR" Proposals 1(a), 1(b), "FOR" the
nominees in Proposals 2(a), 2(b), and "FOR" Proposal 3.
1(a) To change the Fund's FOR AGAINST ABSTAIN
subclassification from a ------- ------- -------
closed-end investment / / / / / /
company to an open-end / / / / / /
investment company; and to ------- ------- -------
amend and restate the
Fund's Articles of
Incorporation to provide
for such conversion.
1(b) To change the Fund's FOR AGAINST ABSTAIN
fundamental investment ------- ------- -------
policy relating to / / / / / /
borrowing to reflect its / / / / / /
proposed new ------- ------- -------
subclassification as an
open-end investment
company.
2(a) To elect the following FOR WITHHELD
nominees to serve as ----- -----
Directors of the Fund in / / / /
the event that Proposal / / / /
1(a) is not approved: ----- -----
FOR ALL EXCEPT
James J. Cattano (three- ------
year term); Richard W. / /
Watt (three-year term) / /
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For nominees except as noted above
2(b) To elect the following FOR WITHHELD
nominees to serve as ----- -----
Directors of the Fund if / / / /
Proposal 1(a) is approved: / / / /
----- -----
FOR ALL EXCEPT
Enrique R. Arzac ------
James J. Cattano / /
Jonathan W. Lubell / /
William W. Priest, Jr. ---------------------------------------
Martin M. Torino For nominees except as noted above
Richard W. Watt
3. To ratify the selection FOR AGAINST ABSTAIN
of PricewaterhouseCoopers ------- ------- -------
LLP as independent public / / / / / /
accountants of the fund / / / / / /
for the fiscal year ending ------- ------- -------
December 31, 1999.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
Please sign exactly as name appears at left. When
shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name
by the president or other authorized officer. If a
partnership, please sign in partnership name by
an authorized person.
Signature:_______________ Date:______ Signature:_______________ Date:______
