FRANCE GROWTH FUND INC DFRN 14A
Filing Date: 3/23/99
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TYPE: DFRN 14A
SEQUENCE: 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission Only (as
permitted
by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
FRANCE GROWTH FUND, INC.
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(Name of Registrant as Specified in its Charter)
Deep Discount Advisors, Inc.
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(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)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies: _____________________________________________
(2) Aggregate number of securities to which transaction
applies: _____________________________________________
(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):
______________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________
(5) Total fee paid:_______________________________________
[ ] 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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_______________________________________
(4) Date Filed:
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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Deep Discount Advisors, Inc.
One West Pack Square, Suite 777, Asheville, NC 28801
828-274-1863 Fax: 828-255-4834 E-mail: [email protected]
Dear Fellow Stockholders:
I am President of Deep Discount Advisors, Inc., and General Partner of Ron Olin
Investment Management Company, both registered investment advisors, which are
the Soliciting Shareholders ("Soliciting Shareholder") for this Proxy.
As long-term stockholders of The France Growth Fund, Inc. (the "Fund"), we are
concerned about the persistent discount from net asset value per share ("NAV")
at which shares of the Fund have traded. We are not "opportunistic short-term
speculators," "fund-busters," or raiders. We are fellow shareholders who
believe in good corporate governance and in maximizing shareholder value.
To help give stockholders a stronger voice on matters affecting the value of
their investments in the Fund at the 1999 Meeting of Stockholders, we intend to
nominate three persons for election as directors of the Fund. We also intend to
introduce three additional proposals for action by stockholders. The Fund will
be nominating its own candidates for Directors as noted in the Fund's proxy.
The meeting will be held on April 29, 1999.
The persons we intend to nominate for election as directors are: Ronald G. Olin,
Ralph W. Bradshaw, and Gary A. Bentz. Each is committed to exploring fully and
implementing measures intended to increase the market price of your shares and
to provide you the option of receiving full NAV for all your shares without
discount. If elected, Messrs. Olin, Bradshaw, and Bentz would encourage the
Board of Directors to consider and to implement a variety of actions designed to
enhance stockholder value.
Some of these might include, but are not limited to:
- Significant perpetual repurchases of shares in the market, which would have
the effect of increasing NAV and the likely effect of reducing the discount;
- Delivering NAV to those shareholders who want it as soon as is practical
while minimizing the impact on those investors who may want to remain in a
closed-end fund structure;
At the meeting, the Fund has scheduled a vote on proposals to ratify the Fund's
accountants, and to consider shareholder proposals to realize net asset value
and to terminate the advisor. In addition, we will introduce for approval by
stockholders the following proposals:
- A resolution recommending that the Board provide shareholders the option of
receiving full NAV for all their shares within two months;
- A resolution stating that it would be in the best interests of the Fund and
its stockholders for members of the Board not standing for election this year
who oppose a commitment to deliver NAV within two months to resign;
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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- A resolution recommending that the Board of Directors reimburse the
Soliciting Shareholder for proxy communication costs limited to printing,
mailing, distribution, and tabulation of this opposing proxy, but not reimburse
legal, solicitor, or extraordinary overnight mailing/telephone costs.
A discussion of various issues, pro and con, related to the possible
implementation of some of these resolutions is included in the proxy under the
respective sections dealing with each proposal.
We believe that both the advisor of the Fund, Indocam, and the Fund's Board of
Directors have not been sufficiently responsive to the legitimate concerns of
long-term stockholders about the discount. A 12% distribution policy or a small
reduction in management fees based on the discount, as implemented by the Fund,
are not adequate enough measures. Consequently, we believe that the only way to
assure that stockholder interests are given primary consideration is through
significant stockholder representation on the Board of Directors. We are not
interested in competing for the Fund's advisory contract and would not agree to
be the replacement for Indocam as manager if the contract termination proposal
were passed.
Don't let the Fund's proxy confuse the issues for you. On 10/2/98, when the
market price of the shares was $11.69, the shareholders had collectively made
only about $82 million on their $177 million investment over more than eight
years while paying out almost $36 million in advisory fees, director fees,
underwriting fees and other expenses. As of 10/2/98 the net asset value of the
shares was $14.02, representing a discount of $2.33 per share or a +20%
immediate gain to the shareholders if the discount were eliminated. The
discounts continue to persist and to fluctuate. As recently as January 29,
1999, the discount was $2.86 per share, equivalent to a +20% gain if eliminated.
On February 26, 1999, the discount of $2.44 represented a potential +18% gain.
We believe that if we lose this proxy contest, the discounts may well return to
the higher levels experienced earlier this year and last year. We believe
Indocam and the current Board are standing in the way of giving shareholders the
option of realizing full value for all their shares. In our opinion, claims of
good relative portfolio performance (NAV performance) are irrelevant if the
shareholders have not made a decent return on their investment based on the
market price of the shares.
Please read between the lines before you vote on all the issues presented to
you. By almost any objective standard, this has not been a good investment for
shareholders but has been a great investment for Indocam. Effective methods of
delivering net asset value to shareholders and enhancing the market value of the
shares are likely to reduce the size of the fund and the corresponding
management fees. Indocam has made a business decision concerning the balance
between their well being and the well being of the shareholders. Shareholders
need to do the same for themselves.
Our proposals are designed to deliver a wake-up call from the shareholders to
the Board and Indocam. Our director nominees, if elected, will be relentless in
working with the rest of the Board to implement the recommendations of the
shareholders. Tell the Board you want the option to receive full net asset
value for your shares within two months. Tell the Board you don't want
Directors to remain who oppose the wishes of the shareholders. Tell Indocam that
you don't want them to remain as your Advisor/Manager if the Directors won't
give you an option to receive full value for your shares.
We do not intend to spend a lot of money on expensive lawyers, multiple
mailings, and proxy solicitors who will call you on the telephone and try to
influence your vote. Indeed, the Fund has committed to spend our money, and
yours, to do exactly that on their behalf. They will spare no expense to make
it as easy as possible for you to record your vote for management and the status
quo. We believe the status quo is your enemy here. You have a chance to vote
your own pocketbook. We represent substantial shareholder interests and, if you
elect us, we will represent your interests as shareholders. Please vote and
return the green proxy card.
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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Please read the attached Proxy Statement carefully. It contains additional
information about the persons we plan to nominate for election as directors and
the proposals we plan to introduce.
To enable us to vote your shares on these issues, PLEASE MARK, SIGN, and DATE
AND RETURN THE ENCLOSED [GREEN] PROXY CARD IN THE POSTAGE PRE-PAID ENVELOPE THAT
HAS BEEN PROVIDED. You may vote on all proposals contained in the Fund's
[WHITE] proxy card by using the enclosed [GREEN] proxy card. Instructions for
executing the [GREEN] proxy card follow below.
If you have already returned the [WHITE] proxy card sent to you by the Fund, you
may revoke that proxy and vote for our nominees and proposals by marking,
signing, dating and mailing a later dated [GREEN] proxy card.
AFTER SUBMITTING A [GREEN] PROXY CARD, PLEASE DO NOT RETURN A [WHITE] PROXY CARD
(EVEN IF YOU ARE VOTING AGAINST THE NOMINEES NAMED IN THE FUND'S PROXY
STATEMENT). DOING SO WILL REVOKE YOUR [GREEN] PROXY CARD.
If you have any questions, please call me at (828) 274-1863
Sincerely yours,
Ronald G. Olin
TO SUPPORT OUR EFFORTS TO ENHANCE STOCKHOLDER VALUE, PLEASE MARK, DATE, SIGN AND
RETURN THE ENCLOSED [GREEN] PROXY CARD USING THE ENCLOSED POSTAGE PRE-PAID
ENVELOPE.
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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VOTING INFORMATION
The Fund's proxy materials also include proposals relating to the election of
Directors, the ratification of the selection of the Fund's independent
accountants, a stockholder proposal to realize net asset value, and a
stockholder proposal to terminate the Fund's advisory agreement with Indocam.
You may vote on all of the matters contained in the Fund's proxy statement by
completing and returning the enclosed [GREEN] proxy card.
The Soliciting Shareholder is not making any recommendation as to how you should
vote on ratification of the selection of the Fund's independent accountants.
A [GREEN] proxy card which is returned to the Soliciting Shareholder or its
agent will be voted as you indicate on the card. If a [GREEN] proxy card is
returned without indicating how to vote on a matter, your shares will be voted
FOR the election of our nominees, FOR the shareholder proposal to realize net
asset value, FOR the proposal recommending that the Board provide shareholders
the option of receiving full NAV for all their shares within two months, FOR the
proposal recommending that members of the Board not standing for election this
year who oppose a commitment to deliver NAV within two months resign, FOR the
proposal recommending that the Board of Directors reimburse the Soliciting
Shareholder for initial proxy communication costs limited to printing, mailing,
distribution and tabulation of this opposing proxy, and will ABSTAIN on the
proposal to ratify the selection of the Fund's independent accountants. All
other stockholder proposals contained in this proxy or introduced at the meeting
for which you have not indicated your preference will be voted at the time of
the meeting by the Soliciting Shareholder in accordance with the best interests
of the stockholders in the sole judgement and opinion of the Soliciting
Shareholder.
If you have already returned the [WHITE] proxy card that was sent to you by the
Fund, you may revoke that proxy and vote for the Soliciting Shareholder's
nominees and proposals by marking, signing, dating and mailing a later dated
[GREEN] proxy card.
Completing and returning a [WHITE] proxy card, even to vote against the nominees
named in the Fund's proxy statement, after you return the enclosed [GREEN] proxy
card will revoke the proxy given in the [GREEN] card.
Therefore, DO NOT return a [WHITE] proxy card after returning the [GREEN] card,
unless you wish to completely cancel ALL of your choices on the [GREEN] proxy
card.
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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PROXY STATEMENT IN OPPOSITION
TO SOLICITATION BY THE BOARD OF DIRECTORS OF THE FRANCE GROWTH FUND, INC.
ANNUAL MEETING OF STOCKHOLDERS
To be held on April 29, 1999
This proxy statement and the enclosed [GREEN] proxy card are being furnished to
holders of record on February 9, 1999 (the "Record Date") of shares of common
stock, par value $.01 per share (the "Common Stock"), of The France Growth Fund,
Inc., a Maryland corporation (the "Fund"), by Deep Discount Advisors, Inc. and
Ron Olin Investment Management Company, both registered investment advisors,
(the "Soliciting Shareholder"), in connection with the solicitation of proxies
by the Soliciting Shareholder for use at the 1999 Annual Meeting of the Fund to
be held on April 29, 1999, at the offices of Credit Agricole Indosuez, 7th Floor
Board Room, 1211 Avenue of the Americas, New York, New York 10036, at 12:00
p.m., New York time. The Soliciting Shareholder is soliciting a proxy to vote
your shares at the 1999 Annual Meeting of Stockholders of the Fund and at any
and all adjournments or postponements of the meeting. The Fund has been properly
notified of the Soliciting Shareholder's intent to solicit proxies on its own
behalf, and the Soliciting Shareholder intends to send its opposing proxy to a
sufficient number of the Fund's shareholders to pass all proposals.
This proxy statement and the enclosed [GREEN] proxy card are first being sent to
stockholders of the Fund on or about April 5, 1999.
INTRODUCTION
There are four matters that the Fund has scheduled to be voted on at the
meeting:
1. The election of three persons to serve as directors of the Fund;
2. The ratification of the selection by the Board of Directors of
PricewaterhouseCoopers LLP as the independent accountants of the Fund for the
fiscal year ending December 31, 1999;
3. To consider and act upon a stockholder proposal with respect to realizing
net asset value;
4. To consider and act upon a stockholder proposal to terminate the Fund's
investment advisory agreement with Indocam International Investment Services;
With respect to these matters, the Soliciting Shareholder is soliciting a proxy
to vote your shares:
- IN FAVOR of the election of three persons whom the Soliciting Shareholder
intends to nominate for election as directors of the Fund;
- IN FAVOR of the stockholder proposal with respect to realizing net asset
value; and
With regard to item 4 above, the Contract Termination Proposal, the Soliciting
Shareholder will vote in accordance with your wishes on this matter. If no
instructions are given, the Soliciting Shareholder will vote in accordance with
the best interests of all shareholders at the time of the Annual Meeting. This
decision will be made in the sole discretion of the Soliciting Shareholder,
unless otherwise specified on the [GREEN] Proxy card.
The Soliciting Shareholder is making no recommendation on how shares should be
voted on the ratification of the selection of the Fund's independent accountants
and will ABSTAIN if no preference is indicated.
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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The Soliciting Shareholder is also soliciting your proxy to vote your shares on
the following proposals, which it intends to introduce at the meeting:
5. A stockholder proposal recommending that the Board provide shareholders the
option of receiving full NAV for all their shares within two months;
6. A stockholder proposal recommending that members of the Board not standing
for election this year who oppose a commitment to deliver NAV within two months
should resign;
7. A stockholder proposal recommending that the Board of Directors reimburse
the Soliciting Shareholder for proxy communication costs limited to printing,
mailing, distribution, and tabulation of this opposing proxy.
How Proxies Will Be Voted
All of the proposals scheduled by the Fund to be voted on at the meeting are
included in the enclosed [GREEN] proxy card. If you wish to vote IN FAVOR of
our nominees, and FOR any of the other proposals, you may do so by completing
and returning a [GREEN] proxy card.
If you return a [GREEN] proxy card to the Soliciting Shareholder or its agent,
your shares will be voted on each matter as you indicate. If you do not
indicate how your shares are to be voted on a matter, they will be voted FOR the
election of our nominees, FOR the shareholder proposal to realize net asset
value, FOR the proposal recommending that the Board provide shareholders the
option of receiving full NAV for all their shares within two months, FOR the
proposal recommending that members of the Board not standing for election this
year who oppose a commitment to deliver NAV within two months resign, and FOR
the proposal recommending that the Board of Directors reimburse the Soliciting
Shareholder for proxy communication costs limited to printing, mailing,
distribution and tabulation of this opposing proxy. If you do not indicate how
to vote on the ratification of the selection of the Fund's independent
accountants, your shares will be voted TO ABSTAIN on that matter. All other
stockholder proposals contained in this proxy or introduced at the meeting,
including the proposal to terminate the investment advisory agreement, will be
voted at the time of the meeting by the Soliciting Shareholder in accordance
with the best interests of the stockholders, in the sole judgement and opinion
of the Soliciting Shareholder. If you return a [GREEN] proxy card, you will be
granting the persons named as proxies discretionary authority to vote on any
other matters of which they are not now aware that may come before the meeting.
These may include, among other things, matters relating to the conduct of the
meeting and proposals of other stockholders.
Voting Requirements
Only stockholders of record on the Record Date are entitled to vote at the
meeting. According to the Fund's proxy statement, there were 15,345,333 shares
of Common Stock issued and outstanding on the Record Date. Holders of record on
the Record Date will be entitled to cast one vote on each matter for each share
of Common Stock held. Directors of the Fund are elected by a plurality of the
votes cast. Ratification of the selection of the Fund's independent accountants
and approval of stockholder proposals numbered 3, 5, 6, and 7 described in this
proxy statement each require the affirmative vote of a majority of the shares
voting on the matter. The Contract Termination Proposal, Proposal 4, requires
the vote of a majority of the outstanding voting securities of the Fund, as
defined by the Investment Company Act of 1940 (the "1940 Act"). This majority
means the lesser of: (1) 67% or more of the Common Stock of the Fund present at
the meeting, if the holders of more than 50% of the outstanding Common Stock are
present or represented by proxy; or (2) more than 50% of the outstanding Common
Stock.
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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In tallying stockholder votes, abstentions and "broker non-votes" (i.e., shares
held by brokers or nominees as to which (a) instructions have not been received
from the beneficial owners or persons entitled to vote and (b) the broker or
nominee does not have discretionary voting power on a particular matter) will be
counted for purposes of determining whether a quorum is present for purposes of
convening the meeting. Abstentions and broker non-votes will have no effect on
the election of directors. The three nominees receiving the largest number of
votes will be elected to serve as directors of the Fund. In addition,
abstentions and broker non-votes are not considered votes "cast" and thus, will
have no effect on any proposal other than the Contract Termination Proposal,
Proposal 4, in which case they will have the same effect as "no" votes.
The presence, in person or by proxy, of the holders of more than 33% of the
shares of Common Stock of the Fund entitled to vote at the meeting will
constitute a quorum for the transaction of business. If a quorum is not present
at the meeting, or if a quorum is present but sufficient votes to approve any of
the stockholder proposals are not received, the persons named as proxies may
propose one or more adjournments of the meeting to permit further solicitation
of proxies. The proxies may also propose an adjournment for other reasons. Any
adjournment will require the affirmative vote of a majority of those shares
present at the meeting in person or by proxy. If an adjournment of the meeting
is proposed, the persons named as proxies on the [GREEN] proxy card will vote
for or against such adjournment in their discretion.
Revocation of Proxies
You may revoke any proxy you give to management or the Soliciting Shareholder at
any time prior to its exercise in the following ways:
Deliver a written revocation of your proxy to the Secretary of the Fund;
Execute and deliver a later dated proxy to the Soliciting Shareholder or to the
Fund or our respective agents; or
Vote in person at the meeting. (Attendance at the meeting will not in and of
itself revoke a proxy.)
There is no limit on the number of times you may revoke your proxy prior to the
meeting. Only the latest dated, properly signed proxy card will be counted.
INFORMATION CONCERNING THE SOLICITING SHAREHOLDER
The beneficial shareholders making this solicitation are Deep Discount Advisors,
Inc. and Ron Olin Investment Management Company, both registered investment
advisors. These companies presently manage investment portfolios having assets
in excess of $180 million.
The address of the Soliciting Shareholder is One West Pack Square, Suite 777,
Asheville, NC 28801.
As of the Record Date, the Soliciting Shareholder has the beneficial ownership
of 360,332 shares of Common Stock of the Fund, held by principals and clients of
the companies and representing approximately 2.4 % of the issued and
outstanding shares of Common Stock of the Fund.
Exhibit 1 to this proxy statement contains a schedule showing the purchases and
sales of Common Stock of the Fund by the Soliciting Shareholder within the past
two years.
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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The Soliciting Shareholder has made the decision to seek Board representation
after an extended period of unsatisfactory shareholder results. Moreover, it
believes effective measures have not been taken by Indocam nor has there been
effective direction by the current Board to deal with the persistent discount to
NAV at which the Fund's shares trade on the open market.
REASONS FOR THE SOLICITATION
In our view, management has not taken meaningful steps to enhance stockholder
value. For this reason, the Soliciting Shareholder is soliciting your vote to
elect Messrs. Olin, Bradshaw, and Bentz to the Board of Directors and to approve
various stockholder proposals, which it believes will enhance stockholder value.
The election of Messrs. Olin, Bradshaw, and Bentz as directors will provide
stockholders with an independent voice on important matters affecting the Fund.
Their election will give the Board a new perspective and will help assure that
measures intended to benefit stockholders are more actively considered. The
approval of various proposals will also further these goals to the extent that
they may result in:
- Delivering an option to shareholders to receive full net asset value for
their shares;
- Enhancing both net asset value and market value of the Fund's shares
through aggressive, perpetual buybacks of shares in the market;
- Greater stockholder guidance to the Board, enhancing its ability to act in
the best interests of stockholders.
If you share these goals, we urge you to vote for our nominees and proposals,
using the enclosed [GREEN] proxy card.
CERTAIN CONSIDERATIONS
In deciding whether to give the Soliciting Shareholder your proxy, you should
consider the following information.
Even if its nominees are elected and its proposals are approved by stockholders,
there can be no assurance that the full Board of Directors will take any actions
that it may advocate or that such actions, if taken, will achieve their intended
goals. Its nominees will, if elected, represent only three of the Fund's eleven
directors, absent the resignation of any Class I or Class III directors.
Implementation of certain Board actions may require stockholder approval, and no
assurance can be given that such approval will be obtained. In addition,
various costs, which would be borne indirectly by stockholders, may be
associated with certain actions, including but not limited to those associated
with holding a special meeting of stockholders.
The Soliciting Shareholder believes that all stockholders of the Fund will
benefit if any actions taken to improve stockholder value or to reduce or
eliminate the discount from NAV are successful. However, the Soliciting
Shareholder is paid fees by its clients who hold shares of the Fund. These fees
will be greater if the value of the Fund's shares increase and, in some cases,
are based upon the performance of the client's account.
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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If the Contract Termination Proposal is approved, it will be necessary for the
Fund to retain a new investment advisor and obtain approval of an investment
advisory agreement with the new advisor by the Board of Directors of the Fund,
including the vote of a majority of the directors who are not "interested
persons" of the Fund as defined by the 1940 Act, and by stockholders of the
Fund. No assurance can be given that a new advisor will be identified or
approved prior to the date as of which the investment advisory agreement with
Indocam terminates. In such event, the Fund might have to implement interim
arrangements to assure continued management of the Fund's assets, which might
require the issuance of an order by the Securities and Exchange Commission (and
of which there can be no assurance). Alternatively, the Board of Directors or
officers of the Fund would have to manage the Fund's investment portfolio.
Ron Olin and Deep Discount Advisors, Inc. are parties to a pending legal action
involving a closed-end fund. These actions are described in Exhibit 2. In that
action, the closed-end fund has alleged that the Soliciting Shareholder has
violated certain provisions of the Federal securities laws in connection with
the solicitation of proxies. Both Ron Olin and Deep Discount Advisors, Inc.
vigorously denied the allegation and moved for dismissal. A dismissal has
subsequently been agreed to by the parties and final details are in preparation.
ELECTION OF DIRECTORS
At the meeting, stockholders will have the opportunity to elect three persons as
directors of the Fund. The Fund currently has a total of eleven directors,
divided into three classes. There are presently three Class II directors, whose
terms expire in 1999, four Class III directors, whose terms expire in 2000, and
four Class I directors, whose terms expire in 2001. Each person elected as a
director at the meeting will be a Class II director whose term will expire in
2002. The Fund will be nominating its own candidates for Directors as noted in
the Fund's proxy.
The Soliciting Shareholder will nominate Messrs. Olin, Bradshaw, and Bentz for
election as Class II directors of the Fund. Information about the nominees is
as follows:
Name, Business Address Age Principal Business Occupations
Ronald G. Olin 53
One West Pack Square
Suite 777
Asheville, NC 28801 Mr. Olin is President and Chief Executive
Officer of Deep Discount Advisors, Inc.and
General Partner of Ron Olin Investment
Management Co. Both firms are registered
investment advisors specializing in
investments in closed-end funds. Prior
to founding these investment management
firms, Mr. Olin was a senior manager with
IBM supporting government software
contracts with the N.A.S.A. and D.O.D. He
currently serves as Chairman of the Board
of Clemente Global Growth Fund, a NYSE
Traded closed-end fund with an
internationally diversified portfolio, and
as a Director on the Board of The Austria
Fund, Inc., a NYSE-traded closed-end fund
managed by Alliance Capital.
Number of Shares Owned Directly or
Indirectly As of February 9, 1999 200
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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Ralph W. Bradshaw 48
One West Pack Square
Suite 777
Asheville, NC 28801 Mr. Bradshaw has served as Vice President
and Secretary of Deep Discount Advisors,
Inc., a registered investment advisor
specializing in closed-end fund
investments, for over five years. During
that period he has also provided financial
consulting services in the area of closed-
end funds. In previous years, he has held
various managerial positions.
Mr. Bradshaw currently serves as a
Director on the Boards of Clemente Global
Growth Fund and The Austria Fund, both
NYSE-traded closed-end funds.
Number of Shares Owned Directly or
Indirectly As of February 9, 1999 262
Gary A. Bentz 42
One West Pack Square
Suite 777
Asheville, NC 28801 Mr. Bentz has served as Vice President and
Chief Financial Officer of Deep Discount
Advisors, Inc., a registered investment
advisor specializing in closed-end fund
investments, for over five years. He has
also provided financial accounting,
investment analysis and consulting services
to companies and private investors for the
last 13 years. After commencing his career
with Arthur Andersen & Co., Mr. Bentz held
various financial managerial positions in
industry. He currently serves as a
Director on the Boards of Clemente Global
Growth Fund and The Austria Fund, both
NYSE-traded closed-end funds.
Number of Shares Owned Directly or
Indirectly As of February 9, 1999 0
Messrs. Olin, Bradshaw, and Bentz are affiliated with the company Deep Discount
Advisors, Inc. and several of them serve on the Boards of Directors of other
closed-end funds as noted in their biographical information.
As previously noted, Deep Discount Advisors and Ron Olin Investment Management
Company are deemed to own beneficially 360,332 shares of Common Stock,
representing approximately 2.4% of the shares outstanding on the Record Date,
February 9, 1999.
Directors of the Fund who are not affiliated with Indocam receive an annual
stipend for serving on the Board and its committees, an additional sum for each
Board meeting which they attend, and reimbursement for out-of-pocket expenses in
connection with their attendance at directors' meetings. According to the
Fund's Proxy statement, Directors not affiliated with Indocam each received
total compensation between $10,300 and $14,900 for the fiscal year ending
December 31, 1998. The Fund does not pay any pension or other benefits to its
directors.
Other than fees that may be payable by the Fund to its directors, none of the
nominees named above has any arrangement or understanding with any person with
respect to any future employment by the Fund or by any affiliate of the Fund.
The persons named as proxies in the enclosed [GREEN] proxy card intend, in the
absence of contrary instructions, to vote all proxies they are entitled to vote
IN FAVOR of the election of the three nominees
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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named above. Each nominee has
consented to stand for election and to serve if elected. If any nominee is
unable to serve, an event not now anticipated, the proxies will be voted for
such other person, if any, as is designated by the persons named as proxies.
Information regarding the persons now serving as directors and officers of the
Fund, and additional information regarding the Fund, is contained in the Fund's
proxy statement.
ANNUAL MEETING PROPOSALS
PROPOSAL 2 - SELECTION OF INDEPENDENT ACCOUNTANTS
Information concerning this proposal is contained within the Fund's proxy
statement. The Soliciting Shareholder takes no position with regard to the
selection of independent accountants and will ABSTAIN if no preference is
indicated on the [GREEN] proxy.
PROPOSAL 3 - SHAREHOLDER PROPOSAL TO REALIZE NET ASSET VALUE
A stockholder has submitted the following proposal for inclusion in the Fund's
proxy statement. A supporting statement and rebuttal and other additional
information is contained in the Fund's proxy.
- RESOLVED: The stockholders of The France Growth Fund (the "Fund") request
that they be afforded an opportunity to realize net asset value ("NAV") for
their investment in the Fund as soon as practicable.
This proposal is similar to Proposal 5 which will be presented by the Soliciting
Shareholder at the meeting but this proposal does not contain a specific time
frame for action to be taken. The Soliciting Shareholder recommends that
shareholders vote IN FAVOR of this proposal and will vote FOR this proposal if
no indication is given on the [GREEN] proxy.
PROPOSAL 4 - CONTRACT TERMINATION PROPOSAL
At the meeting, the Soliciting Shareholder intends to introduce the following
resolution for consideration by the stockholders which had been submitted by
Ronald G. Olin for inclusion in the Fund's proxy in a letter sent to the Fund on
October 29, 1998 (included as Exhibit 3). This letter was sent prior to a
decision by the Soliciting Shareholder to solicit its own proxies for the annual
meeting. A supporting statement and rebuttal and other additional information
relative to this proposal is contained in the Fund's proxy.
- RESOLVED: The Fund's investment advisory agreement with its investment
advisor, Indocam International Investment Services (Indocam, formerly Indosuez),
shall be terminated and the shareholders recommend that the Board solicit
competitive proposals for a new investment advisor.
On 10/2/98, when the market price of the shares was $11.69, the shareholders had
collectively made only about $82 million on their $177 million investment over
more than eight years while paying out almost $36 million in advisory fees,
director fees, underwriting fees and other expenses. As of 10/2/98 the net
asset value of the shares was $14.02, representing a discount of $2.33 per share
or a +20% immediate gain to the shareholders if the discount were eliminated.
The discounts continue to persist and to fluctuate. As recently as January 29,
1999, the discount was $2.86 per share, equivalent to a +20% gain if eliminated.
On February 26, 1999, the discount of $2.44 represented a potential +18% gain.
We believe that if we lose this proxy contest, the discounts may well return to
the higher levels experienced earlier this year and last year. The Soliciting
Shareholder believes that claims of good relative portfolio performance are
irrelevant if the shareholders have not made a decent return on their investment
based on the market price of the shares.
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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Shareholders who believe that Indocam, its management fees, and its influence on
the Board are a large part of the problem in getting the Board to give
shareholders the option of receiving full net asset value for their shares
should consider voting in favor of this proposal. Moreover, if the Soliciting
Shareholder is given sufficient discretionary voting authority on this proposal
by virtue of shareholders returning the [GREEN] proxy with this proposal
unmarked, it will determine at the time of the meeting whether or not
termination of the Indocam contract, or the threat of it, combined with other
actions taken or promised by Indocam and the Board, will be in the best
interests of shareholders. The Soliciting Shareholder believes that a large
discretionary vote on the [GREEN] proxy may give it the leverage to overcome a
possible unwillingness of Indocam and the other Directors to follow shareholder
direction on the other proposals.
If this proposal is approved by stockholders, the Fund's investment advisory
agreement with Indocam will be required to be terminated. The Soliciting
Shareholder believes that Indocam may be the primary impediment to allowing
shareholders the option to receive full Net Asset Value (NAV) for their shares.
Although passage of this proposal would not directly result in achieving this
goal, it will encourage the Board of Directors to seek a new investment advisor
who is committed to enhancing stockholder value.
In the event this proposal is approved by stockholders, it will be necessary for
the Board of Directors, including a majority of the directors who are not
"interested persons" (as defined by the 1940 Act) of the Fund, to approve an
investment advisory agreement with a new investment advisor to assure continuity
of services to the Fund. This new advisory agreement will also have to be
approved by stockholders of the Fund prior to its effectiveness. If a new
advisory agreement is not approved by stockholders and directors and implemented
prior to the effective date of the termination of the present investment
advisory agreement, it is possible that there will be a period of time during
which the Fund will not have an independent investment advisor responsible for
the management and supervision of its investment portfolio.
If no preference is given on the [GREEN] proxy card, the Soliciting Shareholder
will vote on this proposal at the time of the meeting in accordance with the
best interests of the stockholders, in the sole judgement and opinion of the
Soliciting Shareholder.
PROPOSAL 5 - SHAREHOLDER OPTION TO RECEIVE FULL NET ASSET VALUE WITHIN TWO
MONTHS
The Soliciting Shareholder has provided appropriate advance notice to the Fund
of its intent to solicit sufficient votes in favor to pass the following
proposal which it will present for approval by the stockholders at the annual
meeting:
- RESOLVED: That the stockholders hereby recommend that the Board of
Directors take whatever steps necessary to provide all shareholders the option
of receiving full Net Asset Value (NAV) for their shares within two months (60
days) of the date of the 1999 Annual meeting.
Existing shareholders have endured a long-lasting and persistent discount in the
market value of their shares. The Board has it within its power to provide
shareholders the option of receiving full net asset value for their shares, less
any associated costs, in a timely manner, without any further shareholder
approvals. Examples of how this could be done include having the Fund do a full
tender offer for all its shares at NAV for cash or offering shareholders the
option of receiving an in-kind, proportionate distribution of their share of the
Fund's portfolio. Both techniques have been done successfully in the past by
other closed-end funds. Any such undertaking could be designed to minimize the
impact and costs to those shareholders wishing to retain the Fund's current
structure.
Such actions would likely require exemptive relief from the SEC to permit
participation by those shareholders who own more than 5% of the Fund. A tender
offer, which would require the liquidation of some portion of the Fund's
portfolio could create tax liabilities for those remaining in the Fund. An in-
kind distribution would NOT have tax consequences for those remaining in the
Fund; those electing to take an in-kind distribution could have tax liabilities
from the distribution. If the Fund becomes significantly smaller through one of
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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these actions, it is possible that
certain fixed expenses of the Fund would increase the expense ratio for
remaining shareholders, although within certain limits we believe that much can
be done to adjust fixed expenses to match the size of the Fund. Also, it is
possible that if most of the shareholders elect to participate, the Fund may
become so small that it is impractical to operate. As would be the case with
massive redemptions after an open-ending or alternative measure, a merger or
liquidation of the Fund might then become necessary. Finally, any measure
designed to provide full NAV to shareholders, net of associated expenses, would
be subject to the prevailing market conditions at the time the measure is
implemented, consequently, actual NAV will be dependent on prevailing market
conditions. If there are any securities held by the Fund which are highly
illiquid, these may require a longer time to liquidate without adversely
affecting the related market price of the security. It is also possible that
certain strategies which might be adopted by the Fund to provide NAV to
shareholders might require longer than sixty days in order to assure prudent
financial management of the liquidation.
PROPOSAL 6 - RESIGNATION OF DIRECTORS OPPOSING SHAREHOLDER OPTION TO RECEIVE NET
ASSET VALUE
The Soliciting Shareholder has provided appropriate advance notice to the Fund
of its intent to solicit sufficient votes in favor to pass the following
proposal which it will present for approval by the stockholders at the annual
meeting:
- RESOLVED: That it would be in the best interests of the Fund and its
stockholders for all Directors not standing for election at the 1999 Annual
Meeting who oppose the resolution to deliver full Net Asset Value (NAV) to all
shareholders within 60 days of the date of the 1999 Annual Meeting to resign,
and that the stockholders hereby recommend that such Directors resign their
positions as Directors of the Fund.
Directors need to be responsible to the wishes of the shareholders, even if it
conflicts with the financial interests of the Fund manager and reduces the
manager's fees. Directors who oppose an approved resolution of the shareholders
and refuse to act on such a resolution should be held accountable to those
shareholders and, in our opinion, should resign their position. Staggered Board
terms make it possible for a majority of directors to ignore the shareholders
for a period of time. Just because it is possible does not make it right, and
the Soliciting Shareholder believes that those shareholders who desire the
option of receiving full net asset value for their shares should speak out by
voting for the above resolution.
PROPOSAL 7 - LIMITED REIMBURSEMENT OF CERTAIN EXPENSES OF THE SOLICITING
SHAREHOLDER
The Soliciting Shareholder has provided appropriate advance notice to the Fund
of its intent to solicit sufficient votes in favor to pass the following
proposal which it will present for approval by the stockholders at the annual
meeting:
- RESOLVED: That the stockholders hereby recommend that the Board of
Directors authorize and direct the officers of the Fund to reimburse the
Soliciting Shareholder for such reasonable fees and expenses associated with its
proxy communication to shareholders, including only printing, normal mailing,
distribution, and tabulating costs, but not including attorneys fees, solicitor
fees, overnight mailing costs, telephone communication, or other extraordinary
expenses.
The Soliciting Shareholder believes that the election of its nominees as
directors of the Fund and the approval of the stockholder proposals it intends
to introduce will benefit the Fund and its stockholders. For this reason, it
intends to seek reimbursement to the maximum extent permitted by law of the
reasonable fees and expenses incurred in connection with providing these choices
to shareholders and believes that reimbursement by the Fund would be
appropriate. However, the Soliciting Shareholder does not believe that outside
lawyer costs, hired solicitor costs, telephone solicitations, special overnight
mailing costs, and various
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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other expensive techniques often used in proxy
contests should be paid for by shareholders. It is not right to charge the
shareholders these costs whether they are incurred by the Soliciting Shareholder
or whether they are incurred by the Fund in an attempt to entrench the incumbent
manager or Board.
The Fund has indicated that it will use shareholder money to pay a fee
approximating $125,000 to an outside proxy solicitation firm. The Soliciting
Shareholder believes the current Board may also authorize significant additional
expenses to oppose this proxy. In contrast, the soliciting shareholder intends
to bear its own attorney fees, legal fees, and extraordinary solicitation fees
and is only requesting reimbursement of approximately $25,000 for the costs of
simply communicating these choices to shareholders. Shareholders should look
closely at who is delivering value for their money and who has their best
interests in mind.
PRINCIPAL HOLDERS OF VOTING SECURITIES
According to the Fund's proxy statement, the Fund is aware of five entities
which have reported beneficial ownership of more than 5% of the outstanding
Common Stock: (i) President and Fellows of Harvard College, care of Harvard
Management Co., Inc., 600 Atlantic Ave., Boston, MA 02210--1,770,851 shares
(11.54%); (ii) Bankgesellschaft Berlin AG Postfach, 110801, D-10838, Berlin,
Germany--1,476,221 shares (9.62%); (iii) Lazard Freres Asset Management, 30
Rockefeller Plaza, New York, NY 10112--1,084,915 shares (7.07%); (iv) Fidelity
Management and Research Corp., 82 Devonshire Street, Boston, MA 02109--909,978
shares (5.93%); and (v) Tattersall Advisory Group, 6620 West Broad Street,
Richmond, VA 23230-- 779,543 shares (5.08%).
According to the Fund's proxy statement, the directors and officers of the Fund,
as a group owned less than 1% of the outstanding shares of the Fund.
THE SOLICITATION
Deep Discount Advisors, Inc. and Ron Olin Investment Management Company
(Soliciting Shareholder) are making this solicitation.
Banks, brokerage houses and other custodians, nominees, and fiduciaries will be
requested to forward this proxy statement and the enclosed [GREEN] proxy card to
the beneficial owners of shares of Common Stock for whom they hold shares of
record. The Soliciting Shareholder will reimburse these organizations for their
reasonable out-of-pocket expenses.
The Soliciting Shareholder will bear all of the fees and expenses related to
this proxy solicitation except to the extent that it seeks and obtains
reimbursement. It intends to seek reimbursement of certain reasonable printing,
mailing, distribution, and tabulating costs from the Fund and will propose at
the meeting that stockholders authorize and direct such reimbursement. It is
estimated that the total amount of fees and expenses, including lawyers and
proxy advisors, will not exceed $80,000, of which none has been disbursed to
date. However, it is estimated that the amount of limited reimbursement sought
from the Fund will likely not exceed $25,000.
The Soliciting Shareholder is not and, within the past year, has not been a
party to any contract, arrangement or understanding with any person with respect
to any securities of the Fund. In addition, there is no arrangement or
understanding involving either the Soliciting Shareholder, or any associate
which relates to future employment by the Fund or any future transaction with
the Fund.
If you have any questions concerning this proxy solicitation or the procedures
to be followed to execute and deliver a proxy, please contact the Soliciting
Shareholder at 828-274-1863.
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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ADDITIONAL PROPOSALS
The Soliciting Shareholder knows of no business that will be presented for
consideration at the meeting other than that set forth in this proxy statement
and in the Fund's proxy statement. If any other matters are properly presented
for consideration at the meeting, it is the intention of the persons named as
proxies on the enclosed [GREEN] proxy card to vote in accordance with their own
best judgment on such matters.
The date by which a stockholder must submit a proposal to be presented at the
2000 Annual Meeting of Stockholders is set forth in the Fund's proxy statement.
Dated: March 23, 1999.
EXHIBIT 1 Purchases and Sales of France Growth Fund Shares
SECURITIES OF THE FUND PURCHASED OR SOLD
WITHIN THE PAST TWO YEARS BY THE SOLICITING SHAREHOLDER
Except as disclosed in this proxy statement, neither Ronald G. Olin nor Deep
Discount Advisors, Inc. nor Ron Olin Investment Management Company has, or had,
any interest, direct or indirect, by security holdings or otherwise, in the
Fund. The following table sets forth certain information with respect to
purchases and sales of shares of Common Stock of the Fund by Deep Discount
Advisors, Inc. and Ron Olin Investment Management Company for accounts holding
shares as to which they are deemed to be the beneficial owners (the "Accounts").
Some of the shares are held in margin accounts. Therefore, a portion of the
purchase price and market value of the shares may from time to time be
represented by margin borrowings, depending upon the net debit balances, if any,
of the margin accounts, which fluctuate daily.
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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Date Shares Purchased
3/14/97 2111
3/17/97 7500
3/18/97 978
3/19/97 5500
3/24/97 1000
3/27/97 700
3/31/97 5000
5/8/97 811
5/15/97 5500
5/16/97 5500
5/19/97 5600
5/20/97 6100
5/21/97 1700
5/23/97 6400
5/27/97 -500
5/29/97 4500
5/30/97 3500
6/2/97 6022
6/3/97 1500
6/4/97 9500
6/5/97 5500
6/6/97 9800
6/9/97 4200
6/10/97 8000
6/11/97 3000
6/12/97 2500
6/13/97 9500
6/16/97 9000
6/17/97 7000
6/18/97 2700
6/19/97 5800
6/20/97 2500
6/23/97 5500
6/24/97 5000
6/25/97 2000
6/26/97 6000
6/27/97 5500
6/30/97 5300
7/2/97 2500
7/3/97 2000
7/7/97 2500
7/8/97 3500
7/9/97 5000
7/10/97 5500
7/15/97 5000
7/16/97 5000
7/17/97 1000
7/18/97 9000
7/28/97 5500
7/29/97 10000
7/30/97 7000
7/31/97 500
8/1/97 14900
8/4/97 7000
8/5/97 1600
8/6/97 4100
8/7/97 12900
8/8/97 7400
8/11/97 7000
8/12/97 2000
8/13/97 9000
8/15/97 4000
8/19/97 800
8/25/97 2500
8/27/97 6800
9/4/97 3000
9/8/97 1000
9/9/97 3679
9/10/97 3000
9/17/97 6000
9/18/97 5000
9/19/97 5000
9/22/97 4000
9/23/97 3000
9/24/97 3000
9/25/97 3500
9/26/97 4700
9/29/97 4900
9/30/97 938
10/1/97 1062
10/2/97 1500
10/3/97 6100
10/8/97 2000
10/9/97 7000
10/14/97 2400
10/16/97 1956
11/7/97 751
11/8/97 2000
11/11/97 5314
12/4/97 5000
12/8/97 3000
12/10/97 3500
12/12/97 700
1/7/98 522
1/15/98 -2251
1/21/98 2000
1/22/98 700
1/26/98 3500
2/3/98 7000
2/4/98 4000
2/5/98 17117
2/6/98 15500
2/9/98 8000
2/10/98 99
2/11/98 3000
2/12/98 13500
2/13/98 4600
2/17/98 2841
2/19/98 8000
2/20/98 6500
2/23/98 2200
2/24/98 6200
2/26/98 4000
3/3/98 14800
3/4/98 8522
3/5/98 42000
3/13/98 3500
3/16/98 7000
3/18/98 6000
3/23/98 6000
3/26/98 6000
4/1/98 1100
4/16/98 1650
4/24/98 7000
6/1/98 1700
6/12/98 -4200
6/16/98 -3367
6/17/98 -3011
6/25/98 -2451
7/14/98 -4100
7/17/98 -1792
7/31/98 -4203
8/18/98 -21106
8/19/98 -1557
8/24/98 -3000
8/25/98 -1900
8/28/98 -7000
8/31/98 -25550
9/1/98 -504146
9/2/98 -37000
9/3/98 -24000
9/4/98 -46000
9/8/98 -15958
9/9/98 -3000
9/11/98 -5000
9/15/98 -4000
10/9/98 -3606
10/16/98 -15500
10/27/98 -400
1/21/99 3000
1/27/99 30000
2/2/99 10000
2/18/99 -700
2/19/99 -16142
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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EXHIBIT 2
PENDING LITIGATION INVOLVING THE SOLICITING SHAREHOLDER
The soliciting shareholder, and entities affiliated with it, are involved in the
following pending litigation relating to closed-end funds. The litigation is
pending in U.S. District Court for the Southern District of New York.
The Emerging Germany Fund Litigation
Ronald Olin and Deep Discount Advisors, Inc., of which Ronald Olin is President
and Chief Executive Officer, are named defendants in a federal court action for
injunctive relief filed on April 8, 1998 by The Emerging Germany Fund, Inc.
("FRG"). FRG filed this action immediately after canceling its 1998 annual
meeting scheduled for April 27, 1998, and stated that it would not schedule an
annual meeting until the litigation has been resolved.
Subsequently, a class action lawsuit was filed by a stockholder who demanded
that FRG reschedule its 1998 Annual Meeting. Recently, FRG rescheduled and
held its 1998 Annual Meeting on January 26, 1999 and the shareholders approved a
proposal initiated by the Fund to open-end.
In its action, FRG alleges that the defendants solicited proxies in violation of
Section 14(a) of the Securities Exchange Act of 1934 (the "Exchange Act") in
connection with certain postings by Mr. Olin on an Internet bulletin board and
engaged in a alleged scheme to force FRG to open-end. FRG also alleges that Mr.
Olin, Deep Discount Advisors, Inc. and the three other defendants, Mr.
Goldstein, and Opportunity Partners L.P., and Kimball & Winthrop, were a "group"
within the meaning of Section 13(d) of the Williams Act, and had failed to file
a Schedule 13D.
All defendants have moved to dismiss FRG's complaint. A dismissal has
subsequently been agreed to by FRG with regard to the Soliciting Shareholder and
final details are in preparation.
All of the above actions were filed in the Federal District Court , S.D.N.Y.
Copies of all pleadings in the above actions are available upon request.
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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EXHIBIT 3
VALUE ENHANCEMENT RECOMMENDATIONS AND TERMINATION PROPOSAL
(Letter set to France Growth Fund on October 29, 1998)
RONALD G. OLIN
One West Pack Square, Suite 777, Asheville, NC 28801
828-274-1863 Fax: 828-255-4834 E-mail: [email protected]
Steven M. Cancro, Secretary Ph: 212-278-2810 Fax: 212-278-2828
The Board of Directors, The France Growth Fund, Inc.
Credit Agricole Indo-Suez, 8th Floor
1211 Avenue of the Americas
New York, NY 10036
(via both Fax and Federal Express) October 29, 1998
To the Board of Directors of The France Growth Fund:
My clients and I currently own 317,332 shares of the France Growth Fund Inc. and
have held most of the shares for a long time. We are disappointed by the long-
term investment return to shareholders and the persistent discount at which the
Fund's shares have traded.
We feel that there is no need to tolerate such a discount, as adequate remedies
exist that are beneficial to all shareholders and are far more effective than
those actions taken by the Fund so far. The purpose of this letter is to
suggest two specific remedies, to request a meeting with the Board of Directors
to discuss these matters, and to submit a shareholder proposal for the next
meeting of the Fund's shareholders.
The shareholder proposal to terminate the management contract with Indosuez may
seem extreme, but it represents the only effective and inexpensive means the
shareholders have to indicate their displeasure if the Board and Advisor fail to
respond to their wishes.
AN UNIMPRESSIVE LONG-TERM INVESTMENT
All of the shareholder reports since the inception of the Fund are the basis of
the following synopsis of the "out of pocket" investment results of the Fund's
owners:
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FRANCE GROWTH FUND SHAREHOLDER RESULTS
(Values in Thousands - Source: Data from Regular Shareholder Reports)
All Total Total Distr. Monthly
Period Shares Offer Share Mgmt. Director Oper. Paid Index Index
Ending Issued Fees Cost Fees Costs Expense Out Value Units
-------------------------------------------------------------------------------
5/18/90 11,509 10,498 138,100 1,431 +96.5
12/31/90 703 79 1,697 6,008 1,163 -5.2
12/31/91 1,061 111 2,554 2,746 1,378 -2.0
12/31/92 1,135 126 2,275 483 1,425 -0.3
12/31/93 1,177 133 2,302 1,733
3/25/94 3,836 36,813 38,843 1,688 +23.0
12/31/94 1,508 187 2,878 8,900 1,651 -5.4
12/31/95 1,569 226 2,905 12,230 1,895 -6.5
12/31/96 1,647 189 2,986 13,323 2,309 -5.8
12/31/97 1,802 254 3,151 28,056 2,595 -10.8
10/02/98 (est. based on 6/30/98) 1,410 156 2,456 8,245 3,016 -2.7
TOTALS 15,345 12,528 176,943 12,011 1,463 23,205 79,991 80.9
MSCI France Total 10/2/98 Per Total Results Fund Index
Return Index (US$)** Values Share Value Comparison Shares Units
- ------------------------ ---------------------- ----------------------------
Index Units from Market
Same Cash Flow 80.9 Price: 11.69 179,349 Market Value 179,349 243,933
Times 9/28/98 Net Asset + Payouts 79,991 79,991
Index Value 3,016 Value: 14.02 215,142 - Share Cost 176,943 176,943
Shareholder Value Discount
w/ Index Units 243,933 Loss: 2.33 35,793 Net Gain: 82,397 146,981
WHO GOT WHAT IN THE FRANCE GROWTH FUND?
(May 1009 - September 1998)
- --------------------------------------------------------------------------------
Net Gain to Shareholders $ 82 Mil. xxxxxxxxxxxxxxxxxxxxxxx
Total Fees & Expenses $ 36 Mil. xxxxxxxxxx
Shareholder Loss to Discount $ 36 Mil. xxxxxxxxxx
Gain to the France Index** $147 Mil. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
**Note: The MSCI France Total Return Index is a standard measure of the returns
of capitalization weighted French equities. Index results may be affected
because the index is not subject to the same investment policies and
restrictions as the Fund. Also, the index is computed on a month-end basis
only, so applying the Fund cash flows during each fiscal year to year-end and
month-end index values is only an approximation of alternative results.
SYNOPSIS OF SHAREHOLDER INVESTMENT RESULTS
This has been an unimpressive long-term investment. Since inception more than
eight years ago, the Fund's shareholders have paid $177 million to buy new
shares, received $80 million in distributions, and had an investment with a
market value of $179 million as of 10/2/98.
The shareholders paid out $36 million in advisory fees, director fees,
underwriting fees, and other expenses while making only about $82 million on
their investment. As of 10/2/98, the discount was costing each and every
shareholder another $36 million ($2.33 a share) or a +20% extra return
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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above its
market value. An identical, hypothetical investment in the unmanaged Morgan
Stanley France total return index would have resulted in $147 million in profits
rather than $82 million.
REMEDIES TO REDUCE THE DISCOUNT & ENHANCE SHAREHOLDER RETURNS
The discount represents an opportunity to markedly improve shareholder
investment results with this Fund. All that is required is that Indosuez and
the Board take the actions necessary to enhance shareholder wealth through the
reduction and eventual elimination of the discount. Remedies are available
which would enhance the Net Asset Value (NAV) of the Fund's shares,
reduce/eliminate the discount, and allow shareholders a choice between a closed
- -end structure and receiving NAV for all their shares. The only significant
impact of such actions would be a reduction in the advisory fee income paid to
Indosuez due to those shareholders who choose to cash out entirely.
Transactions can be structured so that there will be no resulting tax impact on
those shareholders choosing to remain in the closed-end structure.
REMEDY #1 - PERPETUAL SHARE BUYBACKS TO ENHANCE NAV & REDUCE DISCOUNTS
Share buybacks have been viewed by the industry as a failure because, even
though they have always enhanced NAV, they have never permanently fixed the
discount. This is not surprising because all repurchase plans have been limited
in size and duration. You don't get a permanent fix with a temporary band-aid.
Instead, if a fund unequivocally committed to perpetual, sizable buybacks
whenever a discount existed, there would always be a buyer for the Fund's
shares. Potential sellers would learn to be patient and would lower the
discount at which they were willing to sell. Every share that the Fund bought
at a discount would enhance NAV and the performance of the Fund. This would
attract other buyers and serve to rebalance the demand/supply equation at a
lower discount level. Logic says that eventually the price would stabilize in a
range somewhere near NAV.
The value of such a program to existing shareholders is significant. For
example, suppose repurchases began at a 17% discount (similar to that of The
France Growth Fund), suppose it took one half of the Fund's assets and one year
to reduce the discount to 0%, suppose the average purchase price were at a 9%
discount, and further suppose that the Fund's portfolio securities appreciated
10% during the same year net of expenses. In this case, those shareholders
sticking with the Fund would see their investment increase by about +39% (+20%
from discount elimination, +9% from NAV enhancement, +10% from the portfolio
increase).
Repurchasing shares at a discount is equivalent to buying the fund's own
carefully chosen portfolio at prices cheaper than those available in the market.
The turnover of the France Growth Fund has ranged from 49% to 83% in recent
years. What could be a better investment for the Fund?
Seventy per cent of the Fund's yearly expenses are advisory and administrative
fees which are proportional to the size of the Fund. A reduction in Fund size
by one half might increase the Fund's expense ratio from about 1.5% to about
1.9%. Most shareholders would gladly make this tradeoff to eliminate the
discount and enhance their wealth.
20
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OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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REMEDY #2 - SPLITTING UP THE FUND TO SATISFY ALL SHAREHOLDERS
Many shareholders feel that they should be entitled to receive full NAV for
their shares right away and should not have to wait for perpetual share buybacks
or other techniques to slowly eliminate the discount. They desire that the Fund
be open-ended. Fund Advisors and Boards often object that this is not fair to
shareholders who like the closed-end structure. They argue that open-ending
will create tax consequences and costs due to massive redemptions when other
shareholders cash out.
There is a solution which should satisfy all shareholders. The Fund could do a
self-tender offer for its shares in exchange of an in-kind distribution of its
portfolio. Those wishing to remain in the closed-end fund would not have any
tax consequences as a result.
The tendering shareholders could be given a further option to exchange their
portfolio proceeds for shares of a newly formed open-end fund created for that
purpose or alternatively a liquidating trust which would sell them out. The
entire series of transactions could be structured so that all expenses and tax
impacts would be borne only by the those shareholders who chose to tender. A
somewhat similar action has already been approved and completed by another
closed-end fund organization for their European equity closed-end fund.
A further advantage of this approach is that it would remove from the market the
large number of the Fund's shareholders who are currently willing to sell their
shares at less than NAV, and leave only those shareholders who truly desire the
closed-end format in the remaining closed-end fund.
The optimal solution for the France Growth Fund might be a combination of the
two remedies: First, allowing those who wished NAV to exit to an open-end
counterpart, and then instituting a perpetual buyback program in the remaining
closed-end fund to keep the discount from reappearing.
A REQUESTED MEETING WITH THE BOARD
I would like to request a meeting with the Fund's Board to discuss these
potential remedies and other issues relating to the investment performance of
the Fund and the discount. The managed distribution policy and advisory fee
reduction recently announced have not worked so far, and I believe such minor
actions will never work adequately. They will likely have at best a temporary
and relatively small impact on the discount. There is a growing intolerance of
the status quo among the shareholders and a level of impatience that will not be
satisfied by a "wait and see" response.
THE SHAREHOLDER PROPOSAL TO TERMINATE INDOSUEZ
On May 8, 1998 the SEC overruled the objections of eight fund management
companies and their Boards of Directors and determined that the shareholders of
closed-end funds could fire their investment advisor without Board approval.
Short of expensive proxy fights, this is the only practical tool the
shareholders have if their Board and their Advisor are not responsive to
shareholder wishes. The decision to submit this shareholder proposal is
occasioned by the filing deadline and the possibility that Indosuez and the
Board will not take meaningful steps which result
21
<PAGE>
OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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in eliminating the discount.
It would be preferable if the Board would take actions prior to the next meeting
of shareholders which would eliminate the need for shareholders to vote in
support of this proposal.
I own 200 shares of The France Growth Fund Inc. in my IRA and intend to continue
to own these shares until the Fund's next annual meeting. (I am enclosing
independent certification from my broker demonstrating continuous beneficial
ownership of Fund shares in the required amounts for the required period of
time). Pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, I am
hereby submitting the following proposal and supporting statement for inclusion
in the Fund's proxy material for its 1999 annual meeting of stockholders or any
earlier special meeting. The notice of annual meeting for 1998 specifies
October 31, 1998 as the deadline for such submissions. It should be noted for
the record that I am not interested in competing for the Fund's advisory
contract and would not accept it if offered.
SUBMITTED SHAREHOLDER PROPOSAL:
RESOLVED: The Fund's investment advisory agreement with its investment advisor,
Indosuez International Investment Services (Indosuez), shall be terminated and
the shareholders recommend that the board solicit competitive proposals for a
new investment advisor.
SUPPORTING STATEMENT:
I believe Indosuez's advisory contract should be terminated because shareholder
results with the Fund have been unimpressive, and because management fees are
apparently so lucrative to Indosuez that effective steps to enhance shareholder
value are not taken.
Since inception on 5/18/90, the Fund's shareholders have paid $177 million to
buy new shares, received $80 million in distributions, and had an investment
with a market value of $179 million as of 10/2/98. The resulting gain of only
$82 million dollars spread over more than 8 years brings into question the value
of this manager and this entire economic endeavor. The Net Asset Value (NAV)
return of the Fund is somewhat better, but it fails to reflect the devastating
impact of the discount on shareholder investment results.
The shareholders paid out $36 million in advisory fees, director fees,
underwriting fees, and other expenses while making only about $82 million on
their investment. As of 10/2/98, the discount was costing each and every
shareholder an additional $36 million ($2.33 a share) or a +20% extra return
over and above the market value of the Fund's shares.
After 25 years as a private investor and 10 additional years as an investment
professional managing up to $240 million in closed-end fund shares, I am
convinced that the biggest problem in fixing discounts and adding market value
is the investment advisor. Fees are so lucrative that the fund manager will
rarely recommend more than token steps (such as a 12% distribution policy or a
small reduction in his fees) to enhance shareholder value. I believe the
Directors owe their positions to Indosuez and therefore will not take effective
actions such as committing to perpetual share buy-
22
<PAGE>
OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
- -------------------------------------------------------------------------------
backs, tender offers, open
- -endings, or other means to deliver Net Asset Value to shareholders. Such steps
would reduce the Fund size and result in a major reduction in advisory fees.
Instead, this Fund conducted a rights offering and sold new shares at a
discount, which diluted the asset value, added to the supply of shares, and
increased the advisory fees paid to Indosuez.
It is very expensive and time consuming for shareholders to wage successful
proxy fights to replace staggered Boards of Directors hand picked by the
investment advisor. Fortunately, the law gives shareholders one practical tool
to fix this problem. A majority can vote to "fire" the investment manager.
Qualified advisors are available that will work with a motivated Board to
enhance shareholder value.
We have a chance to send a loud and clear message to the Board that we want the
Fund run exclusively for the benefit of the Fund's owners. Vote for this
shareholder sponsored resolution.
***End of supporting statement***
CONCLUSION
I am sure the Board would agree that the discount represents both a wasteful
loss of shareholder wealth, and an issue of contention between the Fund's owners
and its fiduciaries. The shareholders and the Board should work together to
resolve this problem expeditiously. Getting rid of the discount would eliminate
the need for disruptive activities such as proxy fights, opposing director
candidates, and shareholder proposals like the one above.
I remain available at any time for discussions with Indosuez or members of the
Board concerning any issues related to the France Growth Fund, suggestions to
remedy the discount, the submitted shareholder proposal, and other ideas to
enhance shareholder value. I am looking forward to your response.
Very truly yours,
Ronald G. Olin
23
<PAGE>
OPPOSING PROXY 1999 THE FRANCE GROWTH FUND,INC.
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PROXY CARD
PROXY SOLICITED IN OPPOSITION
TO THE BOARD OF DIRECTORS OF THE FRANCE GROWTH FUND, INC.
BY DEEP DISCOUNT ADVISORS, INC. AND RON OLIN INVESTMENT MANAGEMENT COMPANY
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 29, 1999
The undersigned hereby appoints Ronald G. Olin, Ralph W. Bradshaw, Gary A.
Bentz, and William A. Clark, and each of them, as the undersigned's proxies,
with full power of substitution, to attend the Annual Meeting of Stockholders of
The France Growth Fund, Inc. (the "Fund") to be held on April 29, 1999, at the
offices of the Credit Agricole Indosuez, 7th Floor Board Room, 1211 Avenue of
the Americas, New York, New York 10036, at 12:00 p.m., New York time, (the
"Meeting"), and any adjournment(s) or postponement(s) thereof, and to vote on
all matters that may come before the Meeting and any such adjournment or
postponement the number of shares that the undersigned would be entitled to
vote, with all the power the undersigned would possess if present in person, as
specified below. The proxies may vote in their discretion with respect to such
other matter or matters as may come before the Meeting and with respect to all
matters incident to the conduct of the Meeting.
(INSTRUCTIONS: Mark votes by placing an "x" in the appropriate [ ].)
1. ELECTION OF DIRECTORS.
Class Two Directors (term expires in 2002)
RONALD G. OLIN
RALPH W. BRADSHAW
GARY A. BENTZ
FOR ALL NOMINEES [ ] WITHHOLD [ ] FOR ALL EXCEPT [ ]
NOTE: IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" ANY PARTICULAR NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NAME(S) OF THE
NOMINEE(S). YOUR SHARES WILL BE VOTED FOR THE REMAINING NOMINEE(S).
THE SOLICITING SHAREHOLDER URGES YOU TO VOTE "FOR" THE ELECTION OF ALL NOMINEES
2. To ratify the selection by the Board of Directors of PricewaterhouseCoopers
LLP as the independent accountants of the Fund for the fiscal year ending
December 31, 1999:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE SOLICITING SHAREHOLDER HAS NO RECOMMENDATION FOR PROPOSAL TWO (2), IF
PROPOSAL TWO (2) IS LEFT BLANK, THE SOLICITING SHAREHOLDER WILL VOTE TO ABSTAIN.
3. Stockholder proposal requesting that stockholders be afforded an opportunity
to realize net asset value ("NAV") for their investment in the Fund as soon as
practicable:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE SOLICITING SHAREHOLDER URGES YOU TO VOTE "FOR" PROPOSAL THREE (3)
4. Stockholder proposal requiring that the advisory agreement between the Fund
and its investment advisor, Indocam International Investment Services (Indocam,
formerly Indosuez), be terminated, and that the shareholders recommend the Board
solicit competitive proposals for a new investment advisor:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
IF PROPOSAL FOUR (4) IS LEFT BLANK FOR ALL BOXES, THE SOLICITING SHAREHOLDER
WILL VOTE ON THIS PROPOSAL IN THE BEST INTERESTS OF THE STOCKHOLDERS AT THE TIME
OF THE ANNUAL MEETING, BASED ON THE SOLE JUDGEMENT OF THE SOLICITING SHAREHOLDER
5. Stockholder proposal recommending that the Board of Directors take whatever
steps necessary to provide all shareholders the option of receiving full Net
Asset Value (NAV) for their shares within two months (60 days) of the date of
the 1999 Annual meeting:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE SOLICITING SHAREHOLDER URGES YOU TO VOTE "FOR" PROPOSAL FIVE (5)
6. Stockholder proposal recommending that it would be in the best interests of
the Fund and its stockholders for all Directors not standing for election at the
1999 Annual Meeting who oppose the resolution to deliver full Net Asset Value
(NAV) to all shareholders within 60 days of the date of the 1999 Annual Meeting
to resign, and that the stockholders hereby recommend that such Directors resign
their positions as Directors of the Fund:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE SOLICITING SHAREHOLDER URGES YOU TO VOTE "FOR" PROPOSAL SIX (6)
7. Stockholder proposal recommending that the Board of Directors authorize and
direct the officers of the Fund to reimburse the Soliciting Shareholder for such
reasonable fees and expenses associated with its proxy communication to
shareholders, including only printing, normal mailing, distribution, and
tabulating costs, but not including attorney's fees, solicitor's fees, overnight
mailing costs, telephone communication, or other extraordinary fees:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE SOLICITING SHAREHOLDER URGES YOU TO VOTE "FOR" PROPOSAL SEVEN (7)
IMPORTANT - - PLEASE SIGN AND DATE BELOW
SHARES WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED IN FAVOR OF THE ELECTION OF ALL NOMINEES NAMED ABOVE IN ITEM 1, AND "FOR"
PROPOSALS 3, 5, 6, AND 7, AND WILL ABSTAIN FROM VOTING ON PROPOSAL 2. ALL OTHER
PROPOSALS, INCLUDING PROPOSAL 4, WILL BE VOTED BY THE SOLICITING SHAREHOLDER IN
THE BEST INTERESTS OF STOCKHOLDERS AS DETERMINED BY THE SOLE JUDGEMENT OF THE
SOLICITING SHAREHOLDER AT THE TIME OF THE MEETING. THE UNDERSIGNED HEREBY
ACKNOWLEDGES RECEIPT OF THE PROXY STATEMENT DATED MARCH 23, 1999, OF DEEP
DISCOUNT ADVISORS, INC. THE UNDERSIGNED HEREBY REVOKES ANY PROXY HERETOFORE
EXECUTED BY THE UNDERSIGNED RELATING TO THE SUBJECT MATTER HEREOF AND CONFIRMS
ALL THAT THE PROXIES MAY LAWFULLY DO BY VIRTUE HEREOF.
(IMPORTANT - PLEASE FILL IN DATE)
This proxy card is provided by Deep Discount Advisors, Inc. and Ron Olin
Investment Management Company, both beneficial shareholders of the Fund.
Please sign exactly as your name appears hereon or on proxy cards previously
sent to you. When shares are held by joint tenants, both should sign. When
signing as an 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 duly authorized officer.
If a partnership, please sign in partnership name by authorized person.
SIGNATURE(S)_____________________________________________Dated:_______________
Please sign as registered and return promptly in the enclosed envelope.
Executors, trustees and other signing in a representative capacity should
include their names and the capacity in which they sign.
[SEPARATE CARD INSERT]
NOTICE
The [WHITE] proxy solicited by the Fund does not permit shareholders to vote on
all the proposals submitted by the Soliciting Shareholder in its proxy.
Therefore, IF YOU WISH TO VOTE IN FAVOR OF THE PROPOSAL RECOMMENDING THAT ALL
SHAREHOLDERS BE GIVEN THE OPTION OF RECEIVING FULL NET ASSET VALUE FOR THEIR
SHARES WITHIN 60 DAYS, YOU MUST RETURN THE [GREEN] PROXY CARD. You may vote on
all of the matters contained in the Fund's [WHITE] proxy card by using the
enclosed [GREEN] proxy card.
