SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
THE MEXICO EQUITY AND INCOME FUND, INC.
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(Name of Registrant as Specified in Its Charter)
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:
|_| 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 the
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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(3) Filing Party:
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(4) Date Filed:
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THE MEXICO EQUITY AND INCOME FUND, INC.
One World Financial Center
200 Liberty Street
New York, New York 10281
(212) 667-5000
May [__], 2000
Dear Stockholders:
A Special Meeting of Stockholders of The Mexico Equity and Income Fund, Inc.
(the "Fund") will be held at 11:00 a.m. on Friday, July 14, 2000, at the offices
of CIBC World Markets Corp., 200 Liberty Street, 39th Floor, New York, New York
10281. A Notice and Proxy Statement regarding the meeting, proxy card for your
vote at the meeting, and postage prepaid envelope in which to return your proxy
are enclosed. It is very important that you read the enclosed materials
carefully, fill out the enclosed proxy card and return it to us at your earliest
convenience.
At the Special Meeting, the stockholders will consider and act upon a proposal
to liquidate and dissolve the Fund, as set forth in the Plan of Liquidation and
Dissolution (the "Plan") adopted by the Board of Directors of the Fund.
The Board of Directors of the Fund has declared that liquidation of the Fund is
advisable as the most effective way to afford stockholders the opportunity to
promptly realize net asset value for their shares.
Respectfully,
/s/ Alan H. Rappaport
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Alan H. Rappaport
Chairman of the Board
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING,
PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD
AS SOON AS POSSIBLE. YOUR VOTE IS VERY IMPORTANT.
THANK YOU FOR YOUR COOPERATION.
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THE MEXICO EQUITY AND INCOME FUND, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held on July 14, 2000
To the Stockholders of
The Mexico Equity and Income Fund, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the
"Meeting") of The Mexico Equity and Income Fund, Inc. (the "Fund") will be held
at the offices of CIBC World Markets Corp., 200 Liberty Street, 39th Floor, New
York, New York 10281, on Friday, July 14, 2000 at 11:00 a.m., New York time, for
the following purpose:
To consider and act upon a proposal to liquidate and dissolve the Fund, as
set forth in the Plan of Liquidation and Dissolution (the "Plan") adopted
by the Board of Directors of the Fund.
The Board of Directors has declared that liquidation of the Fund is
advisable as the most effective way to afford stockholders the opportunity to
promptly realize net asset value for their shares. Subject to receipt of the
requisite stockholder approval and the satisfactory resolution of any and all
claims pending against the Fund and its Board of Directors, stockholders
remaining in the Fund can expect to receive a liquidating distribution, in cash,
as soon as reasonably practicable. However, there is no minimum distribution to
stockholders. The Fund will not liquidate until all claims are resolved.
The Board of Directors has fixed the close of business on May 19, 2000 as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting or any adjournments thereof.
You are cordially invited to attend the meeting. Stockholders who do not
expect to attend the meeting in person are requested to complete, date and sign
the enclosed proxy card and return it promptly in the envelope provided for that
purpose. You may nevertheless vote in person at the meeting if you choose to
attend. The enclosed proxy is being solicited by the Board of Directors of the
Fund.
When the Plan becomes effective, the stockholders' respective interests in
the Fund's assets will not be transferable by negotiation of the share
certificates and the Fund's shares will cease to be traded on the New York Stock
Exchange, Inc. Stockholders holding stock certificates should consider arranging
with the Fund's transfer agent a return of their certificates in advance of any
liquidating distribution in order to facilitate payments to them. The transfer
agent is PNC Bank, 400 Bellevue Parkway, Mailstop W3-F400-02-4, Wilmington, DE
19809. The transfer agent can be reached at (800) 852-4750.
By order of the Board of Directors,
Bryan McKigney
President and Secretary
May [__], 2000
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THE MEXICO EQUITY AND INCOME FUND, INC.
One World Financial Center
200 Liberty Street
New York, New York 10281
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of THE MEXICO EQUITY AND INCOME FUND, INC.
(the "Fund"), for use at the Special Meeting of Stockholders (the "Meeting"), to
be held at the offices of CIBC World Markets Corp., 200 Liberty Street, 39th
Floor, New York, New York 10281, on Friday, July 14, 2000 at 11:00 a.m., New
York time, and at any adjournments thereof.
The purpose of the Meeting is to consider a proposal to liquidate and
dissolve the Fund, as set forth in the Plan of Liquidation and Dissolution (the
"Plan") adopted by the Board of Directors of the Fund by unanimous written
consent, dated as of May 9, 2000. This Proxy Statement and the enclosed proxy
card are being mailed to stockholders on or about May [__], 2000. Any
stockholder giving a proxy has the power to revoke it before its exercise, by
voting in person at the meeting, by executing a superseding proxy or by
submitting a notice of revocation to the Fund (addressed to The Mexico Equity
and Income Fund, Inc., One World Financial Center, 200 Liberty Street, New York,
New York 10281). All properly executed proxies received in time for the meeting
will be voted as specified in the proxy or, if no specification is made, for
approval of the Plan.
The Fund will furnish without charge, a copy of its annual report for its
fiscal year ended July 31, 1999 and its semi-annual report, dated January 31,
2000 to any stockholder requesting such reports. Requests for a copy of the
Fund's annual report should be made by writing to The Mexico Equity and Income
Fund, Inc., c/o CIBC World Markets Corp., 200 Liberty Street, New York, New York
10281, Attention: Maureen Seaman, or by calling (800) 421-4777 or (212) 667-5015
or (212) 667-4099.
The Board of Directors has fixed the close of business on May 19, 2000 as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting and at any adjournments thereof. Stockholders on the
record date will be entitled to one vote for each share held, with no shares
having cumulative voting rights. As of the record date, the Fund had outstanding
[_______] shares of common stock.
To the knowledge of the Fund's management, no person owns beneficially
more than 5% of the Fund's outstanding shares except for the person set forth in
the following table.
Shares Percent of
Beneficially Shares
5% Stockholder Owned(1) Outstanding(2)
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Mira L.P.
One Chase Manhattan Plaza - 42nd Floor
New York, NY 10005 2,264,280(3) [______]%
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(1) Beneficial share ownership is determined pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934. Accordingly, a beneficial owner of a
security includes any person who, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise has or
shares the power to vote such security or the power to dispose of such
security.
(2) Percentages are calculated on the basis of [________] shares of stock
outstanding as of May 19, 2000.
(3) The above information is based on a Schedule 13D filed December 7, 1999,
which indicates that Mira L.P. has sole voting and dispositive power with
respect to all 2,264,280 shares.
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Management of the Fund knows of no business other than that mentioned in
the Notice of the Special Meeting. If any other matter is properly presented, it
is the intention of the persons named in the enclosed proxy to vote in
accordance with their best judgment.
PROPOSAL TO LIQUIDATE AND DISSOLVE THE FUND
Background
Shares of closed-end equity funds typically trade in the marketplace at a
discount to their net asset value per share(the "discount"). This has been true
in the case of the Fund as well as many other closed-end single country funds.
Thus, the market price for the Fund's shares generally has been less than the
underlying value of the Fund's portfolio. For example, during 1999 the Fund's
shares traded at an average discount of approximately 18.97%.
The Board of Directors has, over an extended period of time, addressed the
discount issue in a comprehensive, creative and aggressive manner. The Fund's
shares, however, have continued to trade at a discount. As of the date of this
Proxy Statement, the Fund's shares were trading at a discount of [___]%, which
represents a substantial reduction from the discount at which the Fund's shares
were trading prior to the Fund's announcement of the liquidation proposal on
April 5, 2000. In Management's view, the reduced current discount is a direct
result of the announcement that the Board of Directors has determined to submit
this proposal to liquidate the Fund to stockholders.
At the Fund's 1999 Annual Meeting of Stockholders (the "Annual Meeting") a
stockholder of the Fund submitted a proposal recommending that within 30 days of
approval of the proposal, Advantage Advisers, Inc. (the "U.S. Co-Adviser") and
Acci Worldwide S.A. de C.V. (the "Mexican Adviser," together the "Investment
Advisers") present to the Board of Directors a proposal designed to afford
stockholders an opportunity to promptly realize net asset value ("NAV") for
their shares. At the reconvened Annual Meeting held on February 4, 2000, this
stockholder proposal received affirmative votes representing 53.96% of the
shares voted on the proposal, or 40% of the shares outstanding.
After reviewing the vote of the stockholders at the Annual Meeting, at a
meeting held on February 9, 2000, the Board of Directors requested that the
Investment Advisers present a proposal to the Board designed to afford
stockholders an opportunity to promptly realize NAV for their shares. At special
meetings of the Board held on March 3, 2000 and April 4, 2000, the Board
considered various alternatives presented by the U.S. Co-Adviser for achieving
the objective of realizing NAV as soon as possible, including converting the
Fund to an open-end fund, conducting a large scale tender offer, merging the
Fund into an open-end fund or liquidating the Fund. The Board of Directors
received information from the Investment Advisers regarding the cost, timing and
other factors bearing on these alternatives.
Based upon the foregoing considerations and other relevant factors, on
April 4, 2000, the Board of Directors determined that, under the circumstances,
liquidation of the Fund is advisable as the most effective way to afford the
stockholders the opportunity to promptly realize NAV for their shares. The Board
of Directors then approved and authorized the orderly liquidation of the Fund,
and by unanimous written consent dated as of May 9, 2000, the Board of
Directors, including all of the Directors who are not "interested persons" of
the Fund (as that term is defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) adopted the Plan and directed that the Plan be
submitted for consideration by the Fund's stockholders. A copy of the Plan is
attached hereto as Exhibit A.
If (a) the Plan is approved by the requisite stockholder vote and (b) any
claims that might be pending against the Fund and/or the Board of Directors
prior to the effective date of the Plan are satisfactorily resolved in the sole
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discretion of the Board of Directors, the Fund's assets will be liquidated at
market prices and on such terms and conditions as determined to be reasonable
and in the best interests of the Fund and its stockholders in light of the
circumstances in which they are sold, and the Fund will file Articles of
Dissolution with the State of Maryland. Prior to stockholder approval of the
Plan, the Fund will continue to invest its assets in accordance with its current
investment objective and policies. Stockholders will receive their proportionate
cash shares of the net distributable assets of the Fund upon liquidation. It is
possible that the net distributable assets of the Fund will be less than the NAV
of the Fund as of the date of this Proxy Statement. In addition, the costs and
possible negative impact on realizable market prices of liquidating the Fund's
portfolio will reduce the net distributable assets.
Under Maryland law and pursuant to the Fund's Articles of Incorporation,
as amended, and Amended and Restated By-Laws, the affirmative vote of the
holders of at least 66 2/3% of the outstanding shares of capital stock of the
Fund entitled to vote thereon is needed to approve the liquidation of the Fund.
For purposes of the vote on the Plan, abstentions and broker non-votes will have
the same effect as a vote against the Plan. In the event that 66 2/3% of the
outstanding shares of capital stock of the Fund are not voted in favor of the
Plan, with the result that the Plan is not approved, the Fund will continue to
exist as a registered investment company in accordance with its stated
investment objective and policies. In the event the Plan is not approved, the
Board of Directors presently intends to meet to consider what, if any, steps to
take in the best interests of the Fund and its stockholders, including the
possibility of resubmitting the Plan or another plan of liquidation and
dissolution to stockholders for future consideration. Also, if the Plan is not
approved by stockholders, the Board of Directors will promptly meet to consider
other options to attempt to reduce the discount.
Notwithstanding the approval of 66 2/3% of the outstanding shares of
capital stock of the Fund, any claims pending against the Fund and/or the Board
of Directors must be satisfactorily resolved prior to the liquidation of the
Fund's assets. While the Board of Directors is not currently aware of any such
claim, it is possible that such a claim could arise and that costs would be
incurred to resolve it. Consequently, the amounts set forth under "Distribution
Amounts" below are for illustrative purposes only. If any such claim should
arise, the Fund will not liquidate until such claim is satisfactorily resolved
in the sole discretion of the Board of Directors.
Summary of Plan of Liquidation and Dissolution
The following summary does not purport to be complete and is subject in
all respects to the provisions of, and is qualified in its entirety by reference
to, the Plan which is attached hereto as Exhibit A. Stockholders are urged to
read the Plan in its entirety.
Effective Date of the Plan and Cessation of the Fund's Activities as an
Investment Company. The Plan will become effective only upon (a) its adoption
and approval by the holders of 66 2/3% of the outstanding shares of the Fund and
(b) the satisfactory resolution in the sole discretion of the Board of Directors
of any and all possible claims pending against the Fund and/or its Board of
Directors (the "Effective Date"). Following these two events, the Fund (i) will
cease to invest its assets in accordance with its investment objective and, to
the extent necessary, will, as soon as reasonable and practicable after the
Effective Date, complete the sale of the portfolio securities it holds in order
to convert its assets to cash or cash equivalents, provided, however, that after
shareholder approval of the Plan, the Board of Directors may authorize the
commencement of the sale of portfolio securities and the investment of the
proceeds of such sale in investment grade short-term debt securities denominated
in U.S. dollars, (ii) will not engage in any business activities except for the
purpose of paying, satisfying, and discharging any existing debts and
obligations, collecting and distributing its assets, and doing all other acts
required to liquidate and wind up its business and affairs, and (iii) will
dissolve in accordance with the Plan and will
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file Articles of Dissolution with the State of Maryland (Plan, Sections 1-2, 5
and 12). The Fund will, nonetheless, continue to meet the source of income,
asset diversification and distribution requirements applicable to regulated
investment companies through the last day of its final taxable year ending on
liquidation.
Closing of Books and Restriction on Transfer of Shares. The proportionate
interests of stockholders in the assets of the Fund will be fixed on the basis
of their holdings on the Effective Date. On such date, the books of the Fund
will be closed. Thereafter, unless the books of the Fund are reopened because
the Plan cannot be carried into effect under the laws of the State of Maryland
or otherwise, the stockholders' respective interests in the Fund's assets will
not be transferable by the negotiation of share certificates and the Fund's
shares will cease to be traded on the NYSE (Plan, Section 3).
Liquidation Distributions. The distribution of the Fund's assets will be
made in up to two cash payments in complete cancellation of all the outstanding
shares of capital stock of the Fund. The first distribution of the Fund's assets
(the "First Distribution") is expected to consist of cash representing
substantially all the assets of the Fund, less an estimated amount necessary to
discharge any (a) unpaid liabilities and obligations of the Fund on the Fund's
books on the First Distribution date, and (b) liabilities as the Board of
Directors reasonably deem to exist against the assets of the Fund on the Fund's
books. However, there can be no assurance that the Fund will be able to declare
and pay the First Distribution. If the First Distribution is declared and paid,
the amount of the First Distribution currently is uncertain. A second
distribution (the "Second Distribution"), if necessary, is anticipated to be
made within 90 days after the First Distribution and will consist of cash from
any assets remaining after payment of expenses, the proceeds of any sale of
assets of the Fund under the Plan not sold prior to the First Distribution and
any other miscellaneous income of the Fund.
Each stockholder not holding stock certificates of the Fund will receive
liquidating distributions equal to the stockholder's proportionate interest in
the net assets of the Fund. Each stockholder holding stock certificates of the
Fund will receive a confirmation showing such stockholder's proportionate
interest in the net assets of the Fund with an advice that such stockholder will
be paid in cash upon return of the stock certificate. Stockholders holding stock
certificates should consider arranging with the Fund's transfer agent a return
of their certificates in advance of any liquidating distributions in order to
facilitate payments to them. The transfer agent is PNC Bank, 400 Bellevue
Parkway, Mailstop W3-F400-02-4, Wilmington, DE 19809. The transfer agent can be
reached at (800) 852-4750. All stockholders will receive information concerning
the sources of the liquidating distribution (Plan, Section 7).
Expenses of Liquidation and Dissolution. All of the expenses incurred by
the Fund in carrying out the Plan will be borne by the Fund (Plan, Section 8).
Continued Operation of the Fund. The Plan provides that the Board of
Directors has the authority to authorize such non-material variations from or
non-material amendments of the provisions of the Plan (other than the terms of
the liquidating distributions) at any time without stockholder approval, if the
Board of Directors determines that such action would be advisable and in the
best interests of the Fund and its stockholders, as may be necessary or
appropriate to effect the marshalling of Fund assets and the dissolution,
complete liquidation and termination of existence of the Fund, and the
distribution of its net assets to stockholders in accordance with the laws of
the State of Maryland and the purposes to be accomplished by the Plan. In
addition, the Board of Directors may abandon the Plan, with stockholder
approval, prior to the filing of Articles of Dissolution with the State
Department of Assessments and Taxation of Maryland if the Board of Directors
determines that such abandonment would be advisable and in the best interests of
the Fund and its stockholders (Plan, Sections 9 and 10). However, it is the
Board of Directors' current intention to liquidate and dissolve the Fund as soon
as practicable following the settlement of all possible claims pending against
the Fund and/or the Board of Directors.
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Distribution Amounts
The Fund's NAV on May 19, 2000 was $[________]. At such date, the Fund had
[_______] shares outstanding. Accordingly, on May 19, 2000, the NAV per share of
the Fund was $[___]. The amounts to be distributed to stockholders of the Fund
upon liquidation will be reduced by the expenses of the Fund in connection with
the liquidation and portfolio transaction costs as well as any costs incurred in
resolving any claims that may arise against the Fund and/or the Board of
Directors. Liquidation expenses are estimated to be approximately $[_______] (or
$[__] cents per share outstanding on [_______]). Portfolio transaction costs
(including amounts allocated for dealer markup on securities traded over the
counter) are estimated to be approximately $[_____], although actual portfolio
transaction costs will depend upon the composition of the portfolio and the
timing of the sale of portfolio securities. Actual liquidation expenses and
portfolio transaction costs may vary. Any increase in such costs will be funded
from the cash assets of the Fund and will reduce the amount available for
distribution to stockholders.
General Income Tax Consequences
United States Federal Income Tax Consequences. The following is only a
general summary of the United States Federal income tax consequences of the Plan
and is limited in scope. This summary is based on the United States Federal
income tax laws and regulations in effect on the date of this Proxy Statement,
all of which are subject to change by legislative or administrative action,
possibly with retroactive effect. While this summary discusses the effect of
federal income tax provisions on the Fund resulting from its liquidation and
dissolution, the Fund has not sought a ruling from the Internal Revenue Service
(the "IRS") with respect to the liquidation and dissolution of the Fund. The
statements below are, therefore, not binding upon the IRS, and there can be no
assurance that the IRS will concur with this summary or that the tax
consequences to any stockholder upon receipt of a liquidating distribution will
be as set forth below.
While this summary addresses some of the United States Federal income tax
consequences of the Plan, neither state nor local tax consequences of the Plan
are discussed. Implementing the Plan may impose unanticipated tax consequences
on stockholders and affect stockholders differently, depending on their
particular tax situations independent from the Plan. Stockholders should consult
with their own tax advisers for advice regarding the application of current
United States Federal income tax law to their particular situation and with
respect to state, local and other tax consequences of the Plan.
The liquidating distributions received by a stockholder will generally be
treated as received in exchange for his stock. The stockholder will generally
have a capital gain or loss depending upon the stockholder's basis in the stock.
The Fund expects to retain its qualification as a regulated investment
company ("RIC") under the Internal Revenue Code of 1986, as amended (the
"Code"), during the liquidation period and, therefore, expects not to be taxed
on any net capital gains it may realize from the sale of its assets. In the
unlikely event that the Fund should lose its status as a RIC during the
liquidation process, the Fund would be subject to taxes.
As discussed above, a liquidating distribution will generally be treated
for Federal income tax purposes as full payment in exchange for the
stockholder's shares and will thus be treated as a taxable
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sale. Thus, a stockholder who is a United States resident or otherwise subject
to United States income taxes will be taxed only to the extent the amount of the
balance of the distribution exceeds his or her adjusted tax basis in such
shares; if the amount received is less than his or her adjusted tax basis, the
stockholder will realize a loss. The stockholder's gain or loss will generally
be a capital gain or capital loss if such shares are held as capital assets. If
such shares are held as a capital asset and are held for more than one year,
then any gain or loss will generally constitute a long-term capital gain or
long-term capital loss, as the case may be, taxable to individual stockholders
at a maximum rate of 20%. To the extent the individual taxpayer has taxable
income below the 28% tax bracket threshold, such individual's effective capital
gains tax rate is 10%. Such 10% capital gain tax rate will be reduced to 8% on
capital assets that will have been held for more than five years and sold after
December 31, 2000. If the stockholder will have held the shares for not more
than one year, any gain or loss will be a short-term capital gain or loss and
will be taxed at ordinary income tax rates.
Corporate stockholders should note that there is no preferential Federal
income tax rate applicable to capital gains for corporations under the Code.
Accordingly, all income recognized by a corporate stockholder pursuant to the
liquidation of the Fund, regardless of its character as capital gains or
ordinary income, will be subject to tax at the same Federal income tax rate.
Under certain provisions of the Code, some stockholders may be subject to
a 31% withholding tax ("backup withholding") on the liquidating distributions.
Generally, stockholders subject to backup withholding will be those for whom no
taxpayer identification number is on file with the Fund, those who, to the
Fund's knowledge, have furnished an incorrect number, and those who underreport
their tax liability. An individual's taxpayer identification number generally is
his or her social security number. Certain stockholders specified in the Code
may be exempt from backup withholding. The backup withholding tax is not an
additional tax and may be credited against a taxpayer's federal income tax
liability if the stockholder furnished the requisite information to the IRS.
Stockholders will be notified of their respective shares of ordinary and
capital gains dividends for the Fund's final fiscal year as has been reported.
Impact of the Plan on the Fund's Status Under the 1940 Act
On the Effective Date, the Fund will cease doing business as an investment
company and, as soon as practicable, will apply for deregistration under the
1940 Act. It is expected that the Securities and Exchange Commission will issue
an order approving the deregistration of the Fund if the Fund is no longer doing
business as an investment company. Accordingly, the Plan provides for the
eventual cessation of the Fund's activities as an investment company and its
deregistration under the 1940 Act, and a vote in favor of the Plan will
constitute a vote in favor of such a course of action (Plan, Sections 1, 2 and
9).
Until the Fund's deregistration as an investment company becomes
effective, the Fund, as a registered investment company, will continue to be
subject to and will comply with the 1940 Act.
Procedure For Dissolution Under Maryland Law
After the Effective Date, pursuant to the Maryland General Corporation Law
and the Fund's Articles of Incorporation, as amended, and Amended and Restated
By-Laws, if at least 66 2/3% of the Fund's aggregate outstanding shares of
capital stock are voted for the proposed liquidation and dissolution of the
Fund, Articles of Dissolution stating that the dissolution has been authorized
will in due course be executed, acknowledged and filed with the Maryland State
Department of Assessments and Taxation, and will become effective in accordance
with such law. Upon the effective date of such Articles of
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Dissolution, the Fund will be legally dissolved, but thereafter the Fund will
continue to exist for the purpose of paying, satisfying, and discharging any
existing debts or obligations, collecting and distributing its assets, and doing
all other acts required to liquidate and wind up its business and affairs, but
not for the purpose of continuing the business for which the Fund was organized.
The Fund's Board of Directors will be the trustees of its assets for purposes of
liquidation after the acceptance of the Articles of Dissolution, unless and
until a court appoints a receiver. The Director-trustees will be vested in their
capacity as trustees with full title to all the assets of the Fund (Plan,
Sections 2 and 12).
Appraisal Rights
Shareholders will not be entitled to appraisal rights under Maryland law
in connection with the Plan (Plan, Section 14).
Voting Information
Approval of the Plan requires the affirmative vote of the holders of at
least 66 2/3% of the outstanding shares of capital stock of the Fund entitled to
vote at the Meeting. If no instructions are given by the stockholder, the
accompanying proxy will be voted FOR approval of the Plan.
THE BOARD OF DIRECTORS HAS DETERMINED THAT LIQUIDATION OF THE FUND IS ADVISABLE
AS THE MOST EFFECTIVE WAY TO AFFORD STOCKHOLDERS THE OPPORTUNITY TO PROMPTLY
REALIZE NET ASSET VALUE FOR THEIR SHARES.
Miscellaneous
Proxies will be solicited by mail and may be solicited in person or by
telephone or facsimile by officers of the Fund or personnel of CIBC World
Markets Corp., the Fund's administrator. The Fund has retained D.F. King & Co.,
Inc. to assist in the proxy solicitation. The cost of their services is
estimated at $_____, plus reimbursement of expenses. The expenses connected with
the solicitation of these proxies and with any further proxies which may be
solicited by the Fund's officers or agents in person, by telephone or by
telegraph will be borne by the Fund. The Fund will reimburse banks, brokers, and
other persons holding the Fund's shares registered in their names or in the
names of their nominees for their expenses incurred in sending proxy material to
and obtaining proxies from the beneficial owners of such shares.
Approval of the proposal to liquidate the Fund requires the affirmative
vote of at least 66 2/3% of the outstanding shares of capital stock of the Fund
cast, in person or by proxy, at a meeting at which a quorum is present. The
holders of a majority of the Fund's outstanding common stock entitled to vote at
the Meeting, present in person or by proxy, constitutes a quorum for the
transaction of business at the Meeting. In the event that the necessary quorum
to transact business or the vote required to approve the Plan is not obtained at
the Meeting, the persons named as proxies may propose one or more adjournments
of the Meeting in accordance with applicable law, to permit further solicitation
of proxies with respect to such proposal. Any such adjournment will require the
affirmative vote of the holders of a majority of the Fund's shares present in
person or by proxy at the Meeting. The persons named as attorneys in the
enclosed proxy will vote in favor of such adjournment those proxies which they
are entitled to vote in favor of the proposal for which further solicitation of
proxies is to be made. They will vote against any such adjournment those proxies
required to be voted against such proposal.
The Fund expects that broker-dealer firms holding shares of the Fund in
"street name" for the benefit of their customers and clients will request the
instructions of such customers and clients on how to vote their shares on the
proposal before the Meeting. The Fund understands that, under the rules of the
NYSE, such broker-dealers may not, without instructions from such customers and
clients, grant authority
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to the proxies designated by the Fund to vote on the proposal to liquidate the
Fund if no instructions have been received prior to the date specified in the
broker-dealer firm's request for voting instructions.
The shares as to which the proxies so designated are granted authority by
broker-dealer firms to vote on the proposal to liquidate the Fund, the shares as
to which broker-dealer firms have declined to vote ("broker non-votes"), as well
as the shares as to which proxies are returned by record stockholders but which
are marked "abstain" on any item will be included in the Fund's tabulation of
the total number of votes present for purposes of determining whether the
necessary quorum of stockholders exists. However, abstentions and broker
non-votes will not be counted as votes cast. Therefore, abstentions and broker
non-votes will have the same effect as votes against the proposal to liquidate,
although they will count toward the presence of a quorum.
Stockholder Proposals
It is expected that, if the Fund's stockholders fail to approve the
liquidation, the Fund will hold an annual meeting of stockholders in December
2000. In order to submit a stockholder proposal to be considered for inclusion
in the Fund's proxy statement for the Fund's 2000 Annual Meeting of
Stockholders, stockholder proposals must be received by the Fund (addressed to
The Mexico Equity and Income Fund, Inc., One World Financial Center, 200 Liberty
Street, New York, New York 10281) not later than July 6, 2000. Any stockholder
who desires to bring a proposal at the Fund's 2000 Annual Meeting of
Stockholders without including such proposal in the Fund's proxy statement, must
deliver written notice thereof to the Secretary of the Fund (addressed to The
Mexico Equity and Income Fund, Inc., One World Financial Center, 200 Liberty
Street, New York, New York 10281) not before September 4, 2000 and not later
than October 3, 2000.
By order of the Board of Directors,
Bryan McKigney
President and Secretary
One World Financial Center
200 Liberty Street
New York, New York 10281
May [__], 2000
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EXHIBIT A
THE MEXICO EQUITY AND INCOME FUND, INC.
PLAN OF LIQUIDATION AND DISSOLUTION
The following Plan of Liquidation and Dissolution (the "Plan") of The
Mexico Equity and Income Fund, Inc. (the "Fund"), a corporation organized and
existing under the laws of the State of Maryland, which has operated as a
closed-end, management investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), is intended to accomplish the
complete liquidation and dissolution of the Fund in conformity with the
provisions of the Fund's Charter.
WHEREAS, the Fund's Board of Directors, at a special meeting of the Board
of Directors held on April 4, 2000, has deemed that in its judgment it is
advisable to liquidate and dissolve the Fund, and by unanimous written consent,
has adopted this Plan as the method of liquidating and dissolving the Fund and
has directed that this Plan be submitted to stockholders of the Fund for
approval;
NOW, THEREFORE, the liquidation and dissolution of the Fund shall be
carried out in the manner hereinafter set forth:
1. Effective Date of Plan. The Plan shall be and become effective only
upon (a) the adoption and approval of the Plan by the affirmative vote of the
holders of 66 2/3% of the outstanding shares of capital stock of the Fund at a
meeting of stockholders called for the purpose of voting upon the Plan and (b)
the satisfactory resolution in the sole discretion of the Board of Directors of
any and all claims pending against the Fund and its Board of Directors. The date
of such adoption and approval of the Plan by stockholders and resolution of all
pending claims is hereinafter called the "Effective Date."
2. Cessation of Business. After the Effective Date of the Plan, the Fund
shall cease its business as an investment company and shall not engage in any
business activities except for the purpose of paying, satisfying, and
discharging any existing debts and obligations, collecting and distributing its
assets, and doing all other acts required to liquidate and wind up its business
and affairs and will dissolve in accordance with the Plan.
3. Restriction of Transfer and Redemption of Shares. The proportionate
interests of stockholders in the assets of the Fund shall be fixed on the basis
of their respective stockholdings at the close of business on the Effective
Date. On the Effective Date, the books of the Fund shall be closed. Thereafter,
unless the books of the Fund are reopened because the Plan cannot be carried
into effect under the laws of the State of Maryland or otherwise, the
stockholders' respective interests in the Fund's assets shall not be
transferable by the negotiation of share certificates and the Fund's shares will
cease to be traded on the New York Stock Exchange, Inc.
4. Notice of Liquidation. As soon as practicable after the Effective Date,
the Fund shall mail notice to the appropriate parties that this Plan has been
approved by the Board of Directors and the stockholders and that the Fund will
be liquidating its assets. Specifically, upon approval of the Plan, the Fund
shall mail notice to its known creditors at their addresses as shown on the
Fund's records, to the extent such notice is required under the Maryland General
Corporation Law (the "MGCL").
5. Liquidation of Assets. After the event in clause (a) in Section 1
hereof, the Board of Directors may authorize the commencement of the sale of
portfolio securities and the investment of the proceeds of such sale in
investment grade short-term debt securities denominated in U.S. dollars. As soon
as is reasonable and practicable after the Effective Date of the Plan, or as
soon thereafter as practicable depending on market conditions and consistent
with the terms of the Plan, all portfolio securities of the
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Fund not already converted to U.S. cash or U.S. cash equivalents shall be
converted to U.S. cash or U.S. cash equivalents.
6. Payments of Debts. As soon as practicable after the Effective Date of
the Plan, the Fund shall determine and shall pay, or set aside in U.S. cash or
U.S. cash equivalents, the amount of all known or reasonably ascertainable
liabilities of the Fund incurred or expected to be incurred prior to the date of
the liquidating distribution provided for in Section 7, below.
7. Liquidating Distributions. In accordance with Section 331 of the
Internal Revenue Code of 1986, as amended, the Fund's assets are expected to be
distributed by up to two cash payments in complete cancellation of all the
outstanding shares of capital stock of the Fund. The first distribution of the
Fund's assets (the "First Distribution") is expected to consist of cash
representing substantially all the assets of the Fund, less an estimated amount
necessary to (a) discharge any unpaid liabilities and obligations of the Fund on
the Fund's books on the First Distribution date, and (b) liabilities as the
Board of Directors shall reasonably deem to exist against the assets of the
Fund. A second distribution (the "Second Distribution"), if necessary, is
anticipated to be made within 90 days after the First Distribution and will
consist of cash from any assets remaining after payment of expenses, the
proceeds of any sale of assets of the Fund under the Plan not sold prior to the
First Distribution and any other miscellaneous income to the Fund.
Each stockholder not holding stock certificates of the Fund will receive
liquidating distributions equal to the stockholder's proportionate interest in
the net assets of the Fund. Each stockholder holding stock certificates of the
Fund will receive a confirmation showing such stockholder's proportionate
interest in the net assets of the Fund with an advice that such stockholder will
be paid in cash upon return of the stock certificate. All stockholders will
receive information concerning the sources of the liquidating distribution.
8. Expenses of the Liquidation and Dissolution. The Fund shall bear all of
the expenses incurred by it in carrying out this Plan including, but not limited
to, all printing, mailing, legal, accounting, custodian and transfer agency
fees, and the expenses of any reports to or meeting of stockholders whether or
not the liquidation contemplated by this Plan is effected.
9. Power of Board of Directors. The Board of Directors and, subject to the
direction of the Board of Directors, the Fund's officers shall have authority to
do or authorize any or all acts and things as provided for in the Plan and any
and all such further acts and things as they may consider necessary or desirable
to carry out the purposes of the Plan, including, without limitation, the
execution and filing of all certificates, documents, information returns, tax
returns, forms, and other papers which may be necessary or appropriate to
implement the Plan or which may be required by the provisions of the 1940 Act,
MGCL or any other applicable laws.
The death, resignation or other disability of any director or any officer
of the Fund shall not impair the authority of the surviving or remaining
directors or officers to exercise any of the powers provided for in the Plan.
10. Amendment or Abandonment of Plan. The Board of Directors shall have
the authority to authorize such non-material variations from or non-material
amendments of the provisions of the Plan (other than the terms of the
liquidating distributions) at any time without stockholder approval, if the
Board of Directors determines that such action would be advisable and in the
best interests of the Fund and its stockholders, as may be necessary or
appropriate to effect the marshalling of Fund assets and the dissolution,
complete liquidation and termination of existence of the Fund, and the
distribution of its net assets to stockholders in accordance with the laws of
the State of Maryland and the purposes to be
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accomplished by the Plan. If any variation or amendment appears necessary and,
in the judgment of the Board of Directors, will materially and adversely affect
the interests of the Fund's stockholders, such variation or amendment will be
submitted to the Fund's stockholders for approval. In addition, the Board of
Directors may abandon this Plan, with stockholder approval, prior to the filing
of the Articles of Dissolution if it determines that abandonment would be
advisable and in the best interests of the Fund and its stockholders.
11. De-Registration Under the 1940 Act. As soon as practicable after the
liquidation and distribution of the Fund's assets, the Fund shall prepare and
file a Form N-8F with the Securities and Exchange Commission in order to
de-register the Fund under the 1940 Act. The Fund shall also file, if required,
a final Form N-SAR (a semi-annual report) with the SEC.
12. Articles of Dissolution. Consistent with the provisions of the Plan,
the Fund shall be dissolved in accordance with the laws of the State of Maryland
and the Fund's Articles of Incorporation. As soon as practicable after the
Effective Date and pursuant to the MGCL, the Fund shall prepare and file
Articles of Dissolution with and for acceptance by the Maryland State Department
of Assessments and Taxation. After the effectiveness of the Articles of
Dissolution:
(a) The Fund's Board of Directors shall be the trustees of its assets
for purposes of liquidation after the acceptance of the Articles of
Dissolution, unless and until a court appoints a receiver. The
Director-trustees will be vested in their capacity as trustees with
full title to all the assets of the Fund.
(b) The Director-trustees shall (i) collect and distribute any remaining
assets, applying them to the payment, satisfaction and discharge of
existing debts and obligations of the Fund, including necessary
expenses of liquidation; and (ii) distribute the remaining assets
among the stockholders.
(c) The Director-trustees may (i) carry out the contracts of the Fund;
(ii) sell all or any part of the assets of the Fund at public or
private sale; (iii) sue or be sued in their own names as trustees or
in the name of the Fund; and (iv) do all other acts consistent with
law and the Articles of Incorporation of the Fund necessary or
proper to liquidate the Fund and wind up its affairs.
13. Power of the Directors. Implementation of this Plan shall be under the
direction of the Board of Directors, who shall have full authority to carry out
the provisions of this Plan or such other actions as they deem appropriate
without further stockholder action.
14. Appraisal Rights. Under Maryland law, stockholders will not be
entitled to appraisal rights in connection with the Plan.
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THE MEXICO EQUITY AND INCOME FUND, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
SPECIAL MEETING OF STOCKHOLDERS - JULY 14, 2000
The undersigned stockholder of The Mexico Equity & Income Fund, Inc. (the
"Fund") hereby appoints Laurence E. Cranch, Bryan McKigney and Alan Rappaport,
and each of them, the proxies of the undersigned, with full power of
substitution, to vote and act for and in the name and stead of the undersigned
at the Special Meeting of Stockholders of the Fund (the "Meeting"), to be held
at the offices of CIBC World Markets Corp., 200 Liberty Street, 39th floor, New
York, New York 10281, on Friday, July 14, 2000 at 11:00 a.m. New York time, and
at any and all adjournments thereof according to the number of votes the
undersigned would be entitled to cast if personally present.
PROPOSAL (Please check one box.)
The approval of the liquidation and dissolution of the Fund, as set forth in the
Plan of Liquidation and Dissolution adopted by the Board of Directors of the
Fund.
|_| FOR |_| AGAINST |_| ABSTAIN
(Continued and to be signed on the other side)
The Shares represented by this proxy will be voted in accordance with
instructions given by the stockholders, but if no instructions are given, this
proxy will be voted in favor of approval of the Plan. In addition, the Shares
represented by this proxy will be voted on any other matter that may come before
the Meeting in accordance with the discretion of the proxies appointed hereby.
The undersigned hereby revokes any and all proxies with respect to such shares
heretofor given by the undersigned. The undersigned acknowledges receipt of the
Proxy Statement dated May [__], 2000.
Dated ______________, 2000
___________________________________
Signature
___________________________________
Signature if held jointly
If shares are held jointly, each Shareholder named should sign. If only one
signs, his or her signature will be binding. If the Shareholder is a
corporation, the President or a Vice President should sign in his or her own
name, indicating title. If the Shareholder is a partnership, a partner should
sign in his or her own name, indicating that he or she is a "Partner."
SIGN, DATE AND MAIL YOUR PROXY TODAY
