-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DjO6ZHbqgRiJj5OHGzUxOJ/1nQrHhGGhjlh+j7+N2p5f41BxO1NAgLD925GVG70y YBQsuBKgf/GvJSNYgjRxNg== 0001072613-01-501173.txt : 20020412 0001072613-01-501173.hdr.sgml : 20020412 ACCESSION NUMBER: 0001072613-01-501173 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20011128 GROUP MEMBERS: CITY OF LONDON INVESTMENT MANAGEMENT CO., LTD. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ASIA PACIFIC FUND INC CENTRAL INDEX KEY: 0000795618 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133362641 STATE OF INCORPORATION: MD FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-41004 FILM NUMBER: 1800581 BUSINESS ADDRESS: STREET 1: 199 WATER ST CITY: NEW YORK STATE: NY ZIP: 10292 BUSINESS PHONE: 2122141250 MAIL ADDRESS: STREET 1: ONE SEAPORT PLZ CITY: NEW YORK STATE: NY ZIP: 10292 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CITY OF LONDON INVESTMENT GROUP PLC CENTRAL INDEX KEY: 0001018138 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: X0 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 10 EASTCHEAP STREET 2: LONDON ENGLAND EC3MLAJ CITY: LONDON BUSINESS PHONE: 011441717110771 MAIL ADDRESS: STREET 1: 10 EASTCHEAP STREET 2: LONDON ENLAND EC3MLAJ CITY: LONDON FORMER COMPANY: FORMER CONFORMED NAME: OLLIFF & PARTNERS PLC DATE OF NAME CHANGE: 19960705 SC 13D 1 sc13d_10934.txt SCHEDULE 13D ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) The Asia Pacifc Fund, Inc ------------------------- (Name of Issuer) Common Stock, par value $.01 per share -------------------------------------- (Title of Class of Securities) 044901106 --------- (CUSIP Number) Clayton Gillece c/o City of London Investment Management Company Limited 10 Eastcheap, London EC3M ILX, England +44 207 711 0771 ---------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 28, 2001 ----------------- (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), (f) or (g), check the following box / X /. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act. (Continued on following pages) (Page 1 of 11 Pages) ================================================================================ - ------------------- ------------ CUSIP NO. 04516T105 13D PAGE 2 of 11 - ------------------- ------------ - ---------------- -------------------------------------------------------------- 1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS City of London Investment Group PLC, a company incorporated under the laws of England and Wales. - ---------------- -------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) |_| (B) |_| - ---------------- -------------------------------------------------------------- 3 SEC USE ONLY - ---------------- -------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - ---------------- -------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(D) OR 2(E) |_| - ---------------- -------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION England and Wales - ---------------- -------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 1,552,695 ------- ----------------------------------------------------- SHARES ------- ----------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY ------- ----------------------------------------------------- ------- ----------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 1,552,695 ------- ----------------------------------------------------- PERSON ------- ----------------------------------------------------- 10 SHARED DISPOSITIVE POWER WITH 0 - ---------------- -------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,552,695 - ---------------- -------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - ---------------- -------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 10.1% - ---------------- -------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* HC - ---------------- -------------------------------------------------------------- - ------------------- ------------ CUSIP NO. 04516T105 13D PAGE 3 of 11 - ------------------- ------------ - ---------------- -------------------------------------------------------------- 1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS City of London Investment Management Company Limited, a company incorporated under the laws of England and Wales. - ---------------- -------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) |_| (B) |_| - ---------------- -------------------------------------------------------------- 3 SEC USE ONLY - ---------------- -------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - ---------------- -------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(D) OR 2(E) |_| - ---------------- -------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION England and Wales - ---------------- -------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 1,552,695 ------- ----------------------------------------------------- SHARES ------- ----------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY ------- ----------------------------------------------------- ------- ----------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 1,552,695 ------- ----------------------------------------------------- PERSON ------- ----------------------------------------------------- 10 SHARED DISPOSITIVE POWER WITH 0 - ---------------- -------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,552,695 - ---------------- -------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - ---------------- -------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 10.1% - ---------------- -------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IA - ---------------- -------------------------------------------------------------- - ------------------- ------------ CUSIP NO. 04516T105 13D PAGE 4 of 11 - ------------------- ------------ ITEM 1. SECURITY AND ISSUER. ------------------- This statement relates to the shares of common stock, par value $.01 per share (the "Shares"), of The Asia Pacific Fund, Inc., a Maryland corporation (the "Fund"). The principal executive offices of the Fund are located at Gateway Center Three, Newark, New Jersey 07102-4077. ITEM 2. IDENTITY AND BACKGROUND. ----------------------- (a), (b) and (c). This statement is being filed by City of London Investment Group PLC ("CLIG") and City of London Investment Management Company Limited ("CLIM," and together with CLIG, the "Reporting Persons"). The principal business of CLIG is serving as the parent holding company for the City of London group of companies, including CLIM. The business address and principal executive offices of CLIG are 10 Eastcheap, London EC3M ILX, England. The directors and executive officers of CLIG, their business addresses and present principal occupation or employment are set forth on Annex A attached to this Schedule 13D. CLIM is an emerging markets fund manager which specializes in investing in closed-end investment companies and is a registered investment adviser under Section 203 of the Investment Advisers Act of 1940. CLIM is controlled by CLIG. CLIM is principally engaged in the business of providing investment advisory services to various public and private investment funds, including The Emerging World Fund ("EWF"), a Dublin, Ireland-listed open-ended investment company, Global Emerging Markets Country Fund ("GEM"), a private investment fund organized as a Delaware business trust, Investable Emerging Markets Country Fund ("IEM"), a private investment fund organized as a Delaware business trust, MP Emerging Markets Country Fund ("MPEM"), a private investment fund organized as a Delaware business trust, and GFM (Institutional) Emerging Markets Country Fund ("GFM"), an open-ended fund organized under the laws of the Province of Ontario (EWF, GEM, IEM, MPEM and GFM are referred to herein collectively as the "City of London Funds"). The business address and principal executive offices of CLIM are 10 Eastcheap, London EC3M ILX, England. The directors and executive officers of CLIM, their business addresses and present principal occupation or employment are set forth on Annex A attached to this Schedule 13D. The Shares to which this Schedule 13D relates are owned directly by the City of London Funds. (d) and (e). During the last five years, none of the Reporting Persons or, to the knowledge or belief of the Reporting Persons, none of the natural persons identified in this Item 2, has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanours), or has been a party to any civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a - ------------------- ------------ CUSIP NO. 04516T105 13D PAGE 5 of 11 - ------------------- ------------ judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violations with respect to such laws. (f). Each of the Reporting Persons is a company incorporated under the laws of England and Wales. Each natural person identified in this Item 2 is a citizen of Great Britain. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. ------------------------------------------------- Beneficial ownership of the Shares to which this statement relates was acquired by the Reporting Persons with invested capital of the City of London Funds. The aggregate purchase price of the 1,552,695 Shares beneficially owned by the Reporting Persons was $13,171,378, inclusive of brokerage commissions. The aggregate purchase price of the 77,090 Shares beneficially owned by EWF was $575,543, inclusive of brokerage commissions. The aggregate purchase price of the 459,736 Shares beneficially owned by GEM was $3,912,354, inclusive of brokerage commissions. The aggregate purchase price of the 459,736 Shares beneficially owned by IEM was $4,148,307, inclusive of brokerage commissions. The aggregate purchase price of the 459,733 Shares beneficially owned by MPEM was $3,772,505, inclusive of brokerage commissions. The aggregate purchase price of the 96,400 Shares beneficially owned by GFM was $762,669, inclusive of brokerage commissions. ITEM 4. PURPOSE OF TRANSACTION. ---------------------- From time to time, the Reporting Persons have acquired beneficial ownership of Shares in the ordinary course of business for investment purposes and have held Shares in such capacity. The Reporting Persons have owned Shares of the Fund since December 1998. Pursuant to a letter dated November 20, 2001 (a copy of which is attached as an exhibit to this Schedule 13D), CLIM expressed to the Chairman of the Fund its views concerning the lack of commitment of the Fund's management and Board of Directors to address and take meaningful actions to reduce the substantial and persistent discount to net asset value ("NAV") at which the Fund's shares trade. That letter followed CLIM's previous letter to the Chairman of the Fund dated August 7, 2001 (a copy of which is also attached as an exhibit to this Schedule 13D) in which CLIM expressed its views concerning the substantial and persistent discount to NAV at which the shares were trading as well as its views with respect to the various proposals that were submitted to a vote of the Fund's - ------------------- ------------ CUSIP NO. 04516T105 13D PAGE 6 of 11 - ------------------- ------------ shareholders at the Fund's 2001 annual meeting of shareholders. However, to date, the Reporting Persons believe that management of the Fund and the Board have not indicated a willingness to follow the Reporting Persons' suggestions or recommendations. The Reporting Persons believe that the Fund and its Board have not been fully committed to eliminating or permanently reducing the discount to NAV at which the Fund's shares trade and to enhancing value for the shareholders of the Fund. Given the persistence of the substantial discount to NAV, the Reporting Persons do not believe that it is appropriate for the Board to be relying on the markets and small self-tender offers for a solution. Instead, the Reporting Persons believe that a proper solution requires a significantly more active policy on the matter than that put in place by the Board. In addition, the Reporting Persons believe that establishing a threshold for conducting minor self-tenders at a discount to NAV of 15% is a statement by the Board that it believes that a persistent discount of just under 15% is acceptable to the shareholders. In its November 20, 2001 letter to the Chairman of the Board, CLIM also expressed its concern as a shareholder of the Fund over the Board's unwillingness to listen to the views of shareholders and shareholder sentiment. In this regard, the Fund has not undertaken any of the actions proposed and approved by shareholders at the last two annual meetings. The Reporting Persons believe that management and the Board should now openly and publicly commit to the shareholders to address the substantial and persistent discount to NAV and to enhance shareholder value through whatever means necessary, with no prejudice for or against any option (e.g., open-ending (including by way of merger), substantial tender, liquidation, conversion to interval status, conversion to an index-based exchange-traded fund (or, if permissible, an actively managed ETF), termination of the investment management agreement, etc.). Furthermore, the Reporting Persons would consider supporting shareholder proposals aimed at addressing, in a more meaningful manner, the Fund's discount to NAV and enhancing shareholder value. Such proposals might include, but are not necessarily limited to, an opposing slate of directors who would be committed to addressing the discount and any of the actions described above. The Reporting Persons also may consider submitting nominees for election as directors or a shareholder proposal for consideration at the next meeting of shareholders of the Fund. In addition to the foregoing, the Reporting Persons may consider the feasibility and advisability of various alternative courses of action with respect to their investments in the Fund, and the Reporting Persons reserve the right, subject to applicable law, (i) to hold their Shares as passive investors or as active investors (whether or not as members of a "group" with other beneficial owners of Shares or otherwise), (ii) to acquire beneficial ownership of additional Shares in the open market, in privately negotiated transactions or otherwise, (iii) to dispose of all or part of their holdings of Shares, (iv) to take other actions which could involve one or more of the types of transactions or have one or more of the results described in Item 4 of this Schedule 13D, or (v) to change their intentions with respect to any or all of the matters referred to in this Item 4. The Reporting Persons' decisions and actions with respect to such possibilities will depend upon a number of - ------------------- ------------ CUSIP NO. 04516T105 13D PAGE 7 of 11 - ------------------- ------------ factors, including, but not limited to, the actions of the Fund, market activity in the Shares, an evaluation of the Fund and its prospects, general market and economic conditions, conditions specifically affecting the Reporting Persons and other factors which the Reporting Persons may deem relevant to their investment decisions. Except as set forth herein, no contract, arrangement, relationship or understanding (either oral or written) exists among the Reporting Persons as to the acquisition, disposition, voting or holding of Shares. Except as set forth herein, no Reporting Person has any present plan or proposal that would result in or relate to any of the transactions required to be described in Item 4 of Schedule 13D. ITEM 5. INTERESTS IN SECURITIES OF THE ISSUER. ------------------------------------- (a) and (b). As of November 20, 2001, EWF, GEM, IEM, MPEM and GFM owned directly 77,090, 459,736, 459,736, 459,733 and 96,400 Shares, respectively, representing approximately 0.50%, 3.0%, 3.0%, 3.0% and 0.63%, respectively, of the 15,324,551 Shares outstanding as of September 30, 2001, as reported in the Fund's Semi-Annual Report on Form N-30D for the period ended September 30, 2001 (the "Form N-30D"). As of November 20, 2001, CLIG, through its control of CLIM, had sole voting and dispositive power with respect to all 1,552,695 Shares owned directly by the City of London Funds, representing approximately 10.1% of the 15,324,551 Shares outstanding as of September 30, 2001, as reported in the Form N-30D. As of November 20, 2001, CLIM, in its capacity as investment adviser to the City of London Funds, had sole voting and dispositive power with respect to all 1,552,695 Shares owned directly by the City of London Funds, representing approximately 10.1% of the 15,324,551 Shares outstanding as of September 30, 2001, as reported in the Form N-30D. (c). Information with respect to all transactions in the Shares beneficially owned by the Reporting Persons that were effected during the past 60 days is set forth in Annex B to this Schedule 13D. (d). None (e). Not Applicable - ------------------- ------------ CUSIP NO. 04516T105 13D PAGE 8 of 11 - ------------------- ------------ ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT --------------------------------------------------------------------- TO SECURITIES OF THE ISSUER. --------------------------- Except as set forth in Item 4 of this Schedule 13D, none of the Reporting Persons has any contract, arrangement, understanding or relationship (legal or otherwise) with any person with respect to any securities of the Fund including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities of the Fund, joint ventures, loan or option arrangements, puts or calls, guaranties of profits, division of profits or losses, or the giving or withholding of proxies. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. -------------------------------- Exhibit 99.1 Letter from CLIM to the Fund, dated August 7, 2001. Exhibit 99.2 Letter from CLIM to the Fund, dated November 20, 2001. - ------------------- ------------ CUSIP NO. 04516T105 13D PAGE 9 of 11 - ------------------- ------------ SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: November 28, 2001 CITY OF LONDON INVESTMENT GROUP PLC / s / Douglas F. Allison -------------------------------------- Name: Douglas F. Allison Title: Finance Director CITY OF LONDON INVESTMENT MANAGEMENT COMPANY LIMITED / s / Clayton Gillece -------------------------------------- Name: Clayton Gillece Title: Director - ------------------- ------------- CUSIP NO. 04516T105 13D PAGE 10 of 11 - ------------------- ------------- ANNEX A ------- DIRECTORS AND EXECUTIVE OFFICERS The names of the directors and executive officers of CLIG and their business addresses and present principal occupation or employment are set forth below. If no business address is given, the business address of such director or executive officer is c/o City of London Investment Group PLC, 10 Eastcheap, London EC3M ILX, England. Andrew Davison Chairman Barry Olliff Chief Executive Officer Douglas Allison Finance Director Peter O'Sullivan Compliance Director Omar Ashur Non-Executive Director George Robb Non-Executive Director The names of the directors and executive officers of CLIM and their business addresses and present principal occupation or employment are set forth below. If no business address is given, the business address of such director or executive officer is c/o City of London Investment Management Limited, 10 Eastcheap, London EC3M ILX, England. Barry Olliff Chief Investment Officer Douglas Allison Finance Director Peter O'Sullivan Compliance Director Mark Dwyer Director Clayton Gillece Director Michael Russell Director - ------------------- ------------- CUSIP NO. 04516T105 13D PAGE 11 of 11 - ------------------- ------------- ANNEX B INFORMATION WITH RESPECT TO TRANSACTIONS IN THE FUND'S COMMON STOCK DURING THE PAST SIXTY DAYS Number of Shares City of London of Common Stock Fund which Price Per Share Date Purchased/(Sold)(1) Purchased/(Sold)(1) (US$) ---- ------------------- ------------------- ----- September 19, 2001 2,400 GFM 6.50 September 21, 2001 4,000 EWF 6.03 September 28, 2001 6,300 EWF 6.50 October 26, 2001 (4,200) GFM 7.22 - --------------------- (1) All purchases/sales were effected through open market or privately negotiated transactions. EX-99.1 3 ex99-1_10934.txt LETTER TO FUND DATED AUGUST 7, 2001 EXHIBIT 99.1 ------------ August 7, 2001 VIA FACSIMILE Mr. Michael J. Downey Chairman Asia Pacific Fund, Inc. 190 Linden Oaks Drive Rochester, NY 14625 Dear Mr. Downey, Further to my letter of July 30th and our conversation this morning, we have decided to vote as follows: RESOLUTION 1: AGAINST ALL DIRECTORS. The reason for this is that they are either, employees of the Manager, individuals with an ongoing financial link to the Fund, or they sit on more than one Baring fund Board. Our opinion is that to varying degrees they are connected, therefore unlikely to be impartial and able to act in the best interest of shareholders. RESOLUTION 2: AGAINST TERMINATION OF THE INVESTMENT MANAGEMENT AGREEMENT. The reason for this is that it is the responsibility of The Board, not the manager, to act in the best interest of Shareholders. We do not believe that on this occasion it would be correct to penalize Barings in the way suggested in the Resolution. RESOLUTION 3: FOR ANNUAL CONTINUANCE OF THE FUND'S INVESTMENT MANAGEMENT AGREEMENT. The reason for this is that the Shareholders own the Fund, they appoint the Board to carry out their wishes. If they, however, believe that the Directors are not impartial, then Shareholders will need to feel that they retain the level of protection that would be provided by an annual vote of Shareholders confirming Baring Asset Management as the Manager of the Fund. I have enclosed a further copy of our January 2001 Statement on Corporate Governance and Voting Policy for Closed-End Funds. We sent seven copies of this document to APB at the beginning of February this year. This is the document we use in determining our stance on issues of this type. As I mentioned on the telephone, regarding the termination of the investment management contract, I believe that Analytical Asset Management might have been acting in a way that showed their frustration. Conceivably, they had surmised that the Board was unlikely to act in the best interest of Shareholders and could only express their views through a vote to terminate the contract. In our opinion, the APB Board is now on notice. In the past, The Board has shown itself adept at increasing the size of this Fund. That was presumably when Asia was considered attractive by Shareholders and when the shares were trading at a premium, or close to NAV per share. Now the shares are, and have for some time, traded at a large, and persistent, discount to their NAV per share. In the City Of London Fund Managers' collective opinion, the Board should announce a tender that would reduce the Share Capital close to its original size at launch. This would address one of the major problems of the sector which is over supply. In addition, it would prove that a Board with a large percentage of connected parties is able to act in the best interest of all Shareholders and not announce substantial increases in share capital at the time of each rights offering and minor buy backs when the shares were trading at a large discount to their underlying NAV. To recap, I believe the following figures are relevant. In 1987, 8,650,000 shares were issued. There were rights offerings of 2,235,000 and 2,802,000 shares in 1Q & 4Q of 1993 respectively. There was a further rights offering of 4,725,097 shares in 1995. By the year end 1996 the total outstanding share capital had increased to 18,903,279 including shares issued pursuant to the companies dividend reinvestment plan. As at September 2000, after a buy back, the number of shares outstanding was 18,229,333. Whilst another 15% of the Funds shares (2,731,280) were tendered for, towards the end of last year, which reduced this total, you will be well aware that 8,413,664 shares were tendered according to the companies announcement of December 19th 2000. 8,413,664 is in our opinion the figure that the Board should focus upon. This figure is almost precisely the increase in the share capital subsequent to the promotion of the original Prospectus at NAV in 1987, and is in line with my suggestion of 40% tender at 10% discount to NAV discussed at our meeting on 26th July. I hope that you find this statement of our position helpful. We await the Board's deliberations in September prior to determining our next course of action. Yours sincerely, - -------------------------- Barry M. Olliff CIO/Managing Director City of London Investment Management Limited EX-99.2 4 ex99-2_10934.txt LETTER TO FUND DATED NOVEMBER 20, 2001 EXHIBIT 99.2 ------------ November 20, 2001 Mr. Michael J. Downey Chairman The Asia Pacific Fund, Inc. 190 Linden Oaks Drive Rochester, NY 14625 Dear Mr. Downey, With reference to earlier correspondence, we write again to express our concern regarding the substantial and persistent discount to net asset value at which the shares of the Fund trade. We also feel compelled to write to you this letter in order to address two additional issues that, in our opinion, undermine the confidence of shareholders: (1) the overly optimistic view held by the Board concerning the ability of the markets to permanently narrow the discount to NAV, despite the persistent discount over the last several years, and (2) the lack of responsiveness by the Board to the concerns of the shareholders. We have, on several occasions, expressed to the Board our view that it has not taken actions to adequately address over the long-term the substantial and persistent discount to NAV at which the Funds shares trade. As you know, the Fund's shares have traded at a discount to NAV in excess of 18% for several years. In May 2000, concerns over the increasing discount finally prompted the Fund to announce a program to repurchase shares of the Fund "at such times and in such amounts as Fund management believes will further these objectives." Following this announcement, between May 2000 and September 2000, the Fund repurchased an aggregate of 701,000 shares. Nevertheless, the shares traded at a discount to NAV of 25.8% as of September 29, 2000. On September 18, 2000, with the shares trading at a discount of 25.6% to the NAV of $12.35 (as of September 15, 2000), the Fund announced a tender offer to be conducted in the fourth quarter of 2000 for a total of 2,731,280 shares (15% of the Fund's total outstanding shares at the commencement of the offer). It also stated its intention to conduct two additional tender offers in the future, if during the thirteen-week measurement periods ending on the last Friday in August 2001 and 2002 the shares of the Fund trade at an average weekly discount of greater than 15%. According to the Fund, these additional tender offers would be for at least 10% of the Fund's total outstanding shares as of the commencement of the offer. The 2000 tender offer was completed on December 19, 2000 with a total of 8,413,664 shares (46.21% of the then outstanding shares) being tendered to the Fund. Notwithstanding this tender offer, the discount to NAV at which the shares traded increased to 26.3% as of December 29, 2000, and at March 30, 2001, the shares traded at a discount to NAV of 21.8%. Accordingly, it is clear that this action, together with the May 2000 share repurchase program, did not result in a permanent narrowing of the discount, were therefore unsuccessful, and did not achieve the objectives intended by the Board. We would also like to point out our concern over the consistent overly optimistic view held by the Board and delivered to the shareholders regarding the positive outlook for the Asian equity markets and their supposed ability to solve the discount to NAV problem affecting the Fund. The late timing and minor size of the buy-backs and tender offers made by the Fund during 2000 and 2001 has confirmed our perception and increased our concern. Let us provide you with some examples: 1. In the Letter to Shareholders contained in the 1996 Annual Report, the Fund stated "In summary, one or more of the following should alleviate the discount at which the Fund's shares are trading relative to net asset value: the maintenance of strong performance on an absolute and a relative basis; a resurgence of investor interest in closed-end funds; and a reasonable expectation that emerging markets will significantly outperform the U.S. domestic market." 2. In the 1997 Annual Report, the Chairman of the Board assured to Shareholders "that your Board is monitoring the discount closely and, although I do believe it to be primarily related to investment performance in the region, we continue to search for ways to lower the discount that are in the interest of all shareholders. Recent comment in the financial press indicates, however, that there may be a renewal of investor interest in closed-end funds." 3. In the 1999 Annual Report, the Chairman stated that "the recent rise in the Fund's stock price to healthier levels gives cause for encouragement and should assist the contraction of the discount. Your Directors continue to seek ways of increasing Shareholder value and are pleased with the steady progress of the investor relations program." 4. In the 2000 Annual Report, the message to Shareholders stated that "at recent [discount] levels of 30%, your Board considers this to be contrary to shareholders' interest and hence untenable. Therefore, your Board announced a share buyback program after it's recent meeting on May 10 and is confident that, going forward, this will provide an opportunity to enhance shareholder value." In addition, in July 2000 you represented to us personally that the Board was uncomfortable with the 30% discount level but that the Board hoped that supply and demand would take care of the discount over time and that the market would see better days and turn the discount around. Given the persistence of the substantial discount to NAV, we do not believe that it is appropriate for the Board to be relying on the markets for a solution. In addition, we believe that it is incredulous to establish a threshold for conducting minor self-tenders at a discount to NAV of 15%, which clearly suggests that the Board believes that a persistent discount of just under 15% is acceptable to the shareholders. Instead of small self-tenders designed to keep the discount under 15% (with no evidence that they have been successful), we believe that a proper solution requires a significantly more active policy on the matter than that put in place by the Board. Although emerging markets may have not been helpful in recent periods, it seems obvious that the large and persistent discount has resulted from an over supply of shares created by the various and sizable rights offerings conducted by the Fund in the early and mid-1990s. Accordingly, we expressed our views to the Fund's management that an appropriate course of action to reduce the discount and genuinely enhance shareholder value would be to reverse that expansionary program through a sizable and concrete buyback program. We stressed that the trigger for such action should come from the Board, not the market. After all, when the Fund was launched the Board issued shares at NAV. To our disappointment, the Fund has not implemented such a course of action. We also would like to express our concern as a shareholder of the Fund over the Board's unwillingness to listen to the views of shareholders and shareholder sentiment. Although the Board purports to consider the opinions of shareholders, we believe the evidence demonstrates that the Board in fact has not adhered to its commitment to listen, as the following examples illustrate. 1. In July 2000, as a result of concerns over the discount, a proposal was made at the 2000 annual meeting of shareholders recommending that the Board take action to liquidate the Fund. This proposal was approved by the shareholders by nearly a two-to-one margin of votes present at the meeting (with the votes in favor of such proposal representing approximately 23.5% of the total outstanding shares). The Board strongly opposed this proposal, stating that it was not "in the best overall interests of stockholders." Notwithstanding the fact that the affirmative vote of 23.5% of the total outstanding shares did not necessarily mean a positive expression of a majority of all outstanding shares, it was nonetheless an obvious demonstration of the concern over the discount by those shareholders who voted at the meeting. The lack of any meaningful action by the Board in response to the approval of this proposal illustrates a clear disregard by the Board of shareholder sentiment. 2. In connection with the 2001 annual meeting, certain significant shareholders of the Fund, including City of London, were given an opportunity to express their views concerning the discount to certain members of the Fund's management and adviser, including yourself and Mr. Watt of Baring Asset Management (Asia) Limited. At that time, we expressed our frustration with what we perceived as the lack of effort on the part of the Board to propose or take meaningful actions that might adequately address the ever-increasing discount. In expressing our views, we noted that there did not appear to be a significant level of concern on the part of the Board in regard to the discount, as evidenced by the fact that the Board would purport to review the discount, yet always was willing to rely on the markets to reduce or eliminate it. 3. At the 2001 annual meeting of shareholders of the Fund, a shareholder of the Fund submitted a proposal seeking to terminate the investment management agreement between the Fund and Baring Asset Management and recommended that the Board only propose as a replacement adviser an investment manager having a firm commitment to promptly realize NAV for the shareholders. In addition, another shareholder submitted a proposal recommending the adoption of a bylaw that would require the investment management agreement to be submitted to the shareholders for their approval in 2002 and every year thereafter. We believe that these proposals, like the proposal made at the 2000 annual meeting, were a result of increasing frustration by our fellow shareholders at the Board's failure to take actions aimed at reducing the discount to NAV and enhancing shareholder value. 4. On July 26, 2001, we met with you to discuss our concern over the large discount at which the Fund shares traded and the proposals submitted by other stockholders. During that meeting you stated that the existing Board was responsive to the creation of shareholder value, was aware of the need to have a constructive and open dialogue with shareholders, would not undermine the rights of shareholders and was not driven by self interest. We then expressed our view that one method for reducing the discount would be a tender to reduce the outstanding shares of the Fund to a number close to the Fund's original size of approximately 8.65 million shares. We informed you of our belief that this action would, in a more meaningful manner, address the problem of over supply of the Fund's shares resulting from the various rights offerings conducted in the early and mid-1990s. In addition, we expressed our belief that the Board had not appropriately addressed the discount by authorizing minor buybacks after several years of authorizing substantial rights offerings. 5. On July 25, 2001, Analytical Asset Management circulated a letter to the shareholders of the Fund. The views articulated by Analytical Asset Management in this letter concerning the many obstacles that a shareholder faces when trying to propose nominees to the Board of the Fund seem to be in conflict with your representation at our July 26, 2001 meeting that the Board would not undermine the rights of shareholders. 6. On August 7, 2001, we again spoke with you to express our views with respect to the various proposals that were submitted to the shareholders. During these conversations and in our letter to you dated August 7, 2001, we indicated our intention to vote against all of the directors proposed for re-election by the Board because of their lack of independence, to vote against the proposal to terminate the Baring investment management agreement and to vote in favor of the proposal recommending the adoption of a bylaw that would require the investment management agreement to be submitted to the shareholders for their approval in 2002 and every year thereafter. In our August 7th letter, we again expressed our views concerning the substantial and persistent discount to NAV at which the shares were then trading. At that time, we believed that it would not be appropriate to penalize Baring for the share price of the Fund in the manner suggested by the shareholder proposing to terminate the investment management agreement. At the same time, however, we stated that shareholders should have the right to approve annually the investment management agreement because the shareholders need to feel that they have some degree of protection if they believe that the Board is not acting impartially. As you know, although the first of these two proposals was defeated, the second was approved by the shareholders. To our knowledge, however, the Board has not acted on the recommendation of the shareholders set forth in the second resolution nor has it taken any of the actions that we have expressed in our communications with you. We believe the vast majority of our fellow shareholders share our extreme frustration with the lack of tangible evidence of your willingness to address the substantial and persistent discount to NAV and to enhance shareholder value through whatever means necessary. We strongly urge you to openly and publicly commit to your shareholders to take immediate action to reduce the discount, with no prejudice for or against any option (e.g., open-ending (including by way of merger), substantial tender, liquidation, conversion to interval status, conversion to an index-based exchange-traded fund (or, if permissible, an actively managed ETF), termination of the investment management agreement, etc.). The time has come to put the shareholders' wishes and interests first. Sincerely, J. Martin Garzaron Fund Manager -----END PRIVACY-ENHANCED MESSAGE-----