-----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, AVvAyYA72PQ/twVU0XCnhfQDEJBcdMgDmyE2lyvftA1yMhIZ1SmKdH1TWYm9F/rl 30+6Sf260i3s6fMzk/RZ8Q== 0001072613-04-002126.txt : 20041115 0001072613-04-002126.hdr.sgml : 20041115 20041115145809 ACCESSION NUMBER: 0001072613-04-002126 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20041115 DATE AS OF CHANGE: 20041115 GROUP MEMBERS: CITY OF LONDON INVESTMENT MANAGEMENT CO. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: KOREA FUND INC CENTRAL INDEX KEY: 0000748691 IRS NUMBER: 133226146 STATE OF INCORPORATION: MD FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-36819 FILM NUMBER: 041144423 BUSINESS ADDRESS: STREET 1: 345 PARK AVE STREET 2: C/O DEUTSCHE ASSET MANAGEMENT CITY: NEW YORK STATE: NY ZIP: 10154 BUSINESS PHONE: 617-295-3986 MAIL ADDRESS: STREET 1: DEUTSCHE ASSET MANAGEMENT STREET 2: TWO INTERNATIONAL FUND CITY: BOSTON STATE: MA ZIP: 02110 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CITY OF LONDON INVESTMENT GROUP PLC CENTRAL INDEX KEY: 0001018138 STATE OF INCORPORATION: X0 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A 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/A 1 sch13d-a_13101.txt THE KOREA FUND, INC. SCHEDULE 13D/A #5 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Rule 13d-101) (Amendment No. 5) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) The Korea Fund, Inc ------------------- (Name of Issuer) Common Stock, par value $.01 per share -------------------------------------- (Title of Class of Securities) 500634100 -------------- (CUSIP Number) Barry M. Olliff 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 12, 2004 ------------------------------------------------------- (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 [_]. *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. ================================================================================ (Page 1 of 7 Pages) =================== =========== CUSIP NO. 500634100 13D PAGE 2 of 7 =================== =========== ================================================================================ 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 - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 4,426,782 ------------ ------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 ------------ ------------------------------------------------ EACH 9 SOLE DISPOSITIVE POWER REPORTING 4,426,782 ------------ ------------------------------------------------ PERSON 10 SHARED DISPOSITIVE POWER WITH 0 - ------------ ------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,426,782 - ------------ ------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - ------------ ------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.90% - ------------ ------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* HC ================================================================================ =================== =========== CUSIP NO. 500634100 13D PAGE 3 of 7 =================== =========== ================================================================================ 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 - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 4,398,762 ------------ ------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 ------------ ------------------------------------------------ EACH 9 SOLE DISPOSITIVE POWER REPORTING 4,398,762 ------------ ------------------------------------------------ PERSON 10 SHARED DISPOSITIVE POWER WITH 0 - ------------ ------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,398,762 - ------------ ------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - ------------ ------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.84% - ------------ ------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IA ================================================================================ =================== =========== CUSIP NO. 500634100 13D PAGE 4 of 7 =================== =========== This Amendment No. 5 to Schedule 13D (this "Amendment No. 5") should be read in conjunction with the Schedule 13D filed with the U.S. Securities and Exchange Commission (the "SEC") on February 17, 2004 (the "Original Schedule 13D"), with Amendment No. 1 to Schedule 13D filed with the SEC on March 1, 2004 ("Amendment No. 1"), with Amendment No. 2 to Schedule 13D filed with the SEC on May 5, 2004 ("Amendment No. 2"), with Amendment No. 3 to Schedule 13D filed with the SEC on July 8, 2004 ("Amendment No. 3") and with Amendment No. 4 to Schedule 13D filed with the SEC on August 31, 2004 ("Amendment No. 4" and, together with Amendment No. 1, Amendment No. 2 and Amendment No. 3, the "Amendments") by City of London Investment Group PLC and City of London Investment Management Company Limited relating to the shares of common stock, par value $0.01 per share (the "Shares"), of The Korea Fund, Inc., a Maryland corporation (the "Fund"). This Amendment No. 5 amends Items 3, 4, 5 and 7 of the Original Schedule 13D as amended by the Amendments. All other information in the Original Schedule 13D and the Amendments remain in effect. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Original Schedule 13D as amended by the Amendments. ITEM 3 SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. ------------------------------------------------- Item 3 is hereby amended and restated in its entirety to read as follows: The funds used to purchase the Shares described in this statement were acquired through open market purchases and were derived from EWF's, GEM's, IEM's, GFM's, FREE's and Global's investment capital and funds provided by the Accounts. The aggregate amount of the funds used to purchase all of the Shares purchased by EWF, GEM, IEM, GFM, FREE, Global's and the Accounts is $1,933,746, $18,788,073, $18,090,202, $1,822,797, $6,366,520, $489,912, and $31,933,884, respectively. ITEM 4. PURPOSE OF TRANSACTION. ---------------------- Item 4 is hereby amended by adding the following: On November 12, 2004, CLIG sent a letter to each member of the board of directors of the Fund. In the letter, CLIG sets forth the minimum steps that CLIG believes the Fund's board of directors should take in order to satisfy its obligations to the Fund and the Fund's stockholders. The foregoing description of the letter is not intended to be complete and is qualified in its entirety by the complete text of the form of letter filed as Exhibit A hereto, which form of letter is incorporated herein by reference. Other than as set forth above, none of the Reporting Persons or, in the case of non-individual Reporting Persons, any of their directors or executive officers identified in Item 2, have any present plans or proposals which relate to or could result in, any of the matters =================== =========== CUSIP NO. 500634100 13D PAGE 5 of 7 =================== =========== referred to in paragraphs (a) through (j), inclusive, of Item 4 of Schedule 13D (although they reserve the right to develop any such plans or proposals). ITEM 5. INTERESTS IN SECURITIES OF THE ISSUER. ------------------------------------- Items 5(a) and 5(b) below are hereby amended and restated in their entirety and Item 5(c) is hereby amended as follows: (a) and (b). As of the date hereof, EWF, GEM, IEM, GFM, FREE, the Accounts and Global owned directly 132,036, 1,157,847, 1,118,627, 113,436, 322,994, 1,553,822 and 28,020 Shares, respectively, representing approximately 0.30%, 2.59%, 2.50%, 0.25%, 0.72%, 3.47% and 0.06%, respectively, of the Shares outstanding (based on the most recent Share information publicly disclosed by the Fund). As of the date hereof, CLIG, through its control of CLIM and City of London Quantitative Management Ltd., is the beneficial owner of 4,426,782 Shares, representing approximately 9.90% of the Shares outstanding (based on the most recent Share information publicly disclosed by the Fund) As of the date hereof, CLIM, through EWF, GEM, IEM, FREE, GFM and the Accounts, is the beneficial owner of 4,398,762 Shares, representing approximately 9.84% of the Shares outstanding (based on the most recent Share information publicly disclosed by the Fund). (c). Except as described below, no transactions in the Shares were effected by the Reporting Persons, or, to their knowledge, any of the persons identified in Item 2, during the past sixty days. During the past 60 days, the following open market purchases of Shares have been made by the Accounts: Date of Purchase Number of Shares Purchased Price Paid/Share November 12, 2004 25,000 $21.8900 November 5, 2004 15,700 $21.3656 October 7, 2004 30,000 =================== =========== CUSIP NO. 500634100 13D PAGE 6 of 7 =================== =========== $21.6800 During the past 60 days, the following open market sales of Shares have been made by IEM: Date of Sale Number of Shares Sold Price Received/Share October 7, 2004 24,000 $21.6800 During the past 60 days, the following open market sales of Shares have been made by FREE: Date of Sale Number of Shares Sold Price Received/Share October 7, 2004 6,000 $21.6800 ITEM 7 MATERIALS TO BE FILED AS EXHIBITS. --------------------------------- Item 7 is hereby amended by adding the following: Exhibit A. Form of Letter sent to each member of the board of directors of The Korea Fund, Inc. =================== =========== CUSIP NO. 500634100 13D PAGE 7 of 7 =================== =========== 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 14, 2004 CITY OF LONDON INVESTMENT GROUP PLC /s/ Barry M. Olliff -------------------------------- Name: Barry M. Olliff Title: Director CITY OF LONDON INVESTMENT MANAGEMENT COMPANY LIMITED /s/ Barry M. Olliff -------------------------------- Name: Barry M. Olliff Title: Director EX-99.A 2 exh99-a_13101.txt FORM OF LETTER EXHIBIT A --------- [CITY OF LONDON LETTERHEAD] November 12, 2004 Mr. ___________ Member of the Board of Directors, The Korea Fund, Inc. c/o Deutsche Investment Management Americas Inc. 345 Park Avenue New York, NY 10154 Dear Mr. _______________: At the Fund's 2004 Annual Meeting of Stockholders (the "Meeting"), Messrs. Julian Reid and Chris Russell were overwhelmingly elected to the Fund's Board of Directors (the "Board"). Messrs. Reid and Russell, who are affiliated neither with us nor with Deutsche Investment Management Americas Inc. ("DeIM"), the Fund's investment manager, each received approximately three times the number of votes that were cast in favor of the Board's nominees. We believe that the magnitude of the Stockholders' response to our proxy campaign leaves no doubt as to what we and a significant majority of the other Stockholders who voted at the Meeting expect from the Board. Nevertheless, in order to avoid any possible misunderstanding as to these expectations, we are writing to set forth the minimum steps we believe the Board now should take in order to satisfy its obligations to the Fund and its Stockholders. 1. Managing the Discount to Net Asset Value ---------------------------------------- We believe that managing the discount to net asset value ("NAV") at which shares of closed-end funds frequently trade is one of the primary responsibilities of fund directors. When shares trade at a significant discount over a lengthy period, a board should take meaningful actions to address the problem. We believe that the Board has utterly failed to discharge its obligations to the Stockholders in this regard. The Board has acted only reluctantly, and the measures it has taken that were purportedly designed to address the discount have been ineffectual at best. The only period during which the discount remained below 10% on a consistent basis was the period immediately following our filing of preliminary proxy materials. The discount recently has been in excess of 10%, a level which is unacceptable to us and, we believe to many of the other Stockholders. Moreover, the most recent steps taken by the Board fall far short of what is required. The Board has announced its approval of two additional tender offers, one in the first quarter of 2005 and one in the first quarter of 2006. Each of the proposed tender offers would be for 10% of the outstanding Shares at a price equal to 95% of NAV and would be made only if the Shares have traded at an average weekly discount from NAV greater than 15% during the 13-week measuring period ending the preceding December 31. We believe that the Board's proposed tender offers, Members of the Board of Directors November 12, 2004 Page 2 even if made, would fall far short of meeting the desire of many Stockholders to sell their Shares for cash at or near NAV. We further believe that a 15% trigger is totally inappropriate and that an in-kind offer, which the Board has retained the option to make, is not in the best interest of all of the Stockholders. We have publicly urged the Board to implement a cash tender offer for 50% of the Fund's outstanding shares at not less than NAV (less transaction fees and expenses). The Fund's largest Stockholder, the President and Fellows of Harvard College, has separately recommended to the Board that the Fund conduct a tender offer for 50% of the Fund's shares. In its proxy materials, the Board attempted to persuade the Stockholders that a 50% tender offer would cause great damage to the Fund and the Stockholders. We never believed the Fund's arguments and it appears to be clear that the other Stockholders didn't either. The Board should not delay any longer and should promptly take the steps necessary to commence a 50% cash tender at NAV at the earliest practical time. Even after consummation of the tender, the Board should, in our opinion, continue carefully to monitor the discount to ensure that it stays within parameters that are acceptable to the majority of the Stockholders. 2. Corporate Governance -------------------- We believe that the Board should conduct itself in accordance with the highest standards of good corporate governance. For the reasons set forth below, we believe that the actions of the Board to date fall far short of this standard. (a) Directors should be Free of All Ties to DeIM -------------------------------------------- We believe that DeIM has always exercised undue influence on the Board. Messrs. Reid and Russell have no ties to DeIM. We note that the Fund has publicly announced that Mr. Robert J. Callander, the Board's current chairman, and Mr. William H. Leurs, will be retiring in April 2005. We strongly urge the Board to select replacements for the retiring Directors and to appoint a new chairperson who are free from all ties to DeIM. (b) The ING Barings Proposal ------------------------ We believe that the Board's response to a recent approach on behalf of a potential alternative to DeIM as investment manager demonstrates the potential for conflict of interest inherent in the current composition of the Board and confirms the need for a Board that is free of ties to DeIM. We are hopeful that the addition to the Board of the two truly independent directors will ameliorate this problem. In the weeks prior to the Meeting, the Board received a request from ING Barings ("Barings") to discuss a proposal involving a potential new manager. We urged the Board to meet with Barings, as did Harvard, the Fund's largest Stockholder. Nevertheless, the Board refused to meet with Barings to even consider its proposal. We do not believe a truly independent Board would have conducted itself in this manner. In a letter to the Stockholders on September 28, 2004 (the "September Letter"), during the pendency of the proxy contest, the Board attempted to justify its refusal to meet by claiming that it deemed the Barings inquiry to be "vague" and that Barings acknowledged it had no authority to speak for the investment manager and merely wished to act as a "matchmaker." We do not believe the Board's purported explanation offers any reasonable basis for its refusal to meet with Barings. Members of the Board of Directors November 12, 2004 Page 3 Barings wrote to the Board prior to the conclusion of the proxy contest, in a letter that, to the best of our knowledge, the Board has never made public. In its letter, Barings takes issue with the explanation contained in the September Letter and objects to the September Letter because Barings believes it gives a misleading impression to Stockholders. In particular, Barings denies that it disclaimed authority to speak for the prospective investment manager noting that "we were seeking to meet with the Board with the full authority and knowledge of the prospective investment manager with whom we have been working." Furthermore, Barings confirms that it was fully prepared to disclose the details of the proposal once an in-person meeting was arranged. The Barings letter states that the proposal "would have been concrete and would have contained full details as to investment management capabilities of the prospective manager and their Korean record, which we believe to be demonstrably more impressive than those of the Fund's incumbent manager." It is bad enough that the Board failed to pursue Barings' initial approach. It becomes even harder to understand the Board's refusal to meet and consider the Barings' proposal after the Board received Barings' corrective correspondence. The Board should promptly contact Barings, if it has not already done so, and invite Barings to present, in person, its proposal. We believe it is imperative that the Board carefully explore all credible alternatives before selecting an investment manager for the Fund and that all aspects of the Fund's relationships with its investment manager, including the fees to be paid to the manager, be reevaluated. (c) Improving Communication with the Stockholders --------------------------------------------- The Board consistently has failed to initiate any dialogue with the Stockholders. When City of London, the Fund's second largest holder, sought a meeting with the "independent directors" it was, inexplicably, rebuffed. This approach to Stockholder relations should be discontinued immediately. We believe that the resounding defeat suffered by the Board's nominees at the Meeting demonstrates that the Board is out of touch with the aspirations and expectations of the Stockholders. The Board should adopt a policy designed to encourage communications with the Stockholders and should actively solicit the views of Stockholders on matters of importance to the Fund and its owners. (d) Repealing the 1996 By-Law Amendment ----------------------------------- We believe the Board's refusal to repeal the undemocratic by-law amendment adopted in 1996 is further evidence that the Board prefers to insulate itself from the Stockholders. The amendment increased from 25% to 50% the percentage of shares required to call a special meeting of Stockholders. The Board's chairman has defended the amendment, in another context, by asserting that it protects the Fund from incurring the costs of Stockholder meetings unless the holders of at least 50% of the Fund's shares are in favor of calling a meeting. We believe that the Board should facilitate the Stockholders' right to be heard, not diminish it. The cost of a special meeting is a small price to pay for enhancing the ability of Stockholders to exercise their franchise, particularly when weighed against the approximately $10 million in fees paid annually to DeIM. We believe the by-law amendment should promptly be repealed. A 25% requirement is adequate to ensure that the right to call Stockholders' meetings will not be abused while, at the same time, it will remove the unfortunate impediment to Stockholder democracy that the Board has allowed to remain in place. Members of the Board of Directors November 12, 2004 Page 4 (e) Expenses of the Proxy Contest ----------------------------- We bore all of our considerable costs and expenses, including counsel fees, in the recent proxy contest. Consequently, these costs and expenses were not charged to the Fund and had no impact on NAV. It appears that all of the corresponding costs and expenses incurred by the Fund in the Board's sweeping attempt to oppose and attempt to discredit Messrs. Reid and Russell will be borne by the Fund and will negatively impact the value of the Fund's shares. There may be specific circumstances where the type of vigorous and expensive effort mounted by the Board in the proxy contest is required in order to protect the Fund from a real and serious threat. We question, however, whether such an effort was appropriate here, where the only thing proposed by us was the election of two highly qualified independent nominees. Perhaps it would have been a wiser course and would have better served the interests of the Stockholders merely to let the Stockholders vote on the nominees. It would have saved the Stockholders a considerable amount of money and the result would have been the same. We urge the Board to take this into account if confronted with similar circumstances in the future. Furthermore, we suggest that the Board consider seeking reimbursement from DeIM for all or a portion of the costs of the proxy contest, as it seems to us that the costs were incurred primarily to protect the interest of DeIM. The Board is constituted to serve the interests of all of the Stockholders. It is time for the Board to abandon the rhetoric it used throughout the proxy campaign and cease asserting that the interests of City of London are different from those of other Stockholders. The Stockholders have emphatically rejected this view through their overwhelming vote in support of our platform and the independent nominees, Messrs. Reid and Russell. We trust the Board now will hear the voices of the Stockholders, the Fund's true owners, and act quickly and decisively to implement the policies and procedures for discount management and corporate governance outlined above. We intend carefully to monitor the Board's progress over the next two months with respect to the foregoing. Depending upon our assessment of the Board's actions, we will consider nominating additional directors to the Board and making one or more proposals to the Stockholders, including a proposal to terminate the investment management contract with DeIM. We are prepared to discuss any aspects of the above with members of the Board and remain committed as a Stockholder to play our part in any discussions regarding the detailed achievement of satisfactory standards of corporate governance for the Fund. Very truly yours, Barry Olliff Director, City of London Investment Group PLC -----END PRIVACY-ENHANCED MESSAGE-----