UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR 13(E)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
Templeton Dragon Fund, Inc.
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(Name of Subject Company (Issuer))
Templeton Dragon Fund, Inc. (Offeror)
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(Names of Filing Persons (Identifying Status as Offeror, Issuer
or Other Person))
Common Stock, $0.01 Par Value Per Share
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(Title of Class of Securities)
88018T101
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(CUSIP Number of Class of Securities)
Barbara J. Green, Esq.
Templeton Dragon Fund, Inc.
Broward Financial Centre
500 E. Broward Blvd., Suite 2100
Ft. Lauderdale, FL 33394-3091
Tel (954) 527-7500
Fax (954) 847-2288
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(Name, Address and Telephone Numbers of Person
Authorized to Receive Notices and Communications on Behalf of Filing Persons)
COPIES TO:
John F. Della Grotta, Esq. Bruce G. Leto, Esq.
Paul, Hastings, Janofsky & Walker, LLP Stradley, Ronon, Stevens & Young, LLP
695 Town Center Drive 2600 One Commerce Square
Costa Mesa, CA 92626-1924 Philadelphia, PA 19103-7098
Tel (714) 668-6200 Tel (215) 564-8000
Fax (714) 979-1921 Fax (215) 564-8120
CALCULATION OF FILING FEE
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Transaction Valuation* Amount of Filing Fee*
not applicable not applicable
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* As the filing contains only preliminary communications made before the
commencement of the tender offer, no filing fee is required.
[_] Check the box if any part of the fee is offset as provided by
Rule 0-11(a) (2) and identify the filing with which the offsetting fee
was previously paid. Identify the previous filing by registration
tatement number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: Not applicable
Form or Registration No.: Not applicable
Filing Party: Not applicable
Date Filed: Not applicable
[X] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[_] third-party tender offer subject to Rule 14d-1.
[X] issuer tender offer subject to Rule 13e-4.
[_] going-private transaction subject to Rule 13e-3.
[_] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
PAGE
[Graphics omitted]
FRANKLIN(R)TEMPLETON(R) TEMPLETON DRAGON FUND, INC.
INVESTMENTS Broward Financial Centre
500 East Broward Boulevard/Suite 2100
Fort Lauderdale, FL 33394-3091
Facsimile 954.847.2288
Telephone 954.527.7500
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March 28, 2003
Dear Templeton Dragon Fund Shareholder:
Attached please find the text of a press release issued on March 20, 2003.
Sincerely,
/s/CHARLES B. JOHNSON
Charles B. Johnson
On behalf of the Board of Directors
PAGE
FOR IMMEDIATE RELEASE
Media Contacts: Lisa Gallegos, Franklin Templeton Investments,
Tel:(650) 312-3395
Steven Alperin, Harvard Management, Tel: (617) 523-4400
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HARVARD UNIVERSITY, TEMPLETON CHINA WORLD FUND, INC.,
TEMPLETON DRAGON FUND, INC. AND
TEMPLETON ASSET MANAGEMENT LTD.
SETTLE LAWSUIT
HARVARD UNIVERSITY WITHDRAWS
ITS TEMPLETON CHINA WORLD SHAREHOLDER PROPOSALS
AND SUPPORTS TEMPLETON CHINA WORLD'S
OPEN-ENDING PROPOSAL WITH AN IN-KIND DISTRIBUTION FEATURE
HARVARD UNIVERSITY WITHDRAWS
ITS TEMPLETON DRAGON SHAREHOLDER PROPOSALS;
TEMPLETON DRAGON TO MAKE CASH TENDER OFFER FOR
15% OF ITS OUTSTANDING SHARES AT 92.5% OF NET ASSET VALUE PER SHARE
TEMPLETON DRAGON
TO SEEK AUTHORITY TO MAKE IN-KIND TENDER OFFERS
Fort Lauderdale, Florida and Boston, Massachusetts, March 20, 2003 - TEMPLETON
CHINA WORLD FUND, INC. (NYSE: TCH), a closed-end management investment company
("China World"), TEMPLETON DRAGON FUND, INC. (NYSE: TDF), a closed-end
management investment company ("Dragon"), TEMPLETON ASSET MANAGEMENT LTD., the
investment advisor to each of the funds ("Templeton"), and PRESIDENT AND FELLOWS
OF HARVARD COLLEGE ("Harvard University") announced today that they had reached
agreements that will result in, among other things, the dismissal of their
litigation claims against each other and the withdrawal of Harvard University's
shareholder proposals for the funds' upcoming annual meetings. Also, Harvard
will now support the Board's proposal to open-end China World with an in-kind
distribution feature, and Dragon will make a tender offer to be commenced on or
prior to April 30, 2003, and may, pursuant to its settlement with Harvard, make
additional tender offers in the future.
DISMISSAL OF LAWSUIT
The three settlement agreements announced today (between China World and
Harvard, Dragon and Harvard, and Templeton and Harvard, respectively) will
result in the dismissal without prejudice of the lawsuit originally brought in
January 2003 by China World, Dragon and Templeton in the United States District
Court for the District of Maryland, Northern Division, against Harvard
University, Harvard Management Company, Inc., which is an investment advisor to
Harvard University, and Steven Alperin, an officer of Harvard Management
(collectively, "Harvard"), as well as the dismissal without prejudice of the
counterclaims brought by Harvard against the funds, their respective directors
and Templeton. The parties have also entered into covenants not to sue each
other with respect to the claims that were made or could have been made in the
litigation absent a breach of the settlement agreements.
END OF PROXY CONTEST
As part of the settlements, Harvard has agreed to withdraw all of its
shareholder proposals for the respective upcoming 2003 Annual Meetings of
Shareholders of China World and Dragon. Harvard also will not solicit proxies
from shareholders for the China World 2003 Annual Meeting and will not vote any
proxies previously received.
CONVERSION OF CHINA WORLD TO AN OPEN-END FUND
Harvard announced that it intends to support the Board of Directors' proposal at
the 2003 Annual Meeting calling for the open-ending of China World, with an
in-kind distribution feature described below.
If shareholders approve the open-ending proposal, the in-kind distribution
feature will provide the fund the option of meeting large redemption requests
through a pro rata, in-kind distribution of its portfolio investments by making
an election pursuant to Rule 18f-1 under the Investment Company Act of 1940 and
adopting related procedures. This will allow the fund to minimize the potential
adverse impact of large redemption requests on the fund's net asset value per
share. Small redemption requests (generally in amounts less than $250,000 in any
ninety-day period) will be paid in cash by the fund.
Harvard also announced that, if and when China World open-ends, Harvard will
redeem all of its shares of the fund within 30 days after conversion, and that
under the settlement it will take its redemption proceeds through a pro rata,
in-kind distribution of portfolio investments. As a result, the fund will avoid
having to sell significant portfolio assets to raise cash to meet Harvard's
redemption request - thus limiting the potential adverse effect on the fund's
net asset value per share.
China World announced that if conversion to an open-end fund is approved by
shareholders, the open-end fund would assess a redemption fee, not in excess of
two percent, on all redemptions or exchanges of shares made within six months
following the effective date of the conversion except on any redemptions of
shares purchased after the conversion.
Representatives of Harvard and China World also have agreed to discuss, prior to
conversion, steps China World might take to minimize any adverse effect on the
net asset value per share of the fund resulting from a need to sell portfolio
securities of the fund to raise cash to satisfy redemption requests.
DRAGON TENDER OFFERS
Dragon announced that as part of its settlement with Harvard, it has agreed to
take the following actions:
o APRIL 2003 CASH TENDER OFFER - The Board of Directors of Dragon approved the
making of a cash tender offer to be commenced on or prior to April 30,
2003, for 15% of the fund's outstanding shares at 92.5% of net asset value
per share as of the date the offer expires. Previously, the Board of
Directors had approved an April 2003 cash tender offer for not less than
10% of the fund's outstanding shares at not less than 90% of net asset
value per share.
o IN-KIND TENDER OFFERS - Dragon also will apply to the Securities and Exchange
Commission ("SEC") for an exemption allowing the fund to make occasional,
non-periodic tender offers, each for up to 20% of Dragon's outstanding
shares at a price equal to 95% of net asset value per share as of the date
the offer expires, to be paid entirely in kind through a pro rata
distribution of marketable portfolio securities. The fund will not apply,
however, for interval fund status. Subject to certain conditions, the
settlement requires the fund to commence such an in-kind tender offer for
20% of the fund's shares within three months after obtaining the SEC
exemption. Dragon may also be required under the settlement to conduct, on
substantially identical terms, up to two additional in-kind tender offers
under certain circumstances. There is no assurance that the SEC will grant
the exemption, nor is it possible to predict the date when an exemption
might be granted.
o ADDITIONAL CASH TENDER OFFERS - If the SEC does not grant the exemption for
in-kind tender offers by May 26, 2004, the settlement provides that Dragon
may, but is not obligated to, conduct an additional cash tender offer, and
possibly later follow-on cash tender offers, each for 15% of the fund's
outstanding shares at a price of 92.5% of net asset value per share as of
the date the offer expires. Under certain circumstances, if Dragon does not
conduct these tender offers, Harvard will be relieved of its obligation to
refrain from making shareholder proposals and taking other actions with
respect to the fund, as described below.
Harvard announced that it intends to tender all of the shares it then owns into
each tender offer described above that is commenced.
The Dragon settlement agreement provides that Dragon will not be obligated to
commence in-kind tender offers or additional cash tender offers under certain
circumstances or conditions. These relate to, among other things, the number of
shares tendered by shareholders into preceding tender offers as well as the
beneficial ownership percentages of the fund's shareholders.
STANDSTILL
As part of the three settlements, Harvard agreed not to submit any proposals for
consideration by shareholders of China World or Dragon, or any other closed-end
fund or similar investment vehicle managed by Templeton or its affiliates, or
for consideration by shareholders of Franklin Resources, Inc. (NYSE: BEN), the
parent company of Templeton, nor to encourage others to do so, for a period of
four years. Harvard also has agreed not at any time to acquire additional shares
of China World, Dragon or any other closed-end fund or similar investment
vehicle managed by Templeton or its affiliates.
* * * * *
THE SUMMARIES OF THE SETTLEMENTS REACHED BY HARVARD AND CHINA WORLD, HARVARD AND
DRAGON, AND HARVARD AND TEMPLETON INCLUDED IN THIS PRESS RELEASE ARE QUALIFIED
IN THEIR ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE THREE SEPARATE SETTLEMENT
AGREEMENTS. COPIES OF THE SETTLEMENT AGREEMENTS WILL BE FILED BY CHINA WORLD AND
DRAGON WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION AND WILL BE AVAILABLE
FOR FREE AT THE SEC'S WEBSITE, WWW.SEC.GOV. THE PARTIES HAVE AGREED NOT TO MAKE
PUBLIC STATEMENTS (INCLUDING TO THE MEDIA) REGARDING THE SETTLEMENTS.
* * * * *
In connection with their 2003 annual meetings of shareholders, China World and
Dragon intend to file relevant materials with the U.S. Securities and Exchange
Commission ("SEC"), including their respective proxy statements. Because those
documents contain important information, shareholders of China World and Dragon
are urged to read them when they become available. When filed with the SEC, they
will be available for free at the SEC's website, www.sec.gov. Shareholders also
can obtain copies of these documents, when available, for free by calling China
World or Dragon at 1-800-342-5236.
China World, its directors and executive officers and certain other persons may
be deemed to be participants in China World's solicitation of proxies from its
shareholders in connection with its 2003 annual meeting of shareholders. Dragon,
its directors and executive officers and certain other persons may be deemed to
be participants in Dragon's solicitation of proxies from its shareholders in
connection with its 2003 annual meeting of shareholders. Information about their
respective directors is set forth in the proxy statement for China World's 2002
annual meeting of shareholders and for Dragon's 2002 annual meeting of
shareholders, respectively. Participants in China World's and Dragon's
respective solicitations may also be deemed to include the following executive
officers or other persons whose interests in China World or Dragon may not be
described in their respective proxy statements for China World's and Dragon's
2002 annual meetings: Mark Mobius (President and C.E.O. - Investment
Management); Jimmy D. Gambill (Senior Vice President and C.E.O. - Finance and
Administration); Charles B. Johnson (Vice President); Rupert H. Johnson, Jr.
(Vice President); Harmon E. Burns (Vice President); Martin L. Flanagan (Vice
President); Jeffrey A. Everett (Vice President); Gregory E. Johnson (President,
Franklin Resources, Inc.); John R. Kay (Vice President); Murray L. Simpson (Vice
President and Asst. Secretary); David P. Goss (Vice President and Asst.
Secretary); Barbara J. Green (Vice President and Secretary); Michael O. Magdol
(Vice President - AML Compliance); Bruce S. Rosenberg (Treasurer and Chief
Financial Officer); and Holly Gibson Brady (Director of Corporate Communications
- Franklin Resources, Inc.).
As of the date of this communication, none of the foregoing participants
individually, or as a group, beneficially owns in excess of 1% of China World's
common stock or 1% of Dragon's common stock. Except as disclosed above, to the
knowledge of China World and Dragon, none of their respective directors or
executive officers has any interest, direct or indirect, by security holdings or
otherwise, in China World or Dragon.
Shareholders of China World or Dragon may obtain additional information
regarding the interests of the participants by reading the proxy statements of
China World and Dragon when they become available.
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Dragon has not commenced any tender offer referred to in this communication.
Upon commencement of any such offer, Dragon will file with the SEC a Schedule TO
and related exhibits, including the offer to purchase, letter of transmittal and
other related documents. Dragon shareholders are strongly encouraged to read
these documents when they become available because they will contain important
information about any offer. When filed with the SEC, the Schedule TO and
related exhibits will be available without charge at the SEC's website at
www.sec.gov. Any offer to purchase and related letter of transmittal, when
available, will be delivered without charge to all of Dragon's shareholders.
Dragon shareholders may also obtain copies of these documents without charge by
calling Dragon at 1-800-342-5236.
This communication is not an offer to purchase or the solicitation of an offer
to sell shares of Dragon. Any tender offer will be made only by an offer to
purchase and the related letter of transmittal. Neither the offer to purchase
shares will be made to, nor will tenders pursuant to the offer to purchase be
accepted from or on behalf of, holders of shares in any jurisdiction in which
making or accepting the offer to purchase would violate that jurisdiction's
laws.