SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [ ]
Filed by a party other than the Registrant [X]
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-12
THE MEXICO FUND, INC.
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(Name of Registrant as Specified In its Charter)
LAXEY PARTNERS LIMITED
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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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:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
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(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:
Laxey Partners Ltd.
Stanley House, 7-9 Market Hill
Douglas, Isle of Man, IM1 2BF
Tel: 01624 629365 Fax: 01624 623819
www.laxeypartners.com
Dear Fellow Stockholder of The Mexico Fund, Inc., (the "Fund"):
Laxey Partners Limited is seeking your support in (1) electing our two nominees
to the Board of Directors of the Fund at the Annual Meeting of Stockholders of
the Fund scheduled for March 7, 2002 (the "Annual Meeting") and (2) terminating
the Fund's investment advisory and management agreement (the "Investment
Advisory Agreement") with Impulsora del Fondo Mexico, S.A. de C.V.
Laxey Partners Limited is the manager of The Value Catalyst Fund Limited and
Laxey Investors Limited and, through such entities and unaffiliated third party
discretionary accounts, we are a large beneficial owner of shares of the Fund.
As of the date of this Proxy Statement, we beneficially own approximately 5.6%
of the Fund's outstanding shares of Common Stock.
Laxey Partners Limited desires that all stockholders of the Fund, regardless of
size, be offered the opportunity of receiving a minimum of 98% of net asset
value ("NAV") for all their shares. The resolutions put forward to elect two new
directors and to terminate the Investment Advisory Agreement are meant to
achieve this end. If stockholders of the Fund wish the opportunity to receive at
least 98% of NAV on a regular basis for their shares rather than have to suffer
the discount to NAV which has been as high as 30% over the last two years, then
we urge stockholders to support our two proposals. While we and other large
investors have tried to discuss our concerns with the existing board, we have
been forced to put forward these proposals in order to protect the value of our
investment in the Fund, consistent with the Fund's corporate governance
procedures.
OUR OBJECTIVES:
o To offer all stockholders, regardless of size, the ability to realize at
least 98% of NAV for all their shares on a regular basis.
o To offer stockholders a continuing closed-end fund.
o To facilitate a reorganization of the Fund, by terminating the investment
manager's contract and electing two new directors.
We recently filed with the SEC a survey seeking to better understand stockholder
sentiment before we filed our proxy statement. We have received a very clear
message from a majority of the stockholders of the Fund - they wish to have the
opportunity to be able to receive NAV for all of their shares on a regular
basis. We note that stockholders have discussed with the Fund and its advisors
on many occasions how this might be achieved and the response has been
unsatisfactory. While the scheme proposed by the Company for periodic
repurchases has the potential to satisfy the stockholders' liquidity needs, we
do not believe that, left to their own
1
discretion, the existing Board and investment manager will apply this repurchase
policy in a meaningful manner.
We therefore believe that stockholder interests would be best served if the
Investment Advisory Agreement were terminated. We would encourage the Fund to
solicit competitive proposals for a new investment advisor and to hire an
independent investment manager who would be committed to offering a minimum of
98% of NAV on a regular basis to all stockholders of the Fund.
The Laxey nominees, Javier Lozano Alarcon and Xavier Cervantes y Omana, have
indicated to us that, if elected to the Board of Directors of the Fund, they
will be committed to exploring methods to offer stockholders at least 98% of NAV
on a regular basis. We believe that our two nominees will be more committed than
the current members of the Board to urging the Fund to take prompt action and
will be an important element in achieving stockholders' desires to maximize
value. Stockholders should be aware, however, that even if our nominees are
elected to the Board of Directors of the Fund they will constitute only two of
the seven members of the Board and may not be able to persuade other members of
the Board to take any actions that they propose.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED GOLD PROXY CARD IN THE POSTAGE-PREPAID
ENVELOPE THAT HAS BEEN PROVIDED. You should not return any proxy card sent to
you by the Fund if you wish to support our nominees and/or our proposal to
terminate the Investment Advisory Agreement. If you have already returned the
WHITE proxy card sent to you by the Fund, you have the right to REVOKE that
proxy and vote for our nominees and the termination proposal by signing, dating
and mailing a later-dated GOLD proxy card in the envelope provided. If you have
any questions, please contact Innisfree M&A Incorporated, who is assisting us
with this solicitation, toll free at (888) [________].
There are two other matters scheduled to be voted upon at the Annual Meeting -
two proposed by the Fund (the approval of a performance fee component to the
Fund's investment advisory fee and the adoption of the Fund's proposed share
repurchase policy) and one proposed by an unaffiliated stockholder (a
recommendation that the Board of Directors expedite the process of converting
the Fund to an open-end fund). All of these proposals are included on our GOLD
proxy card. You may vote on all of these matters by using our GOLD proxy card. A
GOLD proxy card that is returned to us will be voted as you indicate on it. If a
GOLD proxy card is returned without a vote indicated thereon, the shares
represented thereby will be voted FOR the election of our nominees, FOR the
termination of the Investment Advisory Agreement, AGAINST the addition of a
performance fee component to the Fund's investment advisory fee, FOR the
adoption of the Fund's proposed share repurchase policy, and FOR the
recommendation that the Board of Directors convert the Fund to an open-end
investment management company. In addition, a GOLD proxy card will be voted in
the proxy holders' discretion with respect to such other matters as may properly
come before the meeting.
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Thank you for your cooperation in helping to cause the Fund to offer a minimum
of 98% of NAV on a regular basis to all stockholders of the Fund.
Sincerely yours,
Andrew Pegge
Director
Laxey Partners Limited
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LAXEY PARTNERS LIMITED
PROXY STATEMENT
IN OPPOSITION TO THE
BOARD OF DIRECTORS OF
THE MEXICO FUND, INC.
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2002 ANNUAL MEETING OF STOCKHOLDERS
OF
THE MEXICO FUND, INC.
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PLEASE SIGN, DATE AND RETURN THE ENCLOSED GOLD PROXY CARD
This proxy statement and the enclosed GOLD proxy card are being furnished
to stockholders of The Mexico Fund, Inc., a Maryland corporation (the "Fund" or
the "Company"), by Laxey Partners Limited, an Isle of Man company, on behalf of
itself and two of its managed companies, The Value Catalyst Fund Limited
("Catalyst") and Laxey Investors Limited ("LIL", collectively, with Laxey
Partners Limited and Catalyst, "Laxey"), in connection with the solicitation of
proxies from stockholders of the Fund (the "Stockholders") to be used at the
2002 Annual Meeting of Stockholders (the "Annual Meeting"), including any
adjournments or postponements thereof and any special meeting which may be
called in lieu thereof: (i) to vote FOR the election of two (2) persons
(collectively, the "Laxey Nominees") nominated by LIL for election as Class III
Directors to the Board of Directors of the Fund (the "Board"); (ii) to vote FOR
the termination the Fund's Investment Advisory and Management Agreement (the
"Investment Advisory Agreement") with Impulsora del Fondo Mexico, S.A., de C.V.
("Impulsora") not more than 60 days after the date of the Annual Meeting; (iii)
to vote AGAINST the approval of the addition of a performance fee component to
the Fund's investment advisory fee (the "Advisory Fee"); (iv) to vote FOR the
adoption of the Fund's proposed share repurchase policy; and (v) to vote FOR a
stockholder proposal that the Stockholders recommend that the Board of Directors
expedite the process of converting the Fund to an open-end fund (the "Open-End
Proposal"). As nominees for director, Javier Lozano Alarcon and Xavier Cervantes
y Omana are also deemed to be participants with Laxey in this proxy
solicitation. By virtue of their ownership of Laxey Partners Limited, Colin
Kingsnorth and Andrew Pegge may also be deemed to be participants in this
solicitation. See "The Laxey Nominees" and Schedule I "Information About
Participants" for further information regarding the participants in this
solicitation.
The Fund's principal executive office is located at 1775 Eye Street, N.W.,
Washington, DC 20006-2401. This proxy statement and the enclosed GOLD proxy card
are first being furnished to the Stockholders on or about February[___], 2002.
The Company has established with the New York Stock Exchange a record date
of December 22, 2001 for determining Stockholders entitled to notice of and to
vote at the Annual
1
Meeting (the "Record Date") and March 7, 2002 as the date of the Annual Meeting.
Stockholders of record at the close of business on the Record Date will be
entitled to one vote at the Annual Meeting for each Share (as defined herein)
held on the Record Date. Laxey, together with all of the participants in this
solicitation, beneficially owns an aggregate of 2,676,650 shares of the Fund's
Common Stock, par value $1.00 per share ("Shares"), which represents
approximately 5.9% of the Shares outstanding (based on the most recent Share
information publicly disclosed by the Fund). Laxey and all of the participants
intend to vote all of their Shares FOR the election of the Laxey Nominees, FOR
the termination of the Investment Advisory Agreement, AGAINST the Advisory Fee,
FOR the Fund's proposed share repurchase policy, and FOR the Open-End Proposal.
THIS SOLICITATION IS BEING MADE BY LAXEY AND NOT ON BEHALF OF THE BOARD OF
DIRECTORS OR MANAGEMENT OF THE FUND.
A brief summary of the proposals to be presented before the Annual Meeting
of which Laxey is aware is set forth below:
ELECTION OF DIRECTORS
Laxey is soliciting proxies for the election of the Laxey Nominees because
it believes that the election of the Laxey Nominees represents the best means
for the Stockholders to obtain representatives on the Board who will more
accurately reflect the wishes of a majority of the Stockholders. If elected, the
Laxey Nominees intend to encourage the other Directors to explore methods to
offer Stockholders at least 98% of net asset value ("NAV") for their Shares on a
regular basis.
If elected, the Laxey Nominees will constitute a minority of the current 7
members of the Board. Under the Fund's Amended and Restated Bylaws, a majority
of the whole Board constitutes a quorum, and action may be taken by a vote of a
majority of the directors when a quorum is present.
TERMINATION OF INVESTMENT ADVISORY AGREEMENT
Laxey is soliciting proxies for the termination of the Investment Advisory
Agreement because Laxey believes that Impulsora has not been acting actively
seeking to reduce the discount from NAV of the Shares of the Fund and to
increase the liquidity of the Fund's Shares. The Fund has applied for an
exemption to allow the Fund to offer in-kind repurchases of at least 5% of its
outstanding shares each fiscal year. According to the Fund's proposed program,
the Fund would be committed to at least one repurchase offer each fiscal year
and each repurchase offer would be for amounts between 1% to 25% of the Fund's
outstanding shares, at the Board's discretion. However, Laxey does not believe
that the Fund's proposed program will be actively administered by Impulsora or
the Board and that actual repurchases will be at or near the minimum levels
permitted by the plan. If the proposed plan is not actively administered, Laxey
believes it will not provide adequate protection for the Stockholders or
meaningfully address the persistent deep discount from NAV, which has been as
high as 30% over the last two years. Laxey therefore believes that Stockholder
interests would be best served if the Investment Advisory Agreement were
terminated. Laxey would encourage the Fund to solicit competitive
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proposals for a new investment advisor and to hire an independent investment
manager who would be committed to exploring methods to offer Stockholders at
least 98% of NAV for their shares on a regular basis. Consistent with the Fund's
corporate governance procedures, Laxey would encourage the Fund to hire a new
investment advisor with experience in both closed-end and open-end funds dealing
primarily in Mexican securities.
ADDITIONAL PERFORMANCE FEE COMPONENT
As indicated in the Fund's proxy statement, the Fund seeks your approval to
amend the Investment Advisory Agreement to add a performance adjustment
component to the advisory fee of the Fund. As discussed above, Laxey does not
believe that Impulsora has acted decisively to achieve maximum Stockholder
value. Therefore, Laxey is seeking to terminate the Investment Advisory
Agreement and does not support the Advisory Fee proposal.
THE FUND'S PROPOSED REPURCHASE POLICY
The Board has approved a policy whereby the Fund would offer to repurchase
a previously disclosed percentage of Shares from Stockholders at least once each
fiscal year.
As indicated in the Fund's proxy statement, a regulatory filing for
exemptive authority to allow the Fund to conduct periodic in-kind repurchases of
Shares at no less than 98% of NAV at least once each fiscal year has been
pending with the SEC since March 2, 2001. In November 2001, the staff of the SEC
informally advised the Fund it intended to provide the Fund with additional
comments on the Fund's application. As of the date of this proxy statement, the
Fund has not received those comments. Notwithstanding the fact that the SEC has
not approved the policy, Stockholders are being asked at the Annual Meeting to
approve the adoption of this proposed repurchase policy.
In concept, Laxey supports the Fund's proposal to adopt the proposed
periodic in-kind repurchase policy. Laxey believes that the Fund's proposal is
consistent with Laxey's desire for Stockholders to be able to realize at least
98% of NAV for their Shares on regular basis. Laxey believes, however, based on
the actions of the Board and Impulsora to date, that the Fund's proposed
repurchase policy will not be actively administered by Impulsora or the Board.
Other than the very limited repurchases which are required, the amount and
frequency of actual repurchases under the Fund's proposal are within the sole
discretion of the Board and there is no defined proposed policy as to the
frequency or amount of such repurchases. Moreover, the Fund's proposed
repurchase policy offers a very limited facility to certain small Stockholders
who may not be able to participate in the Fund's repurchase program. Laxey
believes that the proposed repurchase policy is a good starting point and
supports the approval of the policy, but Laxey also believes that implementation
of the policy in a manner which reflects the desires of the Stockholders will
only occur if the Laxey Nominees are elected and a new investment advisor is
retained.
THE OPEN-END PROPOSAL
As indicated in the Fund's proxy statement, a Stockholder of the Fund
unaffiliated with Laxey has submitted the Open-End Proposal. The Open-End
Proposal is in the form of a non-binding recommendation by the Stockholders that
the Board convert the Fund to an open-ended
3
fund. Laxey believes that the Open-End Proposal is consistent with Laxey's
desire for Stockholders to be able to realize at least 98% of NAV for the Shares
on a regular basis and supports the adoption of the Open-End Proposal.
LAXEY RECOMMENDATIONS
Laxey is soliciting proxies FOR the election of the Laxey Nominees to the
Board as Class III Directors, FOR the termination of the Investment Advisory
Agreement, AGAINST the Advisory Fee, FOR the Fund's proposed repurchase policy
and FOR the Open-End Proposal. Other than the four proposals set forth in the
Fund's preliminary proxy statement and Laxey's proposal to terminate the
Investment Advisory Agreement, Laxey is not aware of any other proposals to be
brought before the Annual Meeting. However, should other proposals be brought
before the Annual Meeting of which Laxey is not made aware within a reasonable
amount of time prior to the Annual Meeting, the persons named as proxies in the
enclosed GOLD proxy card will vote on such matters in their discretion.
IMPORTANT!
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN. LAXEY
URGES YOU TO SIGN, DATE AND RETURN THE ENCLOSED GOLD PROXY CARD TODAY TO VOTE
FOR THE ELECTION OF THE LAXEY NOMINEES, FOR THE TERMINATION OF THE INVESTMENT
ADVISORY AGREEMENT, AGAINST THE ADVISORY FEE, FOR THE FUND'S PROPOSED SHARE
REPURCHASE POLICY AND FOR THE OPEN-END PROPOSAL.
THE LAXEY NOMINEES ARE COMMITTED, SUBJECT TO THEIR FIDUCIARY DUTIES TO THE
FUND'S STOCKHOLDERS, TO GIVING ALL STOCKHOLDERS OF THE FUND THE OPPORTUNITY TO
RECEIVE THE MAXIMUM VALUE FOR THEIR SHARES. A VOTE FOR THE LAXEY NOMINEES, FOR
THE TERMINATION OF THE INVESTMENT ADVISORY AGREEMENT, AGAINST THE ADVISORY FEE,
FOR THE FUND'S PROPOSED SHARE REPURCHASE POLICY AND FOR THE OPEN-END PROPOSAL
WILL ENABLE YOU -- AS THE OWNERS OF THE FUND -- TO SEND A STRONG MESSAGE TO THE
BOARD THAT YOU ARE COMMITTED TO CAUSING THE FUND TO OFFER A MINIMUM OF 98% OF
NAV ON A REGULAR BASIS TO ALL STOCKHOLDERS OF THE FUND.
IF YOUR SHARES ARE REGISTERED IN YOUR OWN NAME, PLEASE SIGN AND DATE THE
ENCLOSED GOLD PROXY CARD AND RETURN IT TO LAXEY, IN THE ENCLOSED ENVELOPE TODAY.
IF ANY OF YOUR SHARES ARE HELD IN THE NAME OF A BROKERAGE FIRM, BANK, BANK
NOMINEE OR OTHER INSTITUTION ON THE RECORD DATE, ONLY IT CAN VOTE SUCH SHARES
AND ONLY UPON RECEIPT OF YOUR SPECIFIC INSTRUCTIONS. ACCORDINGLY, PLEASE SIGN,
DATE AND RETURN YOUR GOLD PROXY IN THE ENVELOPE PROVIDED AND CONTACT THE PERSON
RESPONSIBLE FOR YOUR ACCOUNT AND INSTRUCT THAT PERSON TO EXECUTE ON YOUR BEHALF
THE GOLD PROXY CARD.
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If you have any questions regarding your proxy, or need assistance in
voting your Shares, please call:
Innisfree M&A Incorporated
501 Madison Avenue
20th Floor
New York, New York 10022
Call toll-free: (888) [_________]
Bankers and Brokers Call Collect: (212) 750-5833
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ELECTION OF CLASS III DIRECTORS
Laxey is soliciting your proxy in support of the election of its two
nominees to the Board of Directors of the Fund. All of the proposals scheduled
to be voted upon at the Annual Meeting, including Laxey's proposal to terminate
the Investment Advisory Agreement are included in Laxey's GOLD proxy card. If
you wish to vote for the Laxey Nominees, you may do so by completing and
returning a GOLD proxy card.
WHY YOU SHOULD VOTE FOR THE LAXEY NOMINEES
Laxey believes that the election of the Laxey Nominees represents the best
means for the Stockholders to obtain representatives on the Board who will more
accurately reflect the wishes of a majority of the Stockholders. If elected, the
Laxey Nominees intend to encourage the other Directors to explore methods to
offer Stockholders at least 98% of NAV for their Shares on a regular basis.
The Board of Directors of the Fund is divided into three classes of
Directors, as nearly equal in number as possible. Each class of Directors serves
for three years with one class being elected each year. Each year the term of
office of one class will expire. The terms of Messrs. Juan Gallardo T. and
Augustin Santamarina V. expire this year. As indicated in the Fund's preliminary
proxy statement, Mr. Santamarina has decided not to stand for reelection and to
retire from the Board effective upon the election of his replacement. Mr. Javier
Lozano Alarcon is being nominated by Laxey to be elected to succeed Juan
Gallardo T. and Mr. Xavier Cervantes y Omana is being nominated by Laxey to be
elected to succeed Augustin Santamarina V.
Even if the Laxey Nominees are elected to the Board of Directors of the
Fund, they will constitute only two of the seven members of the Board of
Directors. Accordingly, the Laxey Nominees would not be in a position, without
the support of at least two or more of the incumbent members of the Board, to
cause any action to be taken, including the exploration of strategic
alternatives. There can be no assurance that the incumbent members of the Board
will vote with the Laxey Nominees to explore methods to offer Stockholders at
least 98% of NAV for their Shares on a regular basis. Laxey believes, however,
that Stockholder support for the Laxey Nominees set forth in this proxy
statement may encourage the Board to explore methods to offer Stockholders at
least 98% of NAV for their Shares on a regular basis.
THE LAXEY NOMINEES
Laxey is proposing that the Stockholders elect the Laxey Nominees to the
Board at the Annual Meeting.
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The following table sets forth the name, business address, age, term of
office and length of time served, present principal occupation and principal
occupations, positions, offices, directorships or employments for the past five
years of each of the Laxey Nominees. See also "Information About Participants".
This information has been furnished to Laxey by the Laxey Nominees.
NAME, PRINCIPAL BUSINESS ADDRESS AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE DURING THE
LAST FIVE YEARS; CURRENT DIRECTORSHIPS
Javier Lozano Alarcon Mr. Lozano currently serves as the Chairman of Javier
Monte Caucaso 915 Lozano y Asociados, S.C., a telecommunications
Despacho 602 consulting firm. He is a member of the Mexican Law Bar
Lomas de Chapultepec and is a weekly contributor and collaborator covering
CP 11000, Distrito Federal, Mexico telecommunications matters for "El Financiero", a
Age 39 Mexican newspaper and "Formula Financiara", a Mexican
radio program. Mr. Lozano is currently a professor at
the Escuela Libre de Derecho in Mexico City and teaches
telecommunications law at the Universidad Anahuac del
Sur. Over the last five years, Mr. Lozano has been
extensively involved in the public telecommunications
sector. He acted as a liaison between the federal
government and the electronic print media in addition to
establishing the broadcasting and publicizing criteria
for the Ministry of the Interior and federal state-owned
entities as the Under Minister for Social Communication
of the Ministry of the Interior. He has served as the
Chairman of the Federal Telecommunications Commission in
Mexico in August 1998 and, prior to that, served as the
Communications Under Minister for the Ministry of
Communications and Transportation in Mexico.
Chairman of the Telecomunicaciones de Mexico Board
(telecommunications company) and the Mexican Postal
Service; Chairman of the Committee for Restructuring the
Mexican Satellite System in charge of the satellite
system privatization process in 1977; Chairman of the
Governing Board for the Mexican Radio Institute;
Chairman of the Notimex Board of Directors.
Xavier Cervantes y Omana Mr. Cervantes currently serves as the Chairman of the
Bosques de Cidros Board and Chief Executive Officer of GMC de Mexico, S.A.
No 46-303 Bosques de las Lomas de C.V., a real estate development company. Mr.
Distrito Federal, Mexico Cervantes has experience as the Chief Executive Officer
Age: 38 of Grupo Cierbo, S.A de C.V. promoting and developing
investment projects and as a Partner in Beficiadora De
Coco Acapulco S.A de C.V., a company in the
"agroindustry."
Chairman, Joseph Allen Asesores, S.A. de C.V., (life
insurance brokerage company); Member of the Board of
Trustees, Universidad Anahuac, Mexico City.
7
Each of the Laxey Nominees has entered into consulting agreements with
Laxey as general advisors on the Mexican economic and political climate. Neither
of the Laxey Nominees will receive any compensation from Laxey for their
services as a director of the Fund. Laxey has agreed to indemnify the Laxey
Nominees against any costs, expenses and other liabilities associated with their
nomination and the election contest. Each of Messrs. Lozano and Cervantes has
executed a written consent agreeing to be a nominee for election to the Board
and to serve as a director if so elected. Neither of the Laxey Nominees has been
convicted in any criminal proceedings (excluding traffic violations or similar
misdemeanors) over the past ten years. For additional information on the Laxey
Nominees and the other participants in this solicitation, please review Schedule
I attached hereto.
The Fund's Bylaws require that 60% of the directors on the Board be Mexican
citizens. Each of the Laxey Nominees is a citizen of Mexico. Neither of the
Laxey Nominees beneficially owns any Shares of the Fund and neither of the Laxey
Nominees is an interested person of the Fund as defined in the Investment
Company Act of 1940, as amended.
Neither Laxey nor any of the Laxey Nominees is adverse to the Fund or any
of its subsidiaries in any material pending legal proceedings.
Laxey does not expect that the Laxey Nominees will be unable to stand for
election but, in the event that any such person is unable to do so or for good
cause will not serve, and Laxey does not learn of this circumstance a reasonable
time before the Annual Meeting, the Shares represented by the enclosed GOLD
proxy card will be voted for substitute Laxey Nominees (who would be named after
the solicitation of proxies).
TERMINATION OF INVESTMENT ADVISORY AGREEMENT
Laxey seeks to terminate the Investment Advisory Agreement because Laxey
believes that Impulsora has not been acting aggressively enough to reduce the
discount from NAV of the Shares of the Fund and to increase the liquidity of the
Fund's Shares.
PROPOSAL AND SUPPORTING STATEMENT
As previously provided to the Fund, Laxey's proposal and supporting
statement to be presented to Stockholders at the Annual Meeting is as follows:
RESOLVED: The Investment Advisory and Management
Agreement between Impulsora del Fondo Mexico, S.A de C.V. and
the Fund shall be terminated in accordance with its terms,
effective within 60 days after the 2002 Annual Meeting.
As significant Fund stockholders, we have a vested
interest in the Fund's performance and management decisions
relating to stockholder value.
The Fund filed an application with the U.S. Securities
and Exchange Commission ("SEC") in March 2001 and is seeking
approval for conducting periodic in-kind repurchases of the
Fund's
8
outstanding shares each year at 98% of Net Asset Value
("NAV"). The Fund has outlined a proposal to offer a very
limited facility to stockholders of approximately 5% annually
and we do not believe that the Fund's proposed program, as
outlined in the application, provides an adequate facility
for the Fund's stockholders. We concur that Fund stockholders
desire the opportunity to receive 98% of NAV for their
shares. However, the Fund's attempt to limit the required
repurchases to approximately 5% annually does not provide
meaningful liquidity to the Fund's stockholders and we
believe does not address the current wish of stockholders. We
believe that the majority of stockholders would support a
mechanism that would provide liquidity with respect to at
least 50% of the Fund's outstanding shares. Moreover,
approval by the SEC of the Fund's application may take a
substantial period of time, may require significant changes
in the application as submitted by the Fund or may be
rejected altogether after an extended review period. We
believe it is imperative that the Fund develops a program
that can be implemented in a significantly shorter time
frame. Since the announcement by the Fund we believe that it
is likely there has been a significant change in the
stockholder base of the Fund towards stockholders who have
reacted to the statements made by the Fund with regard to a
repurchase facility at 98% of NAV. Any further delay in
implementation of a facility to create substantially greater
liquidity for stockholders than the Fund's current 5%
proposal is likely to lead to ever more radical
restructurings of the Fund. We believe that Impulsora del
Fondo Mexico, S.A. de C.V., the current investment advisor
("Impulsora"), has not acted in a manner which would
expediently and effectively allow the stockholders of the
Fund to maximize their investment. Thus, we seek to terminate
the current Investment Advisory Agreement with Impulsora.
BACKGROUND AND RECENT EVENTS
Laxey has been a holder of the Fund's Shares since March 5, 2001. In August
2000, the President and Fellows of Harvard College ("Harvard"), the largest
current Stockholder of the Fund, had sought to undertake to cause the Fund to
reduce the significant discount from NAV of the Shares of the Fund, which has
been as high as 30% over the last two years. In response to Harvard's actions,
the Fund filed the application for exemption with the SEC in March 2001
requesting an exemption from the SEC rules regarding issuer stock repurchases
and to propose a periodic in-kind stock repurchase plan. The application stated
that it presented novel issues for the SEC and was a case of first impression.
Laxey understands that exemptive applications, such as the application filed by
the Fund, often take between one to two years for final disposition by the SEC.
On August 1, 2001, Laxey Partners Limited, together with its two managed
companies, Catalyst and LIL, made a joint filing to the SEC on a Schedule 13D.
In the Schedule 13D, Laxey
9
stated that it might submit one or more proposals for consideration by the
Stockholders at the Annual Meeting.
In September 2001, Laxey contacted the Fund telephonically to discuss
Laxey's concerns regarding the Fund's deep discount to NAV and how the Fund's
management intended to address the issue. Disappointed with the lack of
response, Laxey then sent a letter to the Fund on September 26, 2001, requesting
advice regarding the Fund's persistent deep discount from NAV and again
expressing its dissatisfaction with the manner in which the Fund was handling
the deep discount issue.
On September 28, 2001, Laxey received a letter from the Fund that
referenced the application but offered no other suggestions for dealing with the
Fund's discount from NAV.
In light of the Fund's lack of responsiveness to Stockholders' concerns
about the persistent discount to NAV and the flaws inherent in its application,
on December 21, 2001, Laxey Limited Partners, on behalf of itself and the two
funds which it manages, Catalyst and LIL, nominated its own slate of directors
and submitted a proposal to the Fund to terminate the Investment Advisory
Agreement within 60 days following the date of the Annual Meeting.
During January 2002, Laxey filed with the SEC a survey seeking to better
understand Stockholder sentiment prior to filing this proxy statement. A
majority of the Stockholders indicated their wish to have the opportunity to be
able to receive NAV for all of their Shares on a regular basis.
In concept, Laxey supports the Fund's proposal to adopt the proposed
periodic in-kind repurchase policy. Laxey believes that the Fund's proposal is
consistent with Laxey's desire for Stockholders to be able to realize at least
98% of NAV for their Shares on regular basis. Laxey believes, however, based on
the actions of the Board and Impulsora to date, that the Fund's proposed
repurchase policy will not be actively administered by Impulsora or the Board.
Other than the very limited repurchases which are required, the amount and
frequency of actual repurchases under the Fund's proposal are within the sole
discretion of the Board and there is no defined proposed policy as to the
frequency or amount of such repurchases. Moreover, the Fund's proposed
repurchase policy offers a very limited facility to certain small Stockholders
who may not be able to participate in the Fund's repurchase program. Laxey
believes that the proposed repurchase policy is a good starting point and
supports the approval of the policy, but Laxey also believes that implementation
of the policy in a manner which reflects the desires of the Stockholders will
only occur if the Laxey Nominees are elected and a new investment advisor is
retained.
Laxey believes that the Fund's proposed plan as set forth in the
application, even if the SEC eventually approves it in its current form, will
not be actively administered by Impulsora or the Board and that actual
repurchases will be at or near the minimum levels permitted by the plan. If the
proposed plan is not actively administered, Laxey believes it will not provide
adequate protection for the Stockholders or meaningfully address the persistent
deep discount from NAV, which has been as high as 30% over the last two years.
Thus, more meaningful action is required and Laxey believes that Impulsora is
not prepared to seek such action or apply the Fund's proposed plan in a
meaningful manner. Accordingly, Laxey believes that the
10
termination of the Investment Advisory Agreement is in the best interests of the
Stockholders of the Fund and recommends that Stockholders vote FOR the
termination of the Investment Advisory Agreement.
If a majority of the outstanding voting securities vote to terminate the
Investment Advisory Agreement and a successor investment advisor is not selected
by the Company within 60 days after termination, the Investment Advisory
Agreement provides that, in such an event, the previous advisor will act solely
to dispose of the Company's assets in an orderly manner and will receive
compensation provided for in the Investment Advisory Agreement until such
disposition is completed. Under the Investment Advisory Act of 1940, as amended,
in the event that the previous Investment Advisory Agreement, which was approved
by a majority of the Fund's outstanding voting securities, is terminated and no
successor is immediately selected, the Board may select an interim investment
advisor for a period not to exceed 150 days following the date on which the
previous investment advisory agreement was terminated. A new investment advisory
agreement would require votes of the Board and the Stockholders of the Fund.
Because this proposal relates to the termination of the Investment Advisory
Agreement, included in Schedule III to this proxy statement is information that
Stockholders may wish to consider concerning the Investment Advisory Agreement.
As Laxey has no independent knowledge regarding this information, its
presentation is based entirely on disclosures contained in the Fund's proxy
statement.
APPROVAL OF A PERFORMANCE FEE COMPONENT TO
THE INVESTMENT ADVISORY AGREEMENT
The Fund has proposed the addition of a performance fee component to the
Investment Advisory Agreement. The addition of this component requires the
approval of the Stockholders.
Based on information contained in the Fund's proxy statement, the
performance adjustment would work as follows: For every 1% difference in the
Fund's performance against the IFCG Mexico Index, the Fund's advisory fee would
be adjusted up or down by 0.025%, up to a maximum adjustment of 0.25%, would be
calculated monthly and would be based on the Fund's performance against the IFCG
Mexico Index for the most recent 12 months (the "Performance Adjustment"). If
the Fund were to outperform the IFCG Mexico Index during the most recent 12
months, the Fund's advisory fee would increase by a positive Performance
Adjustment. If the Fund were to underperform the IFCG Mexico Index during the
most recent 12 months, the advisory fee paid to the Fund's investment advisor
would be reduced by the Performance Adjustment.
Based on information contained in the Fund's proxy statement, if the
Performance Adjustment were in place during the fiscal year of the Fund ended
October 31, 2001, Impulsora would have received $6,465,656 ($100,157 more than
the advisory fees actually received for such fiscal year).
Laxey does not support the Advisory Fee proposal. According to the Fund's
proxy statement, the purpose of the Fund's proposal to attach a performance
related fee adjustment to
11
Impulsora's advisory fees would be to further align the interests of the
management of the Fund with the interests of the Stockholders. Laxey believes
that increasing Stockholder value should already be a priority for Impulsora
without having to add any additional performance related incentives. As
discussed above, Laxey does not believe that Impulsora has acted decisively to
achieve maximum Stockholder Value and that Impulsora will not apply the Fund's
proposed repurchase policy in a meaningful manner. Therefore, Laxey is seeking
to terminate the Investment Advisory Agreement and does not support the Advisory
Fee Proposal.
APPROVAL OF THE FUND'S PROPOSED SHARE REPURCHASE POLICY
The Fund has proposed a periodic in-kind share repurchase policy to be
implemented in order to increase Stockholder value. A regulatory filing for
exemptive authority to conduct the in-kind share repurchases has been pending
with the SEC since March 2, 2001. According to the Fund's proxy statement, in
November 2000, the staff at the SEC informally advised the Fund it intended to
provide the Fund with additional comments on the Fund's application. The Fund
has not received such comments as of the date of their preliminary proxy
statement. Notwithstanding that fact that the SEC has not approved the Fund's
application, the Stockholders are being asked at the Annual Meeting to approve
of the adoption of the proposed repurchase policy. According to the description
of the policy in the Fund's preliminary proxy statement, the Fund may offer to
Stockholders a minimum of 5% of the Fund's outstanding Shares to be repurchased
by the Fund. The repurchases could occur as frequently as quarterly or
semi-annually, at the Board's the sole discretion, but must occur at least
annually. Stockholders submitting Shares to be repurchased pursuant to an offer
under the policy would receive an in-kind pro-rata distribution of equity
portfolio securities with certain restrictions as indicated in the Fund's
application.
In concept, Laxey supports the Fund's proposal to adopt the proposed
periodic in-kind repurchase policy. Laxey believes that the Fund's proposal is
consistent with Laxey's desire for Stockholders to be able to realize at least
98% of NAV for their Shares on regular basis. Laxey believes, however, based on
the actions of the Board and Impulsora to date, that the Fund's proposed
repurchase policy will not be actively administered by Impulsora or the Board.
Other than the very limited repurchases which are required, the amount and
frequency of actual repurchases under the Fund's proposal are within the sole
discretion of the Board and there is no defined proposed policy as to the
frequency or amount of such repurchases. Moreover, the Fund's proposed
repurchase policy offers a very limited facility to certain small Stockholders
who may not be able to participate in the Fund's repurchase program. Laxey
believes that the proposed repurchase policy is a good starting point and
supports the approval of the policy, but Laxey also believes that implementation
of the policy in a manner which reflects the desires of the Stockholders will
only occur if the Laxey Nominees are elected and a new investment advisor is
retained.
RECOMMENDATION THAT THE BOARD
EXPEDITE THE PROCESS OF CONVERTING TO AN OPEN-END FUND
12
As indicated in the Fund's proxy statement, a stockholder of the Fund
unaffiliated with Laxey has submitted the Open-End Proposal. The Open-End
Proposal is in the form of a non-binding recommendation by the Stockholders that
the Board convert the Fund to an open-ended fund. Laxey believes that the
Open-End Proposal is consistent with Laxey's desire for Stockholders to be able
to realize at least 98% of NAV for the Shares on a regular basis and supports
the adoption of the Open-End Proposal.
LAXEY RECOMMENDATIONS
Laxey is soliciting proxies FOR the election of the Laxey Nominees to the
Board as Class III Directors, FOR the termination of the Investment Advisory
Agreement, AGAINST the Advisory Fee, FOR the Fund's proposed repurchase policy
and FOR the Open-End Proposal. Other than the four proposals set forth in the
Fund's preliminary proxy statement and Laxey's proposal to terminate the
Investment Advisory Agreement, Laxey is not aware of any other proposals to be
brought before the Annual Meeting. However, should other proposals be brought
before the Annual Meeting of which Laxey is not made aware within a reasonable
amount of time prior to the Annual Meeting, the persons named as proxies in the
enclosed GOLD proxy card will vote on such matters in their discretion.
YOU ARE URGED TO VOTE FOR THE ELECTION OF THE LAXEY NOMINEES, FOR THE
TERMINATION OF THE INVESTMENT ADVISORY AGREEMENT, AGAINST THE ADVISORY FEE, FOR
THE FUND'S PROPOSED REPURCHASE POLICY AND FOR THE OPEN-END PROPOSAL ON THE
ENCLOSED GOLD PROXY CARD.
VOTING AND PROXY PROCEDURES
Only Stockholders of record on the Record Date will be entitled to notice
of and to vote at the Annual Meeting. Based on publicly available information,
Laxey believes that the only outstanding class of securities of the Fund
entitled to vote at the Annual Meeting is the Shares. Each Share is entitled to
one vote on each matter as may properly be brought before the Fund meeting.
According to the Fund's proxy statement, there are 45,456,232 Shares issued and
outstanding as of the Record Date.
Shares represented by properly executed GOLD proxy cards will be voted at
the Annual Meeting as marked and, in the absence of specific instructions, will
be voted FOR the election of the Laxey Nominees as Class III directors of the
Fund, FOR the termination of the Investment Advisory Agreement, AGAINST the
Advisory Fee, FOR the Fund's proposed repurchase policy, FOR the Open-End
Proposal and, in the discretion of the persons named as proxies, on all other
matters as may properly come before the Annual Meeting of which Laxey is not
made aware within a reasonable amount of time prior to the Annual Meeting. Laxey
recommends that stockholders vote FOR the election of the two Laxey Nominees,
FOR the termination of the Investment Advisory Agreement, AGAINST the Advisory
Fee, FOR the Fund's proposed repurchase policy and FOR the Open-End Proposal.
Election of the Laxey Nominees as Directors requires the affirmative vote
of a plurality of the Shares represented and entitled to vote at the Annual
Meeting. The presence in person or
13
by proxy of the holders of a majority of the outstanding Shares of the Fund is
required to constitute a quorum at the Meeting. Termination of the Investment
Advisory Agreement requires the vote of a majority of the outstanding Shares of
such Fund and not more that 60 days' written notice to Impulsora. The adoption
of an amendment to the Investment Advisory Agreement adopting a performance fee
component and approval of a fundamental policy requiring periodic in-kind
repurchases will require the approval of the lesser of: (1) 67% of the Fund's
Shares present at a meeting at which holders of more than 50% of the outstanding
Shares are present in person or by proxy; or (2) more than 50% of the Fund's
outstanding Shares. Approval of the Open-End Proposal will require the approval
of the majority of votes validly cast at the Meeting.
Stockholders of the Fund may revoke their proxies at any time prior to its
exercise by attending the Annual Meeting and voting in person (although
attendance at the Annual Meeting will not in and of itself constitute revocation
of a proxy) or by delivering a written notice of revocation. The delivery of a
subsequently dated proxy that is properly completed will constitute a revocation
of any earlier proxy. The revocation may be delivered either to Laxey, in care
of Innisfree M&A Incorporated, at the address set forth on the back cover of
this proxy statement or to the Fund at 1775 Eye Street, N.W., Washington, DC
20006-2401 or any other address provided by the Fund. Although a revocation is
effective if delivered to the Fund, Laxey requests that either the original or
photostatic copies of all revocations be mailed to Laxey, in care of Innisfree
M&A Incorporated, at the address set forth on the back cover of this Proxy
Statement so that Laxey will be aware of all revocations and can more accurately
determine if and when proxies have been received from the holders of record on
the Record Date of a majority of the outstanding Shares.
THE GOLD PROXY CARD CONTAINS ALL PROPOSALS SCHEDULED TO BE VOTED UPON AT
THE ANNUAL MEETING OF STOCKHOLDERS. LAXEY RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF THE LAXEY NOMINEES AS CLASS III DIRECTORS OF THE FUND, FOR THE
TERMINATION OF THE INVESTMENT ADVISORY AGREEMENT, AGAINST THE ADVISORY FEE, FOR
THE FUND'S PROPOSED REPURCHASE POLICY AND FOR THE OPEN-END PROPOSAL. IF YOU WISH
TO VOTE, PLEASE SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED GOLD PROXY CARD IN
THE POSTAGE-PAID ENVELOPE PROVIDED. A GOLD PROXY CARD THAT IS RETURNED TO LAXEY
OR ITS AGENT WILL BE VOTED AS THE STOCKHOLDER INDICATES THEREON. IF A GOLD PROXY
CARD IS RETURNED WITHOUT A VOTE INDICATED THEREON, IT WOULD BE VOTED
CONSISTENTLY WITH LAXEY'S RECOMMENDATIONS SET FORTH ABOVE.
SOLICITATION OF PROXIES
Laxey is making the solicitation of proxies pursuant to this proxy
statement. Proxies may be solicited by mail, facsimile, telephone, telegraph, in
person and by advertisements. Certain directors, officers and employees of
Laxey, none of whom will receive additional compensation for such solicitation,
may make solicitations.
14
Laxey has retained Innisfree M&A Incorporated for solicitation and advisory
services in connection with this solicitation, for which Innisfree M&A
Incorporated will receive a fee not to exceed $[________], together with
reimbursement for its reasonable out-of-pocket expenses, and will be indemnified
against certain liabilities and expenses, including certain liabilities under
the federal securities laws. Innisfree M&A Incorporated will solicit proxies
from individuals, brokers, banks, bank nominees and other institutional holders.
Laxey has requested banks, brokerage houses and other custodians, nominees and
fiduciaries to forward all solicitation materials to the beneficial owners of
the Shares they hold of record. Laxey will reimburse these record holders for
their reasonable out-of-pocket expenses in so doing. It is anticipated that
Innisfree M&A Incorporated will employ approximately sixty-five (65) persons to
solicit Stockholders for the Annual Meeting.
Laxey does not currently intend to seek reimbursement of the costs of this
solicitation from the Fund but may decide to do so in the future in the event
that the Laxey Nominees are elected and/or Laxey's proposal is approved. Costs
of this solicitation of proxies are currently estimated to be approximately
$[_______]. Laxey estimates that, through the date hereof, its expenses in
connection with this solicitation are approximately [$_______].
OTHER INFORMATION
According to the Fund's proxy statement, if a Stockholder intends to
present a proposal at the 2003 Annual Meeting of Stockholders of the Fund and
desires to have the proposal included in the Fund's Proxy Statement and form of
proxy for that meeting, the Stockholder must deliver the proposal to the offices
of the Fund by September 25, 2002 for consideration by the Fund.
Stockholders wishing to present proposals at the 2003 Annual Meeting of
Stockholders of the Fund not to be included in the Fund's proxy materials should
send written notice to the Secretary of the Fund of such proposals by December
7, 2002 but no earlier than November 7, 2002 in the form prescribed in the
Fund's By-Laws.
CERTAIN INFORMATION ABOUT THE FUND
The Mexico Fund, Inc. is a Maryland corporation with its principal
executive office located at 1775 Eye Street, N.W., Washington, DC 20006-2401.
The Fund is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and in accordance therewith is required to file
reports, proxy statements and other information with the SEC. Reports,
registration statements, proxy statements and other information filed by the
Fund with the SEC can be inspected and copied at the public reference facilities
maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W. Room 1024,
Washington, DC 20549. Documents filed electronically by the Fund are also
available at the SEC's Web site (http://www.sec.gov).
The Fund's proxy statement contains information regarding:
o number of Shares outstanding as of the record date;
15
o establishment of a quorum;
o vote required for approval of proposals;
o treatment of abstentions and "broker non-votes;"
o admission requirements for the Annual Meeting;
o ownership of Shares by directors and executive officers of the Fund and by
other persons who own more than 5% of the outstanding Shares;
o background of the Fund's nominees for election to the Board;
o compensation paid and payable to the Fund's directors and executive
officers;
o committees of the Board and their responsibilities;
o meetings of the Board and certain committees thereof;
o requirements regarding the submission of Stockholder proposals to be
considered for inclusion in the Fund's proxy statement for the 2003 Annual
Meeting of Stockholders and the date after which notice of a stockholder
proposal submitted is considered untimely; and
o revocability of proxies.
Laxey assumes no responsibility for the accuracy or completeness of such
information.
OTHER MATTERS AND ADDITIONAL INFORMATION
Laxey is unaware of any other matters to be considered at the Annual
Meeting. Should other proposals be brought before the Annual Meeting of which
Laxey is not made aware within a reasonable amount of time prior to the Annual
Meeting, the persons named as proxies on the enclosed GOLD proxy card will vote
on such matters in their discretion.
February[__], 2002 LAXEY PARTNERS LIMITED
(on behalf of itself and as attorney-in-
fact for the participants in this
solicitation)
By:
------------------------------------
Andrew Pegge, Director
16
SCHEDULE I
INFORMATION ABOUT PARTICIPANTS
Laxey is soliciting proxies on behalf of itself and its two managed
companies, The Value Catalyst Fund Limited, a Cayman Islands company, and Laxey
Investors Limited, a British Virgin Islands company. By virtue of their
ownership of Laxey, Colin Kingsnorth and Andrew Pegge may be deemed to be
participants in this solicitation. By virtue of their role as Laxey Nominees,
Javier Lozano Alarcon and Xavier Cervantes y Omana may be deemed to be
participants in this solicitation. Similar information for the Laxey Nominees is
located under the caption "The Laxey Nominees" of this proxy statement, which
information is incorporated by reference into this Schedule I.
The Value Catalyst Fund Limited, a Cayman Islands company ("Catalyst"):
Catalyst is a private investment company formed in May 2000 and created to allow
investors to take advantage of investment opportunities in closed-end funds and
similar investment entities. The address of Catalyst's principal business and
principal office is P.O. Box 309, Ugland House, South Church Street, George
Town, Grand Cayman, Cayman Islands, British West Indies. As of the date of
mailing of this proxy statement, Catalyst is the beneficial owner of 1,193,400
Shares of the Fund.
Laxey Investors Limited, a British Virgin Islands company ("LIL"):
LIL is a private investment company formed in March 1999 and created to allow
investors to take advantage of investment opportunities in closed-end funds and
similar investment entities. The address of LIL's principal business and
principal office is Akara Building, 24 De Castro Street, Wickams Cay I, Road
Town, Tortola, British Virgin Islands. As of the date of mailing of this proxy
statement, LIL is the beneficial owner of 1,125,460 Shares of the Fund.
Laxey Partners Limited, an Isle of Man company:
Laxey Partners Limited is the investment manager for each of Catalyst and LIL,
subject to the overall control of the directors of each of these entities.
Formed in November 1998, Laxey Partners Limited is a global active value fund
manager specializing in arbitrage-led investment. The address of Laxey Partners
Limited's principal business and principal office is Stanley House, 7-9 Market
Hill, Douglas, Isle of Man IM1 2BF. As of the date of mailing of this proxy
statement, Laxey Partners Limited is the beneficial owner of 2,551,650 Shares of
the Fund.
Colin Kingsnorth, a British citizen; and Andrew Pegge, a British citizen:
Each of Messrs. Kingsnorth and Pegge own one half of the outstanding equity of
Laxey Partners Limited. Mr. Kingsnorth's principal occupation is that of
portfolio manager and director of Laxey Partners (UK) Limited. His business
address is 28 Chelsea Wharf, Lots Road, London, SW10 0QJ, United Kingdom. Mr.
Pegge's principal occupation is also that of portfolio manager and director of
Laxey Partners Limited and his business address is Stanley House, 7-9 Market
Hill, Douglas, Isle of Man, IM1 2BF, United Kingdom. As of the date of mailing
of this proxy statement, each of Messrs. Kingsnorth and Pegge is the beneficial
owner of 2,551,650 Shares of the Fund.
Attached hereto is Schedule II which sets forth information concerning
purchases and sales of Shares of the Fund by the participants in this
solicitation during the last two years.
Neither the soliciting participants nor any associate of the soliciting
participants nor the Laxey Nominees have any arrangement or understanding with
any person with respect to any future employment by the Fund or its affiliates
or with respect to any future transactions to which the Fund or any of its
affiliates will or may be a party.
During the past five years, none of the participants in this
solicitation has been convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors) or been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and, as a result of
such proceeding, was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, Federal or state securities laws or finding any violation with respect to
such laws.
Neither the soliciting participants nor any associate of the soliciting
participants nor the Laxey Nominees have any arrangement or understanding with
any person with respect to any future employment by the Fund or its affiliates
or with respect to any future transactions to which the Fund or any of its
affiliates will or may be a party.
SCHEDULE II
TRANSACTIONS IN THE SECURITIES OF THE FUND
Except as disclosed in this Proxy Statement, none of the participants
in this solicitation has, or had, any interest, direct or indirect, by security
holdings or otherwise, in the Fund. The following table sets forth certain
information with respect to purchases and sales of Shares of the Fund by the
participants in this solicitation within the past two years. Shares beneficially
owned by Laxey Partners Limited include Shares purchased through one or more
unaffiliated third party discretionary accounts managed by Laxey (the "Laxey
Accounts").
-------------------------------------------------------------------------
LIL
-------------------------------------------------------------------------
DATE OF PURCHASE (SALE) NUMBER OF SHARES
-------------------------------------------------------------------------
03/05/01 22,000
-------------------------------------------------------------------------
03/05/01 7,700
-------------------------------------------------------------------------
03/06/01 2,400
-------------------------------------------------------------------------
03/06/01 10,000
-------------------------------------------------------------------------
03/22/01 25,000
-------------------------------------------------------------------------
03/23/01 15,000
-------------------------------------------------------------------------
03/30/01 10,600
-------------------------------------------------------------------------
04/03/01 15,000
-------------------------------------------------------------------------
04/04/01 13,900
-------------------------------------------------------------------------
04/05/01 5,500
-------------------------------------------------------------------------
04/23/01 20,000
-------------------------------------------------------------------------
04/26/01 30,000
-------------------------------------------------------------------------
05/10/01 2,100
-------------------------------------------------------------------------
05/11/01 3,100
-------------------------------------------------------------------------
05/14/01 16,100
-------------------------------------------------------------------------
05/16/01 175,000
-------------------------------------------------------------------------
05/15/01 200,000
-------------------------------------------------------------------------
05/18/01 27,200
-------------------------------------------------------------------------
05/30/01 17,100
-------------------------------------------------------------------------
05/31/01 17,300
-------------------------------------------------------------------------
06/05/01 42,400
-------------------------------------------------------------------------
06/06/01 25,400
-------------------------------------------------------------------------
06/13/01 50,500
-------------------------------------------------------------------------
06/14/01 5,000
-------------------------------------------------------------------------
06/20/01 17,000
-------------------------------------------------------------------------
06/28/01 600
-------------------------------------------------------------------------
06/29/01 1,900
-------------------------------------------------------------------------
07/05/01 5,000
-------------------------------------------------------------------------
07/06/01 6,300
-------------------------------------------------------------------------
07/09/01 37,900
-------------------------------------------------------------------------
07/11/01 93,500
-------------------------------------------------------------------------
-------------------------------------------------------------------------
07/12/01 40,000
-------------------------------------------------------------------------
07/13/01 7,500
-------------------------------------------------------------------------
07/19/01 5,000
-------------------------------------------------------------------------
07/20/01 9,500
-------------------------------------------------------------------------
07/23/01 5,000
-------------------------------------------------------------------------
07/24/01 5,600
-------------------------------------------------------------------------
07/30/01 1,800
-------------------------------------------------------------------------
07/31/01 60,000
-------------------------------------------------------------------------
07/31/01 60,000
-------------------------------------------------------------------------
08/01/01 37,700
-------------------------------------------------------------------------
08/03/01 28,500
-------------------------------------------------------------------------
08/16/01 10,000
-------------------------------------------------------------------------
10/25/01 1,860
-------------------------------------------------------------------------
01/23/02 (50,000)
-------------------------------------------------------------------------
01/24/02 (17,500)
-------------------------------------------------------------------------
LAXEY PARTNERS LIMITED
-------------------------------------------------------------------------
DATE OF PURCHASE NUMBER OF SHARES
-------------------------------------------------------------------------
11/02/01 100
-------------------------------------------------------------------------
11/02/01 50
-------------------------------------------------------------------------
LAXEY ACCOUNTS
-------------------------------------------------------------------------
DATE OF PURCHASE NUMBER OF SHARES
-------------------------------------------------------------------------
11/29/01 130,000
-------------------------------------------------------------------------
08/02/01 28,500
-------------------------------------------------------------------------
08/10/01 2,000
-------------------------------------------------------------------------
08/23/01 3,700
-------------------------------------------------------------------------
08/28/01 18,800
-------------------------------------------------------------------------
08/29/01 14,700
-------------------------------------------------------------------------
08/31/01 20,000
-------------------------------------------------------------------------
09/04/01 8,800
-------------------------------------------------------------------------
09/20/01 2,800
-------------------------------------------------------------------------
09/24/01 2,100
-------------------------------------------------------------------------
10/25/01 1,240
-------------------------------------------------------------------------
CATALYST
-------------------------------------------------------------------------
DATE OF PURCHASE (SALE) NUMBER OF SHARES
-------------------------------------------------------------------------
02/16/01 5,000
-------------------------------------------------------------------------
03/05/01 78,000
-------------------------------------------------------------------------
03/05/01 29,800
-------------------------------------------------------------------------
03/06/01 100,000
-------------------------------------------------------------------------
03/08/01 2,800
-------------------------------------------------------------------------
03/09/01 187,300
-------------------------------------------------------------------------
03/12/01 60,000
-------------------------------------------------------------------------
03/15/01 69,300
-------------------------------------------------------------------------
03/16/01 3,000
-------------------------------------------------------------------------
03/19/01 10,000
-------------------------------------------------------------------------
03/20/01 200,000
-------------------------------------------------------------------------
-------------------------------------------------------------------------
03/21/01 10,000
-------------------------------------------------------------------------
03/22/01 30,000
-------------------------------------------------------------------------
03/23/01 30,000
-------------------------------------------------------------------------
03/26/01 1,500
-------------------------------------------------------------------------
03/29/01 1,000
-------------------------------------------------------------------------
04/03/01 15,000
-------------------------------------------------------------------------
04/05/01 5,500
-------------------------------------------------------------------------
04/12/01 1,900
-------------------------------------------------------------------------
04/23/01 71,100
-------------------------------------------------------------------------
04/26/01 55,000
-------------------------------------------------------------------------
05/16/01 75,000
-------------------------------------------------------------------------
05/31/01 17,300
-------------------------------------------------------------------------
06/05/01 42,400
-------------------------------------------------------------------------
06/18/01 50,000
-------------------------------------------------------------------------
06/19/01 100,000
-------------------------------------------------------------------------
01/23/02 (50,000)
-------------------------------------------------------------------------
01/24/02 (7,500)
-------------------------------------------------------------------------
No separate transactions were undertaken by Kingsnorth or Pegge during the above
time period. No separate transactions were undertaken by Messrs. Lozano and
Cervantes during the above time period.
As of the date of mailing of this proxy statement, the beneficial ownership,
direct and indirect, of the participants in this solicitation are as follows:
Catalyst, together with Laxey Partners Limited, Kingsnorth and Pegge, are the
beneficial owners of 1,193,400 Shares, which represent approximately 2.7% of the
issued and outstanding Shares of the Fund. LIL, together with Laxey Partners
Limited, Kingsnorth and Pegge, are the beneficial owners of 1,125,460 Shares,
which represents approximately 2.6% of the issued and outstanding Shares of the
Fund. Laxey Partners Limited, Kingsnorth and Pegge, are the beneficial owners,
through Laxey Partners Limited's discretionary authority over the Laxey
Accounts, of the 232,640 Shares held in the Laxey Accounts, which represents
approximately 0.5% of the issued and outstanding Shares of the Fund. The Laxey
Accounts are terminable at any time by the respective third parties, for which
the Laxey Accounts are held, upon providing written notice to Laxey Partners
Limited. In addition, Laxey Partners Limited, together with Kingsnorth and
Pegge, are the beneficial owners of 150 Shares. Accordingly, Laxey Partners
Limited, Kingsnorth and Pegge are beneficial owners of an aggregate of 2,551,650
Shares, constituting approximately 5.6% of the issued and outstanding Shares of
the Fund. Messrs. Lozano and Cervantes are not the beneficial owners of any
Shares.
SCHEDULE III
INFORMATION CONCERNING THE FUND'S INVESTMENT ADVISOR, THE INVESTMENT ADVISORY
AGREEMENT AND CERTAIN OTHER MATTERS
The following information relating to Impulsora, the Investment
Advisory Agreement and certain other matters is included here because it may be
required by the rules of the Securities and Exchange Commission in a proxy
statement that contains proposals relating to the continuation or termination of
the Investment Advisory Agreement. This information is based entirely upon the
disclosure in the Fund's proxy statement, and Laxey has no independent knowledge
concerning its accuracy.
Impulsora, the Fund's current investment advisor, has its principal
office at 77 Aristoteles Street, 3rd Floor, Polanco, 11560 Mexico D.F., Mexico.
Impulsora has served as the investment adviser of the Fund from the time the
Fund was established in 1981. The Investment Advisory Agreement was last
approved by the Stockholders in 1990.
Pursuant to the Investment Advisory Agreement, the Adviser receives an
advisory fee at the rate of 0.85% of the Fund's average daily net assets up to
$200 million, 0.70% of such assets between $200 million and $400 million, and
0.60% of such assets in excess of $400 million. For the fiscal year ended
October 31, 2001, total advisory fees paid by the Fund to the Adviser aggregated
$6,365,499 based on average net assets for the fiscal year of approximately
$943,969,059. Impulsora is a Mexican corporation incorporated in 1980 in order
to serve as investment advisor to the Fund, and was a wholly owned subsidiary of
Impulsora del Fondo Mexico Controladora, S.A. de C.V. until October 13, 2000
when the two companies merged.
Pursuant to an Administrative Services Agreement, effective April 1,
1994, which was amended and restated as of June 30, 2001, Impulsora also
provides certain administrative services to the Fund which were previously
performed by the Fund's Trustee, including the determination and publication of
the net asset value of the Fund, the provision of assistance to the Fund to
enable the Fund to maintain its books and records in accordance with applicable
United States and Mexican law and the provision of assistance to the Fund's
auditors in the preparation and filing of tax reports and returns. The Fund pays
Impulsora an annual fee of 0.07% of average daily net assets of the Fund, as
compensation for services provided under the Administrative Services Agreement.
IMPORTANT!
Your vote is important. No matter how many Shares you own, please give
Laxey your proxy FOR the election of Laxey Nominees, FOR the termination of the
Investment Advisory Agreement, AGAINST the approval of the Advisory Fee, FOR the
adoption of the Fund's proposed share repurchase policy and FOR the Open-End
Proposal by taking three steps:
1. SIGNING the enclosed GOLD proxy card,
2. DATING the enclosed GOLD proxy card, and
3. MAILING the enclosed GOLD proxy card TODAY in the envelope
provided (no postage is required if mailed in the United States).
If any of your Shares are held in the name of a brokerage firm, bank
nominee or other institution, only it can vote such Shares and only upon receipt
of your specific instructions. Accordingly, please sign, date and return your
GOLD proxy in the envelope and contact the person responsible for your account
and instruct that person to execute the GOLD proxy card representing your
Shares. Laxey urges you to confirm in writing your instructions to Laxey at the
address provided below so that Laxey will be aware of all instructions given and
can attempt to ensure that such instructions are followed.
PLEASE DO NOT RETURN ANY PROXY CARD SUPPLIED TO YOU BY THE FUND, EVEN
TO VOTE AGAINST THEIR NOMINEES, AS IT MAY REVOKE YOUR PREVIOUS PROXY. REMEMBER,
ONLY YOUR LATEST-DATED PROXY COUNTS.
If you have any questions or require any additional information
concerning this proxy statement, please contact Laxey's proxy solicitor,
Innisfree M&A Incorporated, at the address set forth below.
Innisfree M&A Incorporated
501 Madison Avenue
20th Floor
New York, New York 10022
Call toll-free: (888) [________]
Bankers and Brokers Call Collect: (212) 750-5833
THE MEXICO FUND, INC.
2002 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF LAXEY
AND NOT ON BEHALF OF THE BOARD OF DIRECTORS
OR MANAGEMENT OF THE MEXICO FUND, INC.
The undersigned appoints [_____________ and ________________] and each
of them, attorneys and agents with full power of substitution to vote, as
designated below, all shares of Common Stock of The Mexico Fund, Inc. (the
"Fund") which the undersigned would be entitled to vote if personally present at
the 2002 Annual Meeting of Stockholders of the Fund, and including at any
adjournments or postponements thereof and at any special meeting called in lieu
thereof.
The undersigned hereby revokes any other proxy or proxies heretofore
given to vote or act with respect to the shares of Common Stock of the Fund held
by the undersigned, and hereby ratifies and confirms all action the herein named
attorneys and proxies, their substitutes, or any of them may lawfully take by
virtue hereof.
(Continued and to be signed on the reverse side)
LAXEY RECOMMENDS A VOTE FOR THE ELECTION OF THE
LAXEY NOMINEES, FOR THE TERMINATION OF THE INVESTMENT
ADVISORY AGREEMENT, AGAINST THE APPROVAL OF THE ADVISORY
FEE, FOR THE ADOPTION OF THE FUND'S SHARE REPURCHASE
POLICY AND FOR THE OPEN-END PROPOSAL
1. To elect Javier Lozano Alarcon to the Board of Directors of the Fund;
FOR [_____] WITHHOLD AUTHORITY [_____]
2. To elect Xavier Cervantes y Omana to the Board of Directors of the Fund;
FOR [_____] WITHHOLD AUTHORITY [_____]
3. To terminate the Investment Advisory Agreement effective within sixty (60)
days after the 2002 Annual Meeting of Stockholders.
FOR [_____] AGAINST [_____] ABSTAIN [_____]
4. To approve an additional performance fee component to the Fund's investment
advisory fee (the "Advisory Fee").
FOR [_____] AGAINST [_____] ABSTAIN [_____]
5. To approve the adoption of a share repurchase policy requiring the Fund, on
a periodic basis, to offer to repurchase in-kind Fund shares at no less that
98% of net asset value.
FOR [_____] AGAINST [_____] ABSTAIN [_____]
6. To consider a stockholder proposal that the stockholders of the Fund
recommend that the Board of Directors expedite the process to convert the
Fund to an open-end investment management company (the "Open-End Proposal").
FOR [_____] AGAINST [_____] ABSTAIN [_____]
7. In their discretion, the herein named attorneys and proxies are authorized
to vote upon such other matters as may properly come before the Annual
Meeting, of which such persons are not made aware within a reasonable period
of time prior to the Annual Meeting.
DATED:
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Please Sign Exactly As Name Appears On This Proxy.
---------------------------------------------------------
(signature)
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(signature, if held jointly)
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(title)
WHEN SHARES ARE HELD JOINTLY, JOINT OWNERS SHOULD EACH SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC., SHOULD INDICATE THE CAPACITY IN WHICH SIGNING.
IMPORTANT:
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE!
IF YOU NEED ASSISTANCE WITH THIS PROXY CARD, PLEASE CALL INNISFREE M&A
INCORPORATED TOLL FREE AT (888) [________].