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meVC DRAPER FISHER JURVETSON FUND I, INC.
(d/b/a MVC CAPITAL)
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MVC Capital Mails Letter to All Shareholders
MENLO PARK, Calif.--February 7, 2003--MVC Capital (NYSE:MVC), an information
technology venture capital fund, today announced that it has mailed a letter to
all MVC shareholders urging them to vote for MVC's Board of Directors. Dissident
hedge fund arbitrageur Millenco, L.P. has proposed a different slate.
The letter warns MVC Capital shareholders to beware when Millenco says its
interests are aligned with MVC's shareholders, saying, "Here's their formula:
buy in cheap, control the board of directors under the guise of aligning their
interests with yours, grab profits and move on to the next target...in short,
these raiders are nothing more than wolves in sheep's clothing."
The letter cites the example of a closed-end fund equivalent in the United
Kingdom, where Millenco's activism resulted in a crippled and seriously depleted
fund while Millenco got out of the fund near its peak stock price. Millenco and
its handpicked nominees are, "a wolf pack roving from target to target trying to
force short-term gains at the expense of the long-term shareholder," the letter
said.
Saying that MVC Capital has the right strategy at the right time with the right
team, John M. Grillos, MVC's Chief Executive Officer, commented, "Most of you
invested in MVC Capital to have the opportunity to participate in long-term
venture capital investments in information technology. Venture capital is a
growth engine of America, creating jobs, opportunities, fostering new technology
and building the future.
"In our view, your Board of Directors' candidates are among the most experienced
and visionary business leaders in the United States. They helped create over 200
information technology companies. They have started companies that have created
over 10,000 jobs. They have led or worked in senior positions for companies that
have created over 100 billion dollars in shareholder value."
Mr. Grillos also said that directors and officers of MVC Capital have been
buying additional MVC stock.
As announced on February 6, MVC filed a complaint in the
United States District Court Southern District of New York against Millennium
Partners, L.P., Millenco, L.P., and Karpus Management, Inc. for multiple
violations of federal securities law.
The complaint alleges that the defendants, which collectively
are beneficial owners of more than 10% of the stock of MVC Capital, have
conspired to take control of MVC and then immediately or gradually liquidate the
Fund's assets for their own profit, through a variety of illegal acts,
including: prohibited pyramiding of stock ownership, material misrepresentations
and omissions in various mandatory SEC filings, fraudulent proxy solicitations
in anticipation of MVC's February 28 annual meeting, and market manipulation.
A copy of the letter to MVC's shareholders follows:
February 6, 2003
Dear Fellow Stockholder:
You may have recently received proxy material from a dissident
stockholder, a hedge fund operator -- Millenco, L.P. It is important for you to
understand why what Millenco is proposing could seriously imperil the long-term
value of your investment in MVC Capital.
Beware when Millenco tells you its interests are aligned with yours. We
believe Millenco and its handpicked director nominees have targeted MVC Capital
and its shareholders as their next victim. Here's their formula: buy in cheap,
control the board of directors under the guise of aligning their interests with
yours, grab profits and move on to the next target. The professional raiders
win, but the individual shareholder is left behind, cheated out of the potential
of the fund's long-term value. In short, these raiders are nothing more than
wolves in sheep's clothing. Millenco has done this before. Here is the proof:
The problem with Millenco can be summed up in one line.
International Biotechnology Trust PLC
Weekly Closing Price Per Share (July 7, 2000 to February 4, 2003)
[GRAPH]
Share Price
Date (Pence)
---- -------
7/7/00 276.5
7/14/00 263.5
7/21/00 260
7/28/00 263
8/4/00 266
8/11/00 288
8/18/00 317.5
8/25/00 327.5
9/1/00 328.5
9/8/00 321.5
9/15/00 329
9/22/00 307.5
9/29/00 336.5
10/6/00 337
10/13/00 292.5
10/20/00 337.5
10/27/00 340
11/3/00 352.5
11/10/00 335.5
11/17/00 309.5
11/24/00 291
12/1/00 295
12/8/00 296
12/15/00 291
12/22/00 268.5
12/29/00 296.5
1/5/01 282.5
1/12/01 240
1/19/01 279
1/26/01 277.5
2/2/01 258.5
2/9/01 261.5
2/16/01 251
2/23/01 230
3/2/01 230
3/9/01 238.5
3/16/01 207.5
3/23/01 195.5
3/30/01 200
4/6/01 200
4/13/01 211
4/20/01 224.5
4/27/01 215
5/4/01 218.5
5/11/01 222.5
5/18/01 222.5
5/25/01 225
6/1/01 217.5
6/8/01 236
6/15/01 220
6/22/01 220
6/29/01 222.5
7/6/01 223.75
7/13/01 215
7/20/01 205.5
7/27/01 185.5
8/3/01 190
8/10/01 181.5
8/17/01 177.5
8/24/01 175
8/31/01 176.5
9/7/01 157.5
9/14/01 136.5
9/21/01 126
9/28/01 130
10/5/01 134
10/12/01 147.5
10/19/01 149.5
10/26/01 150
11/2/01 147.5
11/9/01 152.5
11/16/01 151.5
11/23/01 149
11/30/01 151
12/7/01 151.5
12/4/01 151
12/21/01 157
12/28/01 159
1/4/02 159
1/11/02 153.5
1/18/02 147.5
1/25/02 143.5
2/1/02 141
2/8/02 138
2/15/02 138.5
2/22/02 132
3/1/02 129.5
3/8/02 132
3/15/02 132
3/22/02 126.5
3/29/02 122
4/5/02 122.5
4/12/02 119.5
4/19/02 126.5
4/26/02 121
5/3/02 109
5/10/02 105.5
5/17/02 106
5/24/02 112.5
5/31/02 108
6/7/02 99
6/14/02 92.5
6/21/02 87
6/28/02 87
7/5/02 86
7/12/02 77
7/19/02 83
7/26/02 82
8/2/02 82.5
8/9/02 78
8/16/02 76
8/23/02 77
8/30/02 76.5
9/6/02 75
9/13/02 65
9/20/02 54.5
9/27/02 56.5
10/4/02 57.5
10/11/02 58.5
10/18/02 62
10/25/02 63
11/1/02 62.5
11/8/02 63
11/15/02 62
11/22/02 65
11/29/02 65.5
12/6/02 64.5
12/13/02 63.5
12/20/02 60.75
12/27/02 59.5
1/3/03 56.5
1/10/03 60
1/17/03 60.5
1/24/03 61.5
1/31/03 60.5
This is how the shareholders of International Biotechnology Trust (a
closed-end fund equivalent in the United Kingdom) fared when Millenco forced IBT
to buy back shares at net asset value, hire a new fund manager and replace
several directors. The fund was forced to buy back nearly 50% of its shares
through a tender offer. As you can see, the fund was crippled and IBT's share
price plummeted.
And what about Millenco? They got out. They sold their entire stake in
IBT in January of 2001 at a price substantially higher than where it is today.
Other investors? They were left holding shares in a depleted fund.
Now, Millenco and its cohorts are asking you to vote on a proposal that
would require MVC Capital to deplete your fund by buying back shares through
tender offers. They also say they want to look for a new fund manager. Sound
familiar? Just look at the graph and decide if you want the same thing to happen
to your investment.
How can you prevent this from happening to your Company? It's up to you.
Vote FOR the MVC Board of Directors on the enclosed WHITE proxy card
today.
What about the wolf pack that Millenco wants you to install
as directors of MVC Capital?
Knapp. Hellerman. Feeney. Karpus. They are among a close group of hedge
fund cronies that rove from target to target, trying to force short-term gains
at the expense of the long-term shareholder.
The wolf pack has already done this to other closed-end funds and their
unsuspecting shareholders. On at least three occasions, their intimidating
tactics have caused funds to deplete their cash and buy them out--at premiums to
what other shareholders could receive on the open market.
Who is the unseen puppeteer behind Millenco?
It is Israel Englander, the hedge fund arbitrageur who heads Millennium
International Management, which owns Millenco and operates some of his holdings
from an offshore tax haven in the Cayman Islands.
Englander's name was dragged into the news as far back as the '80s when
his close business partner, John Mulheren, was charged with orchestrating stock
trades for the notorious Ivan Boesky and was even charged with going after
Boesky with a loaded gun. And it was that very same close business partner in
the now defunct arbitrage fund Jamie Securities who actually went to jail for
stock manipulation. And in 2000, another employee of Englander's, Hal Herman,
was found guilty of engaging in improper trading among other charges.
Here is more you should know about hedge funds.
| | Just this year, the Financial Times reported that the Securities
and Exchange Commission, amid growing concerns about hedge fund
fraud, is considering a radical overhaul of hedge fund regulation.
| | Forbes recently said that hedge funds "charge outrageous fees,
deliver mediocre returns and in some cases cross the line into
illegal activity."
| | And, in September 2002, the Wall Street Journal reported, "The Bush
Administration today will take a major step in its effort to
increase oversight of hedge funds when the Treasury Department
proposes new anti-money-laundering rules requiring the private
investment pools to disclose their identities to its
financial-intelligence unit . . . Because they are virtually
unregulated and operate in secret, many investigators fear hedge
funds are vulnerable to money laundering by terrorists and other
criminals. `It's
high time' that hedge funds receive more scrutiny, said Treasury
Department General Counsel David Aufthauser."
Offshore hedge funds operate under the radar screen of the U.S. Government.
Unlike mutual funds, offshore hedge funds do not have to report their assets or
operations to the Securities and Exchange Commission. They simply cater to
wealthy investors, frequently by destroying long-term value in closed-end mutual
funds designed for individual investors.
MVC Capital stands for building shareholder value.
Most of you invested in MVC Capital to have the opportunity to
participate in long-term venture capital investments in information technology.
And venture capital is a growth engine of America, creating jobs, opportunities,
fostering new technology and building the future. Compare that to Englander,
Millenco and the rest of the wolf pack, angling for quick profits for themselves
at the expense of long-term investors.
MVC Capital: The right time, the right strategy, the right team.
The right time. We believe the current market environment offers
substantial investment opportunities to create value for both the near- and
long-term. We believe we have reached a turning point in the venture capital
investing cycle and prospects to meet the Fund's original long-term investment
objective have never been better.
The right strategy. Your Board of Directors has put into place a refined
strategy that we believe is the best course to build long-term value for
shareholders. We have a strengthened investment team with a streamlined
management organization. We now offer venture debt financing in addition to
equity investing. This is a unique strategy that diversifies your Company's
portfolio, generates interest income and gives us greater access to invest in
attractive companies backed by leading venture capitalists. And, we have put
into place a $20 million share repurchase program to take advantage of
opportunities to buy back MVC shares at appropriate levels to benefit all
shareholders.
The right team. In our view, your Board of Directors' candidates are
among the most experienced and visionary business leaders in the United States.
They helped create over 200 information technology companies. They have started
companies that have created over 10,000 jobs. They have led or worked in senior
positions for companies that have created over 100 billion dollars in
shareholder value.
All seven of these individuals are running for election at the Annual
Meeting and all are pledged to building value for you.
I also want you to know that, in the continued effort to align their
interests with yours, Directors and officers of MVC Capital have been buying
additional company stock.
Here is what you should do to protect your long-term investment:
Vote FOR the MVC Board of Directors on the enclosed WHITE proxy card today.
Your vote is crucial; it will determine the future direction of the
Company. Please help us fulfill the Company's original mission of superior
returns through long-term venture capital investments.
On Behalf of your Board of Directors
Sincerely,
John M. Grillos
John M. Grillos
Chief Executive Officer
MVC shareholders are invited to visit www.mvccapital.com for more information
about the upcoming vote.
About MVC Capital
MVC Capital, a business development company, was formed to provide individual
investors with the opportunity to invest in venture capital, a historically
top-performing asset class previously open only to high-net-worth individuals
and institutional investors. The Fund's investment objective is long-term
capital appreciation from venture capital investments in information technology
companies. MVC Capital utilizes both equity investing and lending to achieve its
objective. Additional information on the Fund and its investments may be
obtained by writing to MVC Capital, 3000 Sand Hill Road, Building One, Suite
155, Menlo Park, CA 94025, Attention: Secretary, via the website at
www.mvccapital.com, or by calling 877/474-6382.
We encourage you to sign up for MVC Capital's email notification list by
clicking on the following link:
http://www.mvccapital.com/mailing_list/subscribe.jsp
--30--
CONTACT: MVC Capital
Brian Matthews, 650/926-7015 (Investors)
or
The Abernathy MacGregor Group (Media)
Mike Pascale/Rhonda Barnat, 212/371-5999
IN CONNECTION WITH THE ABOVE-DESCRIBED MATTERS AND ITS 2003 ANNUAL MEETING OF
SHAREHOLDERS, meVC DRAPER FISHER JURVETSON FUND I, INC. (d/b/a MVC CAPITAL) HAS
FILED A PROXY STATEMENT AND INTENDS TO FILE OTHER MATERIALS WITH THE SECURITIES
AND EXCHANGE COMMISSION.
SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND THESE OTHER MATERIALS
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
SHAREHOLDERS MAY OBTAIN A FREE COPY OF THE PROXY STATEMENT AND THESE OTHER
MATERIALS WHEN THEY BECOME AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION CONCERNING MVC CAPITAL AT THE SECURITIES
AND EXCHANGE COMMISSION'S WEB SITE AT HTTP://WWW.SEC.GOV. SHAREHOLDERS MAY ALSO
OBTAIN FOR FREE THE PROXY STATEMENT AND OTHER DOCUMENTS FILED BY MVC CAPITAL
WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE
ABOVE-DESCRIBED MATTERS BY DIRECTING A REQUEST TO BRIAN MATTHEWS AT 3000 SAND
HILL ROAD, BUILDING ONE, SUITE 155, MENLO PARK, CA 94025 OR 650-926-7015.
MVC CAPITAL AND ITS DIRECTORS AND EXECUTIVE OFFICERS MAY BE DEEMED TO BE
PARTICIPANTS IN THE SOLICITATION OF PROXIES FROM MVC CAPITAL SHAREHOLDERS WITH
RESPECT TO THE ABOVE-DESCRIBED MATTERS. INFORMATION REGARDING THESE DIRECTORS
AND EXECUTIVE OFFICERS AND THEIR OWNERSHIP OF MVC CAPITAL COMMON STOCK IS SET
FORTH IN MVC CAPITAL'S PROXY STATEMENT FOR ITS 2003 ANNUAL MEETING OF
SHAREHOLDERS. ADDITIONAL INFORMATION REGARDING THESE DIRECTORS AND EXECUTIVE
OFFICERS AND THEIR INTERESTS IS INCLUDED IN THE PROXY STATEMENT.
STATEMENTS IN THIS ANNOUNCEMENT OTHER THAN HISTORICAL DATA AND INFORMATION
CONSTITUTE FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED OR IMPLIED BY
SUCH FORWARD-LOOKING STATEMENTS. POTENTIAL RISKS AND UNCERTAINTIES MAY INCLUDE,
BUT ARE NOT LIMITED TO, RECENT CHANGES IN SENIOR MANAGEMENT, FLUCTUATIONS IN
OPERATING RESULTS, MARKET CONDITIONS, CHANGES IN TECHNOLOGY, INCREASED
COMPETITION AND OTHER RISKS IDENTIFIED BY MVC CAPITAL FROM TIME TO TIME IN ITS
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.