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Sowood Capital Management LP – ‘SC 13D/A’ on 3/21/05 re: Korea Equity Fund Inc

On:  Monday, 3/21/05, at 5:07pm ET   ·   Accession #:  1193125-5-56747   ·   File #:  5-58207

Previous ‘SC 13D’:  ‘SC 13D’ on 9/30/04   ·   Next:  ‘SC 13D/A’ on 5/9/05   ·   Latest:  ‘SC 13D/A’ on 8/2/07

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 3/21/05  Sowood Capital Management LP      SC 13D/A               1:54K  Korea Equity Fund Inc             RR Donnelley/FA

Amendment to General Statement of Beneficial Ownership   —   Schedule 13D
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: SC 13D/A    Amendment to General Statement of Beneficial        HTML     46K 
                          Ownership                                              


This is an HTML Document rendered as filed.  [ Alternative Formats ]



  Schedule 13D/A  

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

 

SCHEDULE 13D

 

 

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE

13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 12d-2(a)

(Amendment No. 1)

 

 

 

 

Korea Equity Fund, Inc.


(Name of Issuer)

 

 

Common Stock


(Title of Class of Securities)

 

 

50063B104


(CUSIP Number)

 

 

Jeffrey B. Larson

Sowood Capital Management LP

500 Boylston Street, 17th Floor

Boston, Massachusetts 02116

(617) 603-3400


(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

 

 

March 21, 2005


(Date of Event Which Requires Filing of this Statement)

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.   ¨

 

 

Page 1 of 9 Pages


CUSIP No. 50063B104   SCHEDULE 13D   Page 2 of 9 Pages

 

  1  

NAMES OF REPORTING PERSONS. I.R.S. IDENTIFICATION NUMBERS

 

            Sowood Capital Management LP

   
  2  

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP

(a)  ¨

(b)  ¨

   
  3  

SEC USE ONLY

 

   
  4  

SOURCE OF FUNDS

 

            OO

   
  5  

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)

 

  ¨
  6  

CITIZENSHIP OR PLACE OF ORGANIZATION

 

            Delaware

   

NUMBER OF

SHARES

BENEFICIALLY

OWNED BY

EACH

REPORTING

PERSON

WITH

 

  7    SOLE VOTING POWER

 

                —


  8    SHARED VOTING POWER

 

                —


  9    SOLE DISPOSITIVE POWER

 

                2,441,200


10    SHARED DISPOSITIVE POWER

 

                —

11  

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

 

            2,441,200

   
12  

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES

 

 

¨

 

13  

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

 

            29.0%

   
14  

TYPE OF REPORTING PERSON

 

            IA

   

 


Item 1. Security and Issuer

 

This statement on Schedule 13D relates to the shares of common stock, par value $.10 per share (the “Common Stock”), of Korea Equity Fund, Inc., a Maryland corporation (the “Issuer”), which has its principal executive offices at 535 Madison Avenue, New York, New York 10022.

 

Item 2. Identity and Background

 

This statement is filed by Sowood Capital Management LP (“Sowood”), a Delaware limited partnership. The principal executive offices of Sowood are located at 500 Boylston Street, 17th Floor, Boston, Massachusetts 02116. Sowood is an investment manager.

 

Information relating to each of the directors, executive officers and controlling persons of Sowood is contained in Exhibit A attached hereto and incorporated herein by reference. Each of the directors, executive officers and controlling persons of Sowood is a citizen of the United States of America.

 

None of Sowood or, to the best of Sowood's knowledge and belief, any of the persons listed in Exhibit A has, during the past five years, been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors). None of Sowood or, to the best of Sowood's knowledge and belief, any of the persons listed in Exhibit A has, during the past five years, 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.

 

Item 3. Source and Amount of Funds or Other Consideration

 

Not applicable.

 

Item 4. Purpose of Transaction

 

Sowood acts as investment manager to President and Fellows of Harvard College (“Harvard”) with respect to its investment in the Issuer. The letter set forth on Exhibit B has been delivered by Harvard to the Issuer, notifying the Issuer of certain matters that Harvard intends to propose for consideration at the Issuer's 2005 annual meeting of stockholders. This Schedule 13D is occasioned by the sending of such letter and Harvard's intention to propose the matters described in such letter for consideration at the Issuer's 2005 annual meeting of stockholders.

 

Except as described herein or in Item 4 of filings on Schedule 13D by Harvard with respect to the Issuer, Sowood does not have any plans or proposals which relate to or would result in any of the actions set forth in parts (a) through (j) of Item 4. Sowood reserves the right to make any such plans or proposals in the future or to take any other steps to enhance the value of its investment.

 

Page 3 of 9 Pages


Item 5. Interest in Securities of the Issuer

 

(a) Sowood is the beneficial owner of 2,441,200 of shares of Common Stock (approximately 29.0% of the shares of Common Stock).

 

(b) Sowood does not have the power to vote any shares of Common Stock. Harvard and Sowood entered into an investment management agreement as of July 1, 2004 (the “Investment Management Agreement”), pursuant to which Sowood has assumed sole dispositive power with respect to 2,441,200 shares of Common Stock.

 

(c) Not applicable.

 

(d) Harvard has the right to receive dividends from, and the proceeds from the sale of, the Common Stock.

 

(e) Not applicable.

 

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer

 

Sowood and Harvard have entered in the Investment Management Agreement, pursuant to which Harvard appointed Sowood as an investment manager with respect to certain assets of Harvard, including the Common Stock.

 

Item 7. Materials to be Filed as Exhibits

 

Exhibit A — Information concerning the directors, executive officers and controlling persons of Sowood.

 

Exhibit B — Letter from Harvard to the Issuer.

 

Page 4 of 9 Pages


SIGNATURES

 

After reasonable inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: March 21, 2005

  SOWOOD CAPITAL MANAGEMENT LP
   

By:

 

/s/ Megan Kelleher


   

Name:

 

Megan Kelleher

   

Title:

 

Principal

 

Page 5 of 9 Pages


EXHIBIT INDEX

 

Exhibit
Number


  

Description


   Page Number In
Sequentially
Numbered Copy


A

   Information Concerning the Directors, Executive Officers and Controlling Persons of Sowood    7

B

   Letter from Harvard to the Issuer    8

 

Page 6 of 9 Pages


EXHIBIT A

 

DIRECTORS, EXECUTIVE OFFICER AND CONTROLLING PERSONS OF SOWOOD CAPITAL MANAGEMENT LP

 

The names of the directors and executive officers of Sowood and their business addresses and present principal occupation or employment are set forth below. If no business address is given, the business address of such director, executive officer or controlling person is c/o Sowood Capital Management LP, 500 Boylston Street, 17th Floor, Boston, Massachusetts 02116.

 

Name


  

Office/Position


Jeffrey B. Larson

   Principal and Portfolio Manager of Sowood

Stuart Porter

   Principal and Portfolio Manager of Sowood

Richard Dowd

   Principal and Chief Financial Officer of Sowood

Megan Kelleher

   Principal and General Counsel of Sowood

 

CONTROLLING PERSON OF SOWOOD CAPITAL MANAGEMENT LP

 

Sowood Capital Management LLC is the general partner of Sowood. The managing member of Sowood Capital Management LLC is Jeffrey B. Larson.

 

 

Page 7 of 9 Pages


EXHIBIT B

 

LETTER FROM HARVARD TO THE ISSUER

 

[Letterhead of Ropes & Gray LLP]

 

March 21, 2005

 

Korea Equity Fund, Inc.

535 Madison Avenue

New York, New York 10022

Attention: Secretary

 

Dear Sir or Madam:

 

On behalf of our client President and Fellows of Harvard College (“Harvard”), the beneficial owner of 2,441,200 shares of common stock of Korea Equity Fund, Inc. (the “Fund”), we hereby notify the Fund that Harvard intends to submit the following matters for consideration at the Fund’s 2005 annual meeting of stockholders (the “Meeting”):

 

  (i) RESOLVED: That the management agreement between the Fund and Nomura Asset Management U.S.A. Inc. be and it hereby is terminated.

 

  (ii) RESOLVED: That the stockholders of the Fund recommend that the Board of Directors take all necessary actions to liquidate the Fund as soon as possible.

 

The reasons for proposing the foregoing matters for consideration at the Meeting are that Harvard is a significant long-term shareholder in the Fund and believes that long-term investors have been severely disadvantaged by poor investment performance of the Fund. Harvard believes this poor performance is attributable to two fundamental problems: the net asset value (“NAV”) performance of the Fund and the Fund’s persistent discount to NAV. According to our calculations, the total NAV return of the Fund (measuring the change in the NAV of the Fund, assuming reinvestment of all distributions on their ex dates) underperformed the Morgan Stanley Capital International Korea Index and the Korea Composite Stock Price Index (“KOSPI”) in the last six-month, one-year, two-year, three- year and five-year periods, with two minor exceptions, as follows:

 

Annualized Returns

Periods ended 2/28/2005


  

Fund

NAV


   

MSCI

Korea


    KOSPI

 

Six months

   89.2 %   108.7 %   101.4 %

One year

   26.7 %   34.2 %   26.3 %

Two years

   41.9 %   44.9 %   46.3 %

Three years

   19.2 %   18.5 %   21.1 %

Five years

   5.0 %   7.3 %   12.5 %

 

For periods in which the Fund’s NAV outperformed one of the indexes, the relatively small differential does not justify the adviser’s management fee.

 

Page 8 of 9 Pages


In addition to poor investment returns, shareholders have suffered from the Fund’s persistent discount to net asset value. According to our calculations, the Fund’s average discount to net asset value for the five-year period ended February 28, 2005 was 16% (although the discount has narrowed in recent months, which Harvard believes is a result of market anticipation of possible board or shareholder action with respect to the Fund).

 

Harvard believes the best solution to both problems is to terminate the agreement with the current investment advisor and to liquidate the Fund.

 

Sowood Capital Management LP (“Sowood”) acts as investment manager to Harvard with respect to its shares of the Fund. The only material interest of Harvard and any of its “Stockholder Associated Persons” (as defined in Section 11 of the Amended and Restated By-laws of the Fund) in the foregoing proposals is Harvard’s interest as a shareholder of the Fund and Sowood’s interest as investment advisor with respect to Harvard’s investment in the Fund. Sowood Capital Management LLC is the general partner of Sowood. The managing member of Sowood Capital Management LLC is Jeffrey B. Larson. Neither Sowood Capital Management LLC or Mr. Larson has any material interest in the foregoing proposals other than in their capacity as general partner and managing member of the general partner of Sowood, respectively.

 

Harvard’s shares of the Fund are held of record by the Depository Trust Company, by its nominee, Cede & Co. Depository Trust Company’s address is 55 Water Street, New York, New York 10041. To Harvard’s knowledge, no Stockholder Associated Persons of Harvard own any shares of the Fund. Harvard’s address is c/o Harvard Management Company, Inc., 600 Atlantic Avenue, Boston, Massachusetts 02210. Harvard’s telephone number is (617) 523-4400. Sowood’s address is 500 Boylston Street, Boston, Massachusetts 02116. Sowood’s telephone number is (617) 603-3400.

 

Harvard does not know of any other stockholder of the Fund supporting the foregoing proposals as of the date hereof.

 

In accordance with Rule 14a-4(c)(2)(i) under the Securities Exchange Act of 1934, as amended, Harvard hereby notifies the Fund that it intends to deliver a proxy statement and form of proxy to holders of at least the percentage of the Fund’s voting shares required under applicable law to carry each of the foregoing proposals.

 

 

Very truly yours,

/s/ Leigh R. Fraser


Leigh R. Fraser

 

Page 9 of 9 Pages


Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘SC 13D/A’ Filing    Date    Other Filings
Filed on:3/21/05SC 13D/A
2/28/05N-Q
7/1/043
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