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Mexico Private Equity Fund Issues Letter To Shareholders
"I am pleased to advise that Mexico Private Equity Fund is making its first distribution to shareholder, at the rate of 10 cents per share. The Fund's accountants have advised that this distribution should be considered a return of capital, thereby reducing the book value per share to $9.90. Shareholders who have provided wire transfer details to the Fund's custodian, CIBC in Grand Cayman, well receive the distribution directly into your designated account. Other shareholders will receive a bank draft with this letter.
Since the Fund's investment period has been completed, no new investment commitments are anticipated. From this point forward, cash received by the Fund form its portfolio companies should exceed future operating expenses. Consequently, the directors expect to continue making semi-annual distributions from available cash, in gradually accelerating amounts.
The terrorist attacks of September 11th have affected the business environment in northern Mexico in many ways. Transit of goods and equipment over the US/Mexican border is significantly delayed, and the overall Mexican export manufacturing sector has declined by about 20 percent, leading to a loss of many jobs in the border communities. This slowdown started as a function of the softness in the US economy, then it was exacerbated by the impact of the terrorist activities.
In the MPEF portfolio, a few companies have encountered sharp reductions in revenues because they were producing products that experienced retail sales declines. This applies particularly to the refurbishment of Kodak disposable cameras done by Pentex Corporation in Guadalajara. Kodak has advised Pentex that retail sales of disposable cameras fell more than 50% during September and October.
Several companies have experienced delays in transporting raw material and finished goods across the US/Mexican border. For them, the result is a higher cost of financing inventories of raw materials (to secure a steady supply), and finished goods. The timing of Accounts Receivable collections has also been extended for many companies.
On the other hand, American Glass Products, a manufacturer of ballistic glass for armoring automobiles, anticipates a significant increase in orders from US government agencies as well as private sectors clients.
Overall, we are encouraged by the performance in the Fund's portfolio, and look forward to providing full details later in the year."
Signed John Reilly, Chairman, Mexico Private Equity Fund.