[Federal Register Volume 63, Number 82 (Wednesday, April 29, 1998)]
[Notices]
[Pages 23481-23482]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-11394]


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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-23126; 812-10892]


The Americas Growth Fund, Inc., et al.; Notice of Application

April 23, 1998.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for exemption under section 57(c) of the 
Investment Company Act of 1940 (the ``Act'') from section 57(a) of the 
Act.

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SUMMARY OF APPLICATION: The order would permit The Americas Growth 
Fund, Inc. (``AGRO''), a business development company (``BDC''), to 
complete a merger with an affiliated person.

APPLICANTS: AGRO and JW Charles Financial Services, Inc. (``JWCFS'').

FILING DATE: The application was filed on December 9, 1997. Applicants 
have agreed to file an amendment, the substance of which is 
incorporated in this notice, during the notice period.

HEARING OR NOTIFICATION OF HEARING: An order granting the application 
will be issued unless the SEC orders a hearing. Interested persons may 
request a hearing by writing to the SEC's Secretary and serving 
applicants with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on May 19, 1998, 
and should be accompanied by proof of service on applicants in the form 
of an affidavit or, for lawyers, a certificate of service. Hearing 
requests should state the nature of the writer's interest, the reason 
for the request, and the issues contested. Persons who wish to be 
notified of a hearing may request notification by writing to the SEC's 
Secretary.

ADDRESSES: Secretary, SEC, 450 5th Street, N.W., Washington, D.C. 
20549. Applicants: AGRO, 701 Brickell Avenue, Suite 2000, Miami, 
Florida 33131 and JWCFS, 980 North Federal Highway, Suite 310, Boca 
Raton, Florida 33432.

FOR FURTHER INFORMATION CONTACT: Elaine M. Boggs, Senior Counsel, at 
(202) 942-0572 (Office of Investment Company Regulation, Division of 
Investment Management).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch, 450 5th Street, N.W., Washington, D.C. 
20549 (telephone (202) 942-8090).

Applicants' Representations

    1. AGRO is a Maryland corporation that is a closed-end non-
diversified management investment company and that has elected to be 
regulated as a BDC under the Act. AGRO's common stock was listed on 
Nasdaq until delisted on March 17, 1998. JWCFS is a Florida corporation 
and a financial services holding company. JWCFS, through wholly-owned 
subsidiaries, engages primarily in securities brokerage, investment 
banking, and clearing and execution of securities transactions. JWCFS's 
common stock trades on the American Stock Exchange (``AMEX'').
    2. On August 13, 1997, JWCFS commenced an exchange offer (the 
``Exchange Offer'') to AGRO's shareholders to acquire each share of 
AGRO common stock for .431 shares of JWCFS common stock (the ``Exchange 
Ratio''). The Exchange Ratio was calculated based upon the net asset 
value (``NAV'') per share of AGRO common stock on March 31, 1997 and 
the average of the last reported sales prices of JWCFS common stock on 
AMEX for the ten trading days immediately preceding the public 
announcement of the Exchange Offer on June 9, 1997. In connection with 
its consideration of the Exchange Offer, the board of directors of AGRO 
(``Board'') engaged an independent appraiser to provide an opinion 
concerning the fairness of the transaction from a financial point of 
view to the shareholders of AGRO. Based upon the value of the offer 
using the traded market price of the common stock of both AGRO and 
JWCFS and applying the Exchange Ratio and its comparison to: (a) the 
traded market price of AGRO's common stock; (b) the NAV per share of 
AGRO's common stock; and (c) the liquidation value per share of AGRO's 
common stock, the appraiser delivered an opinion to the Board on August 
22, 1997 concluding that the JWCFS common stock to be received as 
consideration for the sale of AGRO common stock to JWCFS, if the JWCFS 
common stock had a value of $3.40 per share or higher, was fair from a 
financial point of view to the shareholders of AGRO. The price of JWCFS 
common stock on August 14, 1997 (the date the Exchange Offer began) and 
September 22, 1997 (the date of the Exchange Offer ended) was $3.66 and 
$3.50, respectively. The JWCFS common stock to be received per share of 
AGRO common stock represented a premium to AGRO shareholders of 23.2% 
and 12.5% in August 14 and September 22, 1997, respectively. A 
prospectus and related letter of transmittal relating to the Exchange 
Offer were mailed to AGRO's shareholders on August 14, 1997. The 
prospectus stated that the Exchange Offer would be followed by a 
consolidating merger. As a result of the Exchange Offer, JWCFS now owns 
approximately 91 percent of the issued and outstanding common stock of 
AGRO.
    3. Applicants propose to merge AGRO into JWCFS at the earliest 
practicable date following receipt of the requested order (the 
``Merger''). Because JWCFS now owns more than 90 percent of the 
outstanding AGRO common stock, JWCFS may carry out the Merger as a 
``short-form'' merger under the relevant provisions of Florida and 
Maryland corporate law. The short-form merger would permit the Merger 
to be accomplished without a vote of the shareholders of either 
corporation.
    4. Under the proposed terms of the Merger, each share of AGRO 
common stock not owned by JWCFS would be canceled and those AGRO 
shareholders would be entitled to receive .431 share of JWCFS common 
stock for each share of AGRO common stock owned by them (which is the 
same as the Exchange Ratio used for the Exchange Offer). In the Merger, 
JWCFS would become the owner of all of the issued and outstanding 
common stock of AGRO and, as the sole shareholder of AGRO, intends to 
approve the withdrawal of AGRO's status as a BDC under the Act.

[[Page 23482]]

JWCFS would be the surviving corporation in the Merger.
    5. Prior to the Merger, AGRO's minority shareholders will receive a 
prospectus with respect to the shares of JWCFS common stock being 
offered in connection with the Merger (the ``Prospectus'') which 
discloses the terms and the effective date of the Merger and the 
consideration to be paid by JWCFS. In addition, the Prospectus will 
inform AGRO's minority shareholders of their appraisal rights under 
Maryland law. The appraisal rights would entitle the shareholders to 
dissent from the Merger and receive the fair value of their shares of 
AGRO in cash.
    6. The Merger will constitute a reorganization pursuant to section 
368(a) of the Internal Revenue Code of 1986, as amended. Any AGRO 
minority shareholder receiving solely shares of JWCFS in the Merger 
will not recognize any gain or loss for federal income tax purposes. In 
addition, the Merger will have no material tax consequences for AGRO or 
JWCFS.

Applicants' Legal Analysis

    1. Section 57(a) generally prohibits, with certain exceptions, 
sales or purchases of securities or other property between a BDC and 
certain of its affiliated persons as described in section 57(b) of the 
Act, including a person controlling the BDC. JWCFS owns approximately 
91 per cent of AGRO's shares and, thus, controls AGRO under section 
2(a)(9) of the Act. Because the Merger may involve the purchase of the 
property of AGRO by JWCFS, applicants are requesting relief from 
section 57(a) to complete the Merger.
    2. Section 57(c) of the Act provides that the SEC will exempt a 
proposed transaction from section 57(a) if the terms of the proposed 
transaction, including the consideration to be paid or received, are 
reasonable and fair and do not involve overreaching on the part of any 
person concerned; and the proposed transaction is consistent with the 
policy of the BDC concerned and with the general purposes of the Act. 
Applicants believe that the requested relief from section 57(a) meets 
these standards for the reasons discussed below.
    3. Applicants state that the Board has determined that the Exchange 
Ratio is fair consideration for the minority shareholders of AGRO to 
receive in the Merger. Applicants state that a comparison of the 
closing sales price of JWCFS common stock on April 13, 1998 ($11\15/
16\) to AGRO's NAV of $3.46 on December 31, 1997 (the most recent date 
on which AGRO's Board determined AGRO's NAV) indicates that the 
Exchange Ratio would represent a premium to AGRO's minority 
shareholders of approximately 48.7%.
    4. Applicants state that the Board also considered, in addition to 
other factors: that AGRO has never paid dividends on its common stock 
and has no plans to pay any dividends in the future; that there are no 
possible alternative transactions similar to the Merger with 
unaffiliated third parties; that, if the Merger is not consummated, it 
is unlikely that the minority shareholders of AGRO will realize any 
return on their holdings in the foreseeable future; that the Merger 
would provide AGRO's minority shareholders with a way of disposing of 
their shares and obtaining a return on their investment that would not 
otherwise be available; that following the Merger, AGRO's assets could 
be redirected into the existing business of JWCFS for the benefit of 
JWCFS shareholders (which would include all of AGRO's minority 
shareholders who do not choose to exercise appraisal rights under 
Maryland law to receive cash); and that the AGRO minority shareholders 
have available appraisal rights under Maryland law. In addition, the 
boards of directors of both AGRO and JWCFS have reserved the right to 
abandon the Merger at any time if the boards determine that it would 
not be in the best interests of the respective company to consummate 
the Merger.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
[FR Doc. 98-11394 Filed 4-28-98; 8:45 am]
BILLING CODE 8010-01-M