BVF Beta Vietnam Fd

RNS Number:1476A
Beta Vietnam Fund Ld
2 November 1999


                 BETA VIETNAM FUND LIMITED ("BVNF")                           
                 
         
Set out below is the text of a letter which will be sent to Shareholders and
Warrantholders of BVNF later today.


Further to the announcement released to the Irish and London Stock Exchanges
on Friday 29 October 1999 and sent to Shareholders on the same date, we write
to you to set out in more detail why the Board of BVNF recommends that
Shareholders take no action in response to the proposals made by Vietnam
Enterprise Investments Limited ("VEIL"), on 28 October 1999. 

Summarised below are the principal reasons for the Board's recommendation and
why Shareholders and Warrantholders should vote for the return of US$3.00 at
the EGM and Warrantholder meetings to be held this Friday, 5 November 1999.


IMPLEMENTATION OF VEIL's PROPOSALS

Shareholders should note that VEIL's Proposals:-

      are highly complicated

      are uncertain

      require a protracted and costly process and

      will inevitably significantly delay the receipt of cash by Shareholders 
      until, at best, well into the New Year


VALUATION OF VEIL'S PROPOSALS

VEIL's Proposals, which include the offer of two of VEIL's own shares,
significantly undervalue BVNF's assets.

VEIL claims that its Proposals value each BVNF share at US$4.66, against
BVNF's latest NAV of US$7.05 per share, implying an apparent discount of some
34%.  However, the Board of BVNF believe that VEIL's Proposals should be
considered after removing the proposed return of cash to shareholders from
both VEIL's and BVNF's proposals.  This results in a much larger discount as
set out below:-
  
BVNF's post cash-return NAV             (7.05-3.00)     US$4.05 per share
VEIL's Proposals (after deducting  
$3.00 per share in cash)                (2x0.78+0.10)   US$1.66 per share

Using this analysis VEIL's Proposals represent a discount to BVNF's post cash
return NAV of 59%. This is unjustifiable especially given that the effective
consideration is VEIL shares.   In addition, VEIL have valued their own shares
at 100% of NAV whilst applying a very significant discount to NAV to BVNF's
shares.


ARE VEIL'S SHARES REALLY WORTH US$0.78 EACH?

Shareholders should note that there are good reasons for being critical of
VEIL's valuation of its own shares at 100% of NAV:

VEIL ITSELF RECOGNISES THAT ITS SHARES ARE NOT REALLY WORTH US$0.78 PER SHARE

In its Proposals, VEIL itself recognises that its shares should be discounted
from the value of US$0.78 per share that it wants BVNF Shareholders to accept.
It says it will "consider the redemption of a percentage of VEIL's enlarged
number of shares at a discount to NAV." The level of the discount is not
stated, but will be determined "in the absolute discretion of the directors of
VEIL".


VIETNAMESE ACCOUNTING SYSTEM

Shareholders should note that the accounts for most of VEIL's investments are
drawn up under the Vietnamese Accounting System.  This may differ considerably
from internationally accepted accounting standards. Areas of difference, for
example, are the treatment of provisions of loan losses in banking businesses,
the ability to take foreign exchange losses to the balance sheet and not
through the profit and loss account, and the deferral of costs in poor sales
years. 

Shareholders should consider these factors when reading the figures that VEIL
uses to justify the  valuations of its investments.


VEIL'S DEPENDENCE ON THE VIETNAMESE STOCKMARKET

The Board considers that VEIL's realisation of its investments are
substantially more dependent on the potential success of the Vietnamese stock
market than those of BVNF.  If the stock market does not provide a viable exit
route, it is hard to see how VEIL will be able to exit from its portfolio.

Shareholders should note that in 1997 VEIL forecast the opening of the market
in the second half of 1998. It has not yet been launched.
 
By contrast to VEIL's dependence on the Vietnamese stock market, none of
BVNF's investments rely on the stock market for an exit. Trade sale is the
most likely exit route.  It would be difficult for VEIL to exit from its
investments this way, given its minority shareholdings in domestic companies.
If the stock market is not launched successfully, VEIL Shareholders will be
significantly disadvantaged. 

BVNF Shareholders should bear this in mind when considering the merits of
holding VEIL shares.


COSTS

In its Proposals, VEIL makes many references to its low costs.  It also claims
that its investment manager charges "no additional corporate finance fees or
documentation fees".

However, VEIL's comments in relation to its own costs should be considered
having regard to certain fees which have been charged to some of VEIL's
investee companies by the ultimate parent company of VEIL's investment
manager. 


CONCLUSION

In conclusion, your Board believes that it is in the interests of Shareholders
and Warrantholders to complete BVNF's proposed return of US$3.00 per share.

The Proposals announced by VEIL contemplate a significant delay in the process
of returning value to Shareholders with no certainty at all that the VEIL
Proposals could or would be implemented.  Under BVNF's Proposals, Shareholders
will receive US $3.00 per share by no later than 22 November whereas, under
VEIL's Proposals, (even if these were to be implemented), Shareholders would
not receive their cash until, at best, well into the New Year.  On this basis,
the directors of BVNF do not believe that the VEIL Proposals are in the best
interests of BVNF or its Shareholders.  

In any event, the implementation by BVNF of the proposed return of value to
Shareholders does not preclude the Directors of BVNF from exploring with any
party, including VEIL, any proposals which might increase Shareholder value. 
There is therefore no reason to delay your positive vote and the lodging of
your proxies for this week's EGM and Warrantholder meeting.

In respect of VEIL's Proposals, as outlined in their announcement of 28
October 1999, in the Board's opinion and for the reasons set out above:

      VEIL' s Proposals, which include the offer of two of VEIL's own shares, 
      significantly undervalue BVNF's assets;

      There are good reasons for being critical of VEIL's valuation of its own
      shares at full NAV; and

      VEIL's realisation of its investments is crucially tied in to the       
      potential success of the Vietnamese stock market whose launch has       
      been delayed time and again.

Accordingly, the Board of BVNF advises Shareholders and Warrantholders to take
no action in relation to the announcement by VEIL and reminds Shareholders and
Warrantholders that the proxies in respect of the forthcoming EGM and
Warrantholder meeting of BVNF should be posted as soon as possible, such that
they are received by BVNF's registrars no later than 12 noon on Wednesday 3
November 1999.

Yours faithfully


R. Povey
Chairman
 

DEFINITIONS


"BVNF"                           Beta Viet Nam Fund Limited 


"the Board" or the "Directors"   the board of directors of BVNF


"EGM"                            the extraordinary general meeting of the     
                                 Company to be held at 12 p.m. on 5 November  
                                 1999


" Ordinary Shares"               ordinary shares of US$0.10 each in the       
                                 Company


"Proposals"                      the proposals outlined in the announcement   
                                 by Vietnam Enterprise Investments Limited    
                                 dated 28 October 1999, one of which values   
                                 each BVNF Ordinary Share at US$4.66 


"Shareholder"                    holders of Ordinary Shares


"VEIL"                           Vietnam Enterprise Investments Limited 


"Warrants"                       warrants entitling a Warrantholder to        
                                 subscribe for one Ordinary Share at a price  
                                 of US$10.00 per share issued pursuant to the 
                                 placing memorandum dated 20th August 1993


"Warrantholder"                  a holder of  Warrants
 

"Warrantholder Meeting"          the meeting of holders of warrants to be held
                                 at 12.10 p.m. (or as soon thereafter as the  
                                 EGM shall have been concluded or adjourned)  
                                 on 5 November 1999

END
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