N.Z. FARMERS' CO-OP.

Press, Volume LXI, Issue 18417, 25 June 1925, Page 11

N.Z. FARMERS' CO-OP.

.-o tex T.rtzzop. or "zsr. ras^s. Sir. — T.i c.ipg there .'!'•'' r.v.y -I'-' o ' ol ' en-e shareholders in tno si'-ovc company who arc incline.] to accept tV iiir«vio:--statement; that "The advantage - cumuhtivo rights is a c]"i:!.:l'ul '»" " it mar bo -vol! to point o'.'.t that. • •=y.ei-i----p.Hv as regards -'A" .""'1 " n ' s,,a,v_ holders, t-lvi.'; is ahmvt the only cejupt ligation thev have for the low rate <■. interest they undcrum:-: I" :.' -'cop '-■ Without t hi- orovi-.iou there v."n'.<l "<' nothing to prevent the dire. tors, m '' rear of moderate pr.iiii> ..uftieicm ot>i\ to ]; av Pivierci:<o dn idemls. iron' "-arr.v----ill" the amount forward --ml uandii:it "to the Ordinary shareholders m <"■-" i'ollowiiu: yea;*. The directors equality ><> Micr:fire, I*iit. their proposals do •"" • i:l " : - v opinion, hoar out this maxim. Tho amount received by Ordinary shareholders in :i distribution citlifr ot profits in- assets will not ho affected b>" ivritiiKT down th< if share-, sieee 111 ••'">' rase- they will rocrive alt tiiat _i< '•'•!'■ in proportion to the number of share held by o:tt-li : the only off. ot of the writing down being; that the vr.to per cent, will lie hift'hoi'. On the other hand. Preference 'shareholders arc nsiu :l to jrive tin £70.000 of aeeunn.lated dividends end nliieo themselves pi actteallv on an equality with Ordinary shareholders as regards dividends, except that thev are limited to ■•; per cent., whereas 'the dividend and bonus on Ordinary shares can expand with Iho proiits. I would urge all Preference shareholders to endeavour to attend the meetinirs and on no account to f-ign. proxies in favour of r.nyoue. who will not, undertake to use them in an ondvtn ottr to have the directors* proposals modi-fied.—-Yours. ct<\, (I'M .PI.EK. TO TH'i! EDITOR Of "THS FJtZSS." Sir,—The proposals now made to wipe oft' thes accumulated, interest, now duo on tho preferred shares, and to niako the future dividends non-cumu-lat.ive will, I trust, be .strongly opposed. If allowed to £o through, it. -will ho to tho advantage of the. ordinary shareholder, and will ease the work <>i tho directors and management, but on tho other hand, it will be a grave breach of faith, as well a.s a srriou.s and unjustifiable loss to all holders of preferred shares. "Why did tho company ask investors to tako up preferred instead of ordinary shares, it they did not under all and any circumstances intend to honour the conditions' under which the shares were sold? Shares of the preferred class were offered to induce investors who wanted first-class gilt-edged security to invest with tho company. These people did not want ordinary speculative shares, and would not have taken such up. The further proposal to remove tiro, cumulative rights from January 31st of this vear is most sarious and far-reach-ing. To-day quotations arc: Ordinary shares 10s, preferred shares £3. If this proposal is carried through, there willbe at once a big drop on th© market price of preferred shares, and tho pominvestor who is compelled to sell out, will be luckv if he gets £1 for the £5 he naid for each share. I" realise all the difficulties of the company, and would suggest _ to the directors that, instead of asking preferred shareholders to make a loss of £60,895. for the benefit of the ordinary shareholders, the proper course, is to capitalise that amount to credit of preferred shareholders. This proposal would probably be accepted. ■ It would relieve the company of the immediate call for first payment and also give tho holders of preferred shares the opportunity of ultimately getting oiit without loss.

I think, further, that the directors ought not tio hare made this proposal without disclosing the result of this year's working, which may show a, much improved position. The year closes on July 81st, and the whole matter should he held up until after that date. Meanwhile, I would strongly urgo holders of preferred shares not to send their proxy forms on to the directors. —Yours, etc., PREFERRED.

TO THE. XDITOK 0? "THE KRESS." Sir, —I trust you may grant me space to add my protest to the proposed action of the Association to forfeit preference share dividends, vide correspondence in your issue to-day. At .the time these shares were put on the market six per cent, was obtainable on first-class mortgage security, but as the Association, up to that time, hud an excellent reputation, people were influenced to invest in. these snares on the representation largely advertised that tliey were gilt-edged security for all time. If those who took up these preference shares had lent their money on mortgage they could not reasonably be asked to forfeit interest due for ;«i accumulated period of years and also sign an agreement to forfeit all interest until the mortgagor said he or she was in a financial position to pay; yet this is what tho Association is asking. 31oreover, we are asked to forfeit our right of preference, although it was solely owing to the preference that tho shares were saleable. The Association usually paid an annual dividend of eight per cent. and. a bonus to ordinary shareholders, and according to the optimistic anticipation of the directors they hope to do soagain at the immediate expense of tho preference shareholders, who are restricted to six per cent, for all time, when dividend payments are resumed. The preference shareholders have not in any way prevented the earning of dividends, from the fact that their dividends were accumulated unpaid. Not only so, but the Association has had practically the free use of about hall' a million wounds for a. considcra-

:-''!o period. dunii£ which the assets have been wnaen down mcr a third ol a i!i.i!; ( .ii! po'-.m's. The a.-tjon of the As-.--.: iati-.-.ii. i,-- . arrioil ir.tn effect. Mnke-. ;it T -., 0 ijiumiiuion vi comnu-r.riiil -''. iiritv. _ :i!i.l for this reason 1 shall ho gr.iicfiil if you pram- me space for ibis e;:tie:>i!! of nu extraordinary proceoi.titij; on the part- of what, may U? r.-p.-idei'Ofi e institution, llence ilv> pubjie duty of all prei'evenee to ebieet uu nttral prin-ci-ok:.- I ain. f>t<:' !■ IMIKKKUKXCK SHAIiKHOUIKH. C!ir;<i..-hiircli.' .hir.e •J-kh.