P. AND 0. COMPANY.

Press, Volume LXIII, Issue 19163, 21 November 1927, Page 14

P. AND 0. COMPANY.

PROPOSAL TO INCREASE CAPITAL. METHOD OF ISSUE OPPOSED. (TROM OUR CWK COBESBSONDIKT.) LONDON, October i. Lord inchcape presided at a special general meeting of tlio stockholders of the P. and 0. Steam Navigation Company to submit a resolution to increase the capital of the company from £3,592,518 deferred stock to .£4,592.518 deferred stock, by the creation of £1,000,000 additional deferred stock; thus making, with the addition of the existing preferred stock, the total capital of the company £7,632,518. The additional capital, he said, was required to pay for new tonnage now being built and about to be built, and for the general purposes of the company, and would in accordance with the company's charter, be offorcd in the first place to the existing preferred and deferred stockholders who hold not less than £4O of stock of the company. The stock would be offered at the price of £2 for £1 of deferred stock, or, say, £2OO for £IOO of deferred stock, ratoably in proportion to the amount of stock held by them respectively at the date of issue. He had received a letter from the fortunate possessor of a large amount of deferred stock stating that the Board had been too generous in giving the preferred stockholders the right to subscribe for this issue, as it was giving them a bonus to which they were not entitled. He pointed out, in reply, that they had no option in the matter, that the company's charter provided that both the Preferred and deferred stockholders should nave equal rights in such a cas*. This was the result of tho shares being converted into preferred and deferred stock about 38 yoars ago. The resolution was seconded by Mr F. Kitcbie. An Error of Judgment. Mr Theophilus Sandeman said that when the old stock was divided into prcforred and ordinary stock the samp individuals were the, holders of the two stocks, and consequently it did not matter whethor thoy received the new allotments with one hand or with two hands; but the real intention was that each category of stock should receive allotments in the future of its own particular category. He thought that what they did originally wa's a recognised blunder, and the. proceedings of the Board since then showed that they recognised that it must have been an error of judgment. If at the present time the Board recognised that the preferred stockholder was not entitled to an allotment of deferred stock, it was rather illogical to say that the preferred stockholder, who could ! not be given an allotment of deferred stock free, might take it if he paid 100 per cent, premium. If the Board continued this error it would be a precedent, and it would be saying that they deemed the preferred stockholder to be entitled to rank for the assets of the company. Thirty years ago thoy paid 10 per cent., and they were paying 10 per cent, at present, but the position of the company was very much stronger now, and if the deferred stock was valued on the basis of the assets of the company, it would be worth between £IOOO and £2OOO. Mr G. Acton Davis supported the views of Mr Sandeman, contending that,- though it might be legal, it was not equitable to the deferred stockholders to make the issue on the lines proposed. He appealed to the Board to take the matter again into consideration and not force the proposal down their throats. Bound by the Charter. Several other shareholders having spoken to the same effect, the chairman said they were absolutely bound by the company's charter. The original intention was to offer the stock to the deferred stockholders only, but they were advised by the highest legal authority that it was absolutely impossibte—that they were bound to offer it to the preferred stockholders in the same way as to the deferred. The Btock was divided 38 years ago, before any of the present members of the Board were on the Board, and the charter provided that when the first stock was offered and issued to the stockholders, it must be issued to both the preferred and the deferred on the same terms. In regard to the remarks made by one speaker as to the assets, the assets of the company, after the preferred stock had been paid off, belonged to the deferred stockholders. He strongly urged the meeting to pass the resolution. . After further discussion, the chairman stated that the Board were willing to adjourn the meeting for a fortnight or throe ■weeks. The meeting was accordingly adjourned. The following official statement was issued by the company after the meeting:— "At the extraordinary general meeting o£ the P. and O. Company, held on the 14th inst., certain deferred stockholders objected to the preferred stockholders having the right to participate in the proposed new issue of deferred stock. "Lord Inchcape explained that under the company's charter when stock was offered for subscription it had to be offered to both the pieferred and deferred stockholders; but it was arranged to adjourn the meeting till a later date, to be fixed by tho Board." We understand the next meeting will be held on October 12th:— Prepared for Criticism. Relative to the unexpected turn which evanls took at the meeting, the "Financial Times" comments: "Misconception may bo easily arise in connexion with the unusual happenings at tlio P. and O. meeting that it is well to indicate what actually took place. Reference to the account of the meeting will show dial a stock exchange shareholder, after t.rm chairman's opening speech, voiced the liiiiHalisfaction existing among deferred nlockhonicrs "by reason of the proposal that tlio rightß should be extended to the preferred stockholders. Another shareholder piirimed the same line of argument. "In answering, Lord Inchcape said that tii:«li:r tho company's constitution the directom had no option but to offer new stock In preferred proprietors as well as to those who hold the deferred stock. Upon this point no question seems to exist. It was discussed amicably and temperately, but the meeting was adjourned *or three weeks in order that the Board might consider whether some other plan might be devised for supplying the company with the requisite funds to pay for the new tonnage. The P. and O. directors were prepared, by leferences, made here in advance of the meeting, for the criticisms that led to an unexpected sequel."