Debenture Holders To Keep Enzlon Going

Press, Volume CVI, Issue 31109, 12 July 1966, Page 18

Debenture Holders To Keep Enzlon Going

(Neto Zealand Press Association)

WELLINGTON, July 11.

Holders of Enzlon Chemical Fibres, Ltd., debenture stock today approved a proposal to carry on the company, which is in receivership. The proposal was contained in a report from a committee of some of the major debenture-holders which was placed before the meeting.

The plan proposes that holders of debenture stock exchange it for ordinary shares in a new company which will acquire the Enzlon business.

The trustee will remain free to accept any firm offer made for the purchase of the business. If no suitable offer is received the debenture stockholders will be able to acquire the assets without delay.

About 130 people who attended the meeting hold £440,000 of the £750,000 debenture stock.

The chairman was Mr H. L. Fraser, manager of National Mutual Life Nominees, Ltd., which is trustee for the debenture holders. Also present were Mr F. H. Harris, receiver and manager of Enzlon, and several Enzlon executives and directors. The meeting decided to ex-

elude newspaper representatives after being told that the meeting would be given some information confidentially. A public statement was issued afterwards. The statement traversed events since the receiver and manager was appointed on April 28 and said that Enzlon could not supply consistent first-quality yarn. The receiver had decided to keep the factory running. The receiver and manager had received a number of inquiries for the purchase of the plant but no firm offer.

One inquiry was from an organisation of high standing in its own country. It was sending senior officers to New Zealand to investigate. The meeting had been called to review the position and to decide what action the debenture stockholders should

take, either alone or in conjunction with others, in case no satisfactory firm offer was received. The committee of debenture stockholders made the following points, the statement said: Nylon 6, which Enzlon was making, could be used by customers’ existing equipment with only normal minor modifications, and overseas use of nylon 6 and nylon 66 was practically equal. Within the comparatively near future the present nylon manufacturing capacity in New Zealand would be insufficient to supply the market and although until the normal seasonal demand rose in late autumn the company would work below break-even point, afterwards it should operate profitably.

The capital of a new company taking over the plant should be in the form of ordinary shares, leaving the assets unencumbered for later borrowing if required.

The present plant had a profit potential. 8.A.5.F., the German group which has been assisting the company, would, in exchange for a long term contract for the supply of polymer, the raw material of nylon, provide technical assistance. This association would be of the utmost advantage because B.A.S.F. was an acknowledged leader in the nylon field.

The meeting adopted the following recommendations by the committee:

That the trustee be authorised to instruct the receiver and manager to continue the business with a view to its sale as a going concern. That the committee confer with the trustee and be authorised to consider and accept any offer for the purchase of Enzlon’s assets or to make a conditional offer to the trustee for the purchase of Enzlon’s assets by a company to be incorporated, for which some of the capital would be offered to the public for cash, with a prior right of ap plication given to the debenture stockholders, shareholders and creditors of Enzlon, and the balance taken by the debenture stockholders in exchange for their debenture stock.

Other recommendations adopted authorised the committee to appoint provisional directors, make a provisional agreement to purchase Enzlon’s assets, and proceed with the formation of the new company .