SELL OUT OR NOT?

Dominion, Volume 5, Issue 1267, 24 October 1911, Page 8

SELL OUT OR NOT?

MEAT CO.'S AFFAIRS. THE POSITION AT WA Iv'GANUI. (By Tck-craph.—Soocial Correspondent.) Wanganui, October '23. The affairs of the Wanganv.i >rca t Freezing Company woio subjected to a considerable amount of discussion at the special mM-ti::g of shareholders on Saturday afternoon, when there was a large attendance. Mr. C'. L. Duigan, at wlio» instance the meeting had been called, moved: "That, provided a purchaser can lie found for the company's assets and business as a going concern at a prico which, after providing for all liabilities, ivill return to the shareholders at least the par value of their shares, the shareholders shall consider Midi sale desirable, and shall authorise the same." Speaking to his motion, Mr. Duigan stated that a blight sceme.:! to Lave como over the company's operations during the last few years. An examination of the balance-sheet, since the inception of the company twenty-five yc-ais ago, showed that there had "been an average profit of .ears annually, but 110 allowance whatever luul been made for interest on the capital invested. If the dividends paid in tho past were deducted, the average annual profit was reduced to >£1130, arid he asked: Was it worth while continuing business with saieli sma.il returns on such a largo amount of capital? After liiakl;ig comparison?* with tin- balance-sheets of other companies, Mr. Duigan contended that something was wrong. The works luul showed large losses in the same years as other companies had made profits. It was impossible for the company to carry on successfully, and compete with other large companies 011 its present capital (,£4!),77G), and it was not right that the paid-up capital of the company should be ,£7OOO less than the mortgage debentures hold by the Loan and Mercantile Company anil Tyser Shipping Company. Tile directors had borrowed JctO.OOO from the Tyser Company, undertaking to repay JCIO3O each December, and to ship only by that line till 101!(. ]f the Jilo.OOO, realised by the sale of the stack in hand, were to be devot?d to reducing the Loan and Mercantile Company's mortgage debentures of ■£'!-{,OOO, it would be necessary to borrow more money to carry on with during the present season. Mr. Duigan added that, not only had the shareholders lost confidence, but the directors had lost confidence m the company, as was shown by the fact that, [ wlien the new shares were issued, only one or two directors had taken any up, e.-id then only a very few. The purchase I of the works at Aro.moho for .£10,601 (partly paid by issuing ,£SOOO worth of shares to the vendors, Loan and Mercantile Company) had been a bad bargain, those works being utterly unproductive. The loan and Mercan'ile's name, however, did not appear on (he share list, the shares having been divided in the names' of their manager and staff, and this formed a "silent vote," which he, anil those supporting him. had to fiirht. The chairman of directors (Mr. E. A. Campbell) said that tho time was too brief to reply to Mr. Dnigan in detail, but tho directors had done their part of the bargain. The agreement with the Tyser Lino was very advantageous to the company. After briefly defending tho managccsnt, he said that the directors

had no intentions regarding tlie motion, but would l)c guided by tlio meeting. The secretary of the company then read a statement issued by the directors which, aficr tracing the operations of the company and the growth of plant sinco its jiicoplrxn, agreed that the weak spot was insufficient capital, but this was due to the shareholders not subscribing tho amount required. The company had started business with an overdraft of .£IO,OOO, and. had it not boon for tho assistance cf Nelson Bros., the Tyscr Line, and the Loan and Mercantile, it would never have been floated. Tho totnl expenditure to date hed been .£120,000, oi which the shareholders had subscribed only X'-}9,7"C. Consequently, borrowing had to bo resorted to to'extend the works. After detailing the result of an independent examination of the company's tooks by an expert accountant, which .showed the position to be sound, and putting forward reasons for tad sales in London, the directors concluded by saying that they looked forward hopefully to the coming year. Considerable discussion followed, several speakers adversely criticising the position, and Mr. John Stevenson (manager of the New Zealand Loan and Mercantile) defended his company's position. Finally the motion was carried, with tho addition of the words (moved by Mr. Jiio. M'Grcgor) to the effect that the sale he authorised unless all the directors except the chairman and Messrs. G. S. Robertson and A. Burnett resign, and that tho places of those resigning be filled by Mcs*r=. Beckett, Cornfoot, A. Robinson, and A. G. Bignell. Farther developments are awaited with interest, and, in view of the importanco of the works to this district, the position of the company, and speculation as to the directors' intentions, lias been the chief topic- in business circles in town to-day.