THE CITY COUNCIL AND THE WATERWORKS.

Evening Star, Issue 2865, 25 April 1872, Page 2

THE CITY COUNCIL AND THE WATERWORKS.

At last night’s meeting of the City Council the Waterworks Committee brought up a report on the subject of the proposed purchase of the works by the City. After referring to the preliminary negotiations, the report went on to say : Pursuant to such an instruction, the Subcommittee of the Directors arranged an interview with your Committee, and tendered the following terms for the sale of the Works The Council to pay Ll6 15s for each of the 4400 LLO shares fully paid up ; Ll6 15s per share for 650 LlO shares, upon which only 30s per share has been paid up ; to take up the Company’s debentures (15,000) and to arrrnge Colonel Kitchener’s claims ia respect of LSOOO advanced to the Company by way of a loan. In the event of Colonel Kitchener being in a position to damand, as has been hinted at, that the LSOOO advanced to the Company by him to be converted into 600 LlO shares fully paid up, the purchase money would aggregate L 108.462, 10s. The Council, in addition, to take over at cost price any plant now under order from the Company, as also any existing contracts. If Colonel Kitchener’s advance can be paid oil pursuant to notice already given him by the Directors of the Company, the proposed price would be L 104.587 10s, payable in cash, or 6 per cent. City debentures at par. Your Committee recommend that the offer made by the sub committee of the Directors, subject to confirmation by the shareholders, be declined ; but that the Council offer L 5 bonus per share on the original paid up 4400 LIO shares, and 15s bonus per share on the 650 unguaranteed shares lately issued, upon which only 30s per share has been paid up; the Council to take up the Company’s debentures, and to arrange with Colonel Kitchener. In this case the purchase money would amount to L 86.975, or possibly to L 89,975, the higher sum being the price if Colonel Kitchener establishes his claim as above indicated. Your Committee is of opinion that the citizens generally will approve the transaction should the Council decide to make the offer herein recommended, but though rightly estimating the desirability of having the water supply in the hands of the Municipality, the Committee hopes the Council will he unanimous in finally declining in any way to extend the effer herein recommended for submission to the Company.

The Mayor observed that since the report was framed the sub-committee of the directors had waited upon him and modified their proposition to the extent that they were now willing to recommend the shareholders to accept Ll6 per share upon L 44,000, and the same amount pro rata upon the 650 new shares ; so that the difference between the proposition now made and that recommended by the sub-committee was exactly a LI per share. The directors, in making the modified proposal, reserved to themselves the right of calling up more capital on the unpaid shares, whenever they should think fit: although they stated they did not think more than L3OO would be required to be called up within the next three months. The effect of that reservation would be that, supposing the Council were to agree to the proposal, there would be a difference of price to the extent of the calls : but the directors might call for the whole of the unpaid capital on the new shares to be paid up, in which case they would expect to receive the full ams'iuit on those shares. It would be wise, therefore, for the Council to fix the amount at once.

Mr Cargill thought it a pity that, after negotiations had been brought to a close, there should come from one side a semi* official and irregular communication for a modification of the original proposal. He did not think it was quite fair to the Council, and he did not think consideration should be given to a communication of the sort which carried no weight with it. The report stated the case fairly, and it was one the Council should adopt. It was clear the Council could not consent to be subjected to such a process of bargaining as it appeared there was a risk of its being drawn into. At the time the negotiations were commenced the shares stood at par. The Corporation offered a premium of L2, equal to 20 per cent., per share. He was sure very few of the shareholders ever thought it possible that in a couple of months L 5 would be offered for them. When it was seen that the Corporation was prepared to act generously, there came about a sort of understanding that Lo a share would be given; but he confessed himself loth to even sanction such a large advance as that. The prospects of the Company were very little different now to what they were two months ago. It was absolutely necessary that the Council should guard itself against being drawn on step by step to do something which would afterwards be condemned as extravagant and unfair by the citizens. He thought the Corporation’s offer might fairly be regarded as an ultimatum. Mr Mercer seconded the motion, and said that, as a shareholder, he never expected to receive such a price as was now offered by the Corporation. Mr Ramsay expressed the hope that the shareholders would think lit to accept the offer. The proposal of Ll6 ought not to be entertained for a moment. Mr Barnes expressed similar views, and said he thought that when it was known that the Council had decided, an early arrangement would he come to. The Mayor mentioned that it had come to his knowledge, on very good authority, that the Directors, at a meeting held subsequent to the matter being relegated to them by the shareholders, actually passed a a resolution that the works should be sold for Lo per share premium; that a few days afterwards, from something that transpired, the directors again met, rescinded their former resolution, and the meeting culminated in the offer embodied in the report. Since then the sub-committee of directors had modified that offer. He agreed that the Corporation’s offer should he thoroughly understood as final. The report was adopted, with the addition that at the end of six weeks the Council would decline all further negotiation.