DUNEDIN WATERWORKS COMPANY.

Evening Star, Issue 3112, 8 February 1873, Page 2

DUNEDIN WATERWORKS COMPANY.

A special meeting p£ this Company held in the Friendly Societies’ new hall, yesterday afternoon. There were between seventy and eighty shareholders present; and Mr R. Gillies, the Chairman of the Company, presided. The report by the directors, for the year ended December 31st last, 1 had been previously circulated, and read as follows :

Your Directors have to congratulate you on the continued prosperity of the undertaking for the past year. A contract was entered into with Messrs Park and Curie, on February last, to supply about twelve miles of pipes. These pipes are no w arriving, and contract? have been entered into to have them laid. This will supply most of the City with water, and will add consider* ably to the revenue. At your last meeting it was resolved by a majority of votes to sell the works to the Corporation at Lls per share. Your directors, therefore, entered into uegc. tiations to sell subject to the transaction being completed by the Ist of January; and subject also to the final agreement of the shareholders. The 'action''of the Legislature," however, at the last meeting of Assembly, has rendered any resolution then come to valueless, and it is necessary that the views of the shareholders should again be taken before anything can be done. The Corporation have asked that the arrangement should stand as previously proposed, the time for settlement being extended to the 31st of March next. In reply to the request of the Corporation, your Directors passed the following resolution, which has been communicated to the City Council: — “That, seeing that in a great measure the rise in the marketable value of the Company’s property was caused by the offer of the poration, which offer was increased afterwards to meet the views of many shareholders ; and seeing that a majority of the shareholders voting agreed at the last general meeting to sell to the Corporation at Lls, and that the Corporation agreed to the terms stipulated without toy j al»o default

In the completion of the bargain occurred through no fault of the Corporation, and generally for other reasons, the Directors recommend that the works and plant of the Company be sold to the Corporation on the same terms as were already agreed to in the draft agreement.” It is for you, however, to decide what course the Company should now take with regard to the sale to the Corporation. The revenue of the Company continues to increase, and your Directors would recommend that, in addition to the interim dividend paid up to June 30th last of 4 per cent., there should now bo paid a dividend of 6 per cent, for the half-year ending December 31st, making in all 10 per cent, for the year. The two retiring Directors are Messrs James Wilkie and E. W. Alexander. These gentlemen offer themselves for re-election. The two Auditors, Messrs C. H. Street and H P. Morse, also retire, but are willing to continue their services if re-elected.

The Chairman intimated that the more formal part of the business would be proceeded with firs’, and in moving the adoption of the report, he wished it to be distinctly understood that in adopting it the shareholders would not be committed to anything. He would, however, be happy to answer any questions. Mr G. F. Reid seconded the adoption of the report Mr G. ?. Abram asked if the directors were unanimous m recommending the sale of the works to the Corporation. The Chairman : They were not. There was one director who dissented, but he did not record the grounds of his dissent, though he proposed to do so. Mr Sutherland : What was the name of that director ?

The Chairman : I do not think it necessary to give his name. The recommendation was made by the majority of the directors. However, if the shareholders wish it I shall be glad to give the information, though 1 think it would be invidious to do so, and 1 suggest that it should not be insisted on. I believe the director is quite wiring to tell himself; but I must repeat that it would hardly be fair to the other directors to place them in the position of having to disclose that director’s name.

The motion for the adoption of the report was then put and carried.

The Chairman then moved—“ That a dividend at the rate of 12 per cent, per annum be declared on the guarantee shares for the half-year ending December 31st, 1872, and also a dividend at the ra,te of 12 per cent, per annum on the amounts paid on the unguaranteed shares for the half year ending December 31st, or for such portions of the half-year as payments have been made ; dividends to be payable on and after the 17th inst. That this meeting confirms the Eayraent of interim dividends made by the lirectors for the half-year ending June 30th, 1872.”—Carried. The election of two directors in the room of Dr. Alexander and Mr James Wilkie, who retired, but offered themselves for re-election, was then proceeded with. The drat mentioned declared himself opposed to the sale of the works to the Corporation ; the latter in favor of the sale. Messrs A. C. Strode and E. B. Cargilbwere also proposed ; and a vote being taker, the retiring directors were re-elected, the numbers being, Wilkie, 34 ; Alexander, 31 ; Cargill, 24; Strode, 13 Messrs C. H. Street and M. P. Morse were re-elected auditors ; and, on the motion of Mr Abram, the remuneration of directors was fixed at 10s Cd per sitting.

The Chairman said the next business to be brought before the meeting was this resolution :—“That the works and plant be sold to the Corporation at Lls per share on all the shares allotted as per agreement submitted, as per Dunedin Gas and Water Works Loan Act, 1872.” He did not intend to detain them with any lengthened remarks on the subject, as he supposed they bad all pretty well made up their minds upon it. He was somewhat sorry that there had riot been a preliminary meeting held ih reference to this iriatter before it came On for a final decision, for this reasonj that at the last" moment considerations had been pressed upon shareholders, which were not exactly correct. For instance ; he might refer to a statement made in that day’s Daily Times by a correspondent, that he valued the shares at Ll7. Now he considered the shares well sold for Lls; and he also considered that the Corporation had given a fair and liberal offer for them—had given more than he would have consented to give if he had been in the Corporation. Then was this statement of the correspondent entirely with ut foundation? No, it was not; he did not say it was. He did say, when* the thing was under consideration, that he thought the works were worth LI7 per share. What had caused the alteration they would ask ? Why, the very fact of the offer of the. Corporation' having been made, and of that offer having been accepted by the shareholders, put the matter in an entirely different position. The Corporation had made an offer to them which they had formally consented to, as beihg a fair one; and that fact might be proved iri evidence at any future' tipie before the Legislature, when they weilf there to try arid 1 get an extension of their works or powers in any way, as the directors well knew. He was speaking very guardedly just then, because he did not wish to say one word to injure the property of the Company, as he had the fear before him that the works would not be sold that day to the Corporation' ; and, therefore, he would be cautious in anything be might say that might in the least degree injure the prospects of the Company. But the directors knew ‘ that they Wbuld require to go W the ' Legislature at some time, and not at a distant day either. When they went there they ceifainly could not expect any consideration after refusing such an offer. It also apparent to everyone who hiid watched the progress of events Ifbm the formation of the Company to the present, that the time would not be very far distant when increased facilities for the supply of water to Dunedin wbuld be required. Would they be allowed to take it up ? He thought not. He thought the Corporation would step in and say, “You have done your part, and done it well; you can keep what you have ; anything in the future we will do.” He did not allude to such action as was taken ia reference to the Gas Company, for he did not believe the citizens of Dunedin would up any action lik£ that. The Company had not a full supply of water for Dunedin, and the Corporation would only be doing its duty to take the matter in hand, and bring water into the city. If such a contingency happened, what would be the position the shareholders would be placed in ? They would have a competitor in business It was quite true they could not be driven out of the held, because they had an Act which guaranteed them 8 per cent., and which enabled them to rate the citizens in order to pay that guarantee. But suppose for a moment that that state of matters was in existence. What would he the value of their property ?—would it be worth anything like Lls per share ? it was the fact that they were paying this year a dividend of 10 per cent., with a prospect of paying more, but with the prospect of the Corporation starting in opposition, they might have to enforce the tax upon the citizens to get the 8 per cent'. ’Did they then think their property would be worth Lls a share ? Certainly not. he thought, and that was a very serious consideration. There were many other considerations—weighty considerations —which he could give expression to, and of which the directors were cognisant. The direct' rs, with one exception, told the shareholders they ought to sell. Was it the wiser course to follow the lead of their directors, or that of some of the shareholders, whp said this or the other thing ? It might be said that the position of matters had altered since the last meeting. He had never said it was dishonorable, unfair, or anything of the sort, to refuse to sell now. The Corporation had made a time bargain, which, through no fault of their own, they had not taken advantage of. He said the shareholders were perfectly free to say, “We will not take &” But he would not throw up the bargain— he felt |u<QMlf

same time he did not think it dishonorable for the shareholders to say, “We will not sell n >w.” But it had been said, he knew, that they were in a different position, for they were then paying ten per cent., wheieas formerly they only paid eight. If the shareholders looked at the report at the time this matter was brought up, the directors told the shareholders < hat they would shortly be paying ten prr cent, or more ; so th..t they ha A that fact clearly before them when they came to the decision to sell to the Corporation. If they looked at the directors report submitted in April, 1872, they would find it was go. The dividend on that date was 8 11-20ths, or 84 per cent., which, increasing at the rate of I.J, per cent., made 10 per cent, at the present time. He had been askedtoansweroneortwo questions. The first was, “Is it a part of the bargain that every shareholder can have the amount duo to him in Corporation debentures at 0 per cent?” and the answer to it was that the shareholders could have their purchase cither in cash or in Corporation 0 per cent, debentures. The second question was, “ - 'ow lons will these debentures run before they can be redeemed?” and the answi-r was fifty years. The shareholders would receive debentures paving 0 per cent, for fifty years, and he had no hesitation in saying, as a stock and share broker, that that security would always command a premium in the market ; so that in reality they were getting more than 15 per cent, per annum. The third question was, “ Are the shareholders entitled to a bonus of 50 per cent on the last call of Leper share, just as on the former calls and the answer was “yes.” He concluded by stating that he had been connected with the Company from its formation, before directors were elected, and knew all its ins and outs as well as any one connected with it; he had no political inter st to serve, and no popularity to gain ; and he said to the shareholders that he was perfectly willing to take Corporation debentures, bearing 0 per cent, interest for 50 years for his shares; more than that, if the sale was not completed, he would be very happy to sell all his shares at Lls, and would clear out of the company, Mr James Smith, in seconding the motion, said he did not wish to give a silent vote. It appeared to him that the shareholders on that occasion were divided into two classes : those who voted for the resolnt on confirmed at a meeting some months ago for the sale of the works to the Corporation, at Lls per share ; and those who voted against that resolution, or did not vote at all, either through being absent, or through not being represented ; and it further appeared to him that there was a very wiile distinction between them. He quite admitted that those shareholder who voted against that resolution, or who did not vote at all, were quite free to act now according to a sense of their interest; and the few remarks which he. would venture to address to them, and also to the other class of shareholders, were addressed in the aspect of pecuniary interest. It appeared to him that the sum of LIS per share was a fair price indeed. Different opinions had been expressed ; but confessedly the subject was one upon which it was difficult to arrive at a correct conclusion. Those best informed upon the subject the Chairman for one-informed the meeting that it was their opinion that Lls a share was a fair and good price, and he thought they were bound to accept that as a reliable authority. Even assuming, for the purpose of his argument, that the contention which ho believed some were going to make, that Lls was not full value, it still appeared to him that there were certain drawbacks which ought to be taken into consideration, supposing a majority of the shareholders were then about to vote for not selling. hirst of all, there was what be might call the standing menace to the Company in the shape of the concluding clause of the Act, under which the Company constructed us works, and which authorised the General Legislature to reduce at any time it might see fit the profits divisable among the shareholders. The General Legislature could exercise that power at any time it thought fit to do so for the good of the community, and he deemed the insertion of that clause was intended as a warning to the shareholders that’the rates producing these profits would be reduced, when it was found they had become oppressive to the community. It was to give fair warning that the Legislature reserved to itself the right of reducing those profits,—(Hear). How would the Company stand after declining to accept the very fair and liberal offer which had been made to them by the Corporation ? In this position he thought a strenuous and combined effort—and it was most probable that such would be the case—would bo made on the part of the citizens to impress upon the Legislature the necessity of exercising that power, though it was probable the Legislalature would exercise that power very much to the prejudice of the Company. But as Sliming that it was 'probable, he took it that it would be a very serious drawback to the supposed value of ' the shares, even if tliey were worth more than Lls. Then, again, there was the contingency, which had been adverted to by the Chairman, and to which, the present occasion being one for very plain speaking, even at the risk of it damaging his property, in the event of the sale not taking place, he would allude, because it had only been shadowed forth by the Chairman. He had all along understood that, although Jhe embankment was considered by engineers sufficiently safe g? present, a considerable expenditure—between L4.C00 gud Lo.'OOO, he be. sieved—would have to .be undertaken to construct what was called a culvert, in order to prevent the recurrence of a bursting of the pipes, immediately under the embankment. An accident of that eharac f er, though not attended by any serious consequences, had happened, and the damage was repaired under LIUO ; but it was within the range of possibility—nay it, was more than probable—that a similar accident might occur when the immediate supervision of the person in charge of the work was wanting, in which case the whole embankment be carried away, entailing ppt only positive damage to the wprks, but resulting most disastrously in the amount of damage that would probably have to he paid to those persons injured by the devastation occasioned by the bursting forth of such a large body of water, This contingency he contemplated with some degree of fear. But the proposed sale to the Corporation, which was looked upon as a body fully able to undertake the expenditure necessary to avert such a catastrophe as be had referred to had been a great relief to his mind. There was another drawback of a •serious character, and he asked those shareholders who opposed the sale to seriously consider whether they were not better consulting their own pecuniary interests by accepting the fair offer of the Corporation, for he really believed they had only a chomp of two alternatives. There was a further consideration, whiph, hf imagined, ought to weigh with the shareholders, apd it was this: \yere they placing themselves in an unbecoming of unsatisfactory position towards their in driving what might be termed a hard bargain? To many—he was going to say to most—it seemed that the bargain was a fair and liberal one ; and that being the case, ho would press upon them the good grace of yhlding to that view of the case, and accepting Lls, if not with thanks, at all events with gord grace. Having ventured to offer that advice to one class of shareholders, he would review in a few words the position of those who, like himself, had voted for the resolution to, authorise the directors to offor the property to the Corporation. And there ho took exception t® what fell from the Chairman, viz., that it was a time bargain. As ho (Mr Smith) understood the resolution that was carried, time was not, by any means, an essence of the contract; that was an element which had ho?n added to the contract by the directors. He held it to he the duty of those shareholders who stood in the same position as himself, to cairy out the undertaking im*

plied by the resolution in favor of which they voted on the former occasion in its full and fair spirit If he could satisfy them that it did not authorise the directors to tie the Corporation down to a time bargain, then he took it for granted that they would join with him in endorsing what was done on that occasion. The resolution that -was carried was moved by Mr Reynolds, and was to the following effect : “That the works be offered to the Corporation at L 5 per share premium on 5,050 shares allotted ” —that was the whole of the allotted shares—- “ on the conditions arranged with the Corporation as per report, and that the collector receive six months’ salary.” The terms of the report n ferred to wjere these :

In accordance with a resolution passed at the last meeting of shareholders, your Directors entered into negociatious with the Corporation for the sale of the works, ■which have resulted in the following offer being made by the Corporation. The Corporation to pay L 5 bonus per share on the original paid-up capital of the Company, undei stood to he represented by 4,440 LlO shares ; 15s bonus per share on the <550 unguaranteed shares recently issued, upon which only 30s per share have been paid up; the Council to take up the Company’s debentures, L 15,000; and to arrange with Colonel Kitchener as to L 5.000 advanced by him ti the Company. The Corporation to take over all the liabilities of the Company, provided they receive all share capital on hand ; to take over the works from some quarter-day, on the understanding that all rates due to the day on which the works arc taken ovev are the property of the Company, which shall he authorised to collect arrears after the works are tranfovred —and to take over or give compensation to all the servants of the Company, except the collector, who will not he required by the Corporation, and who, it is supposed by the City Council, will be needed by the Company to collect the arrears of rates, and, being paid by the Company, will not require compensation from the Corporation. The directors, in their report, recommended the acceptance of the Corporation’s offer ; so that Mr Reynolds’s motion proposed to accept that offer, ’with the sole modification that the premium should be payable on the whole of the allotted shares—unguaranteed as well as guaranteed. The meeting would already have observed that the offer of the Corporation did not make time an essence of the contract; on the contrary, it proposed that the transaction should take effect on some quarter day. For reasons which he had never heard explained, the Directors afterwards took upon themselves, in the course of their negociations with the Corporation, to make time an essence of the contract. He believed the Ist of January was fixed as the day upon which the contract was to be concluded, the actual transfer of the works to he made, and the consideration money to be paid, failing which the bargain was to'fall to the ground. As he viewed the matter, the shareholders never authorised the Directors to make that stipulation ; at all events those shareholders who occupied the same position as he (Mr Smith) did, of having voted for the resolution ex anim.o did not regard from the point of view from which it then presented itself to them. For his own part he did not feel honorably or morally at liberty to repudiate the bargain which be then authorised to be, made, because it was through no fault or larhe* of the Corporation that it was not completed on January 1. It was entirely owing to the Legislature having (in its wisdom,and owing to some oppositionhaving been raised against the Corporation in Parliament) passedanActwhich tied the hands of Hie Corporation. 1 hen, although sanctioning the making of time an essence of the contract those shareholders who stood in the same position as himself could not honorably refuse to ratify the bargain which was authorised by that resolution ; and further, that it was very plain to him that those shareholders wiio voted for the motion on that occasion would say that they were morally—he did not pretend they -were legally—bound to uphold what they then authorised. The < il.UKli.iN ; 1 may just explain that the time was inserted in the agreement drawn up, and was one for the purpose of making the Corporation come up to the scratch quick. Mr A. Rennie would support the motion for the simple reason that he had sold his interest in the Company to the Corporation. That was an established fact. A bargain had been made, and it was through no fault of the Corporation that it had not been carried out ere this.

Mr Mercer said he had all along considered the Corporation were giving too high a price, and assured the meeting if the Company did not then sell, the Corporation would be off the thing altogether. Mr Fish said he would not have made any remarks but for “ A bone fide Shareholder ” having challenged, in the Daily Timet, hi a right to speak at that meeting. With, regard to the general question, he would say very little, as the Chairman pnd Mr Smith had spoken upon jt much better than he could. He reminded the meeting that it was fifteen or eighteen months since that a public meeting was hi Id to consider the Company’s application to the Legislature for further powers, when the principle was affirmed that the waterworks should be in the hands of the Corporation, and petitions containing between 3,000 and 4,000 signatures were presented to the Council, asking them to take steps in the matter, so that the Council as a body had not acted without the full consent and apprplsti«i o,f the, citizens. Wheu the idea \ras tfigt presented of purchasing the waterworks, he had very great difficulty in getting soipe members of the Corporation to agree to the first offer, which was made in January, 1872, of LI2 per share on the fully paid up shares. Subsequently, a subcommittee of the Directors of the Company, including Dr Alexander, waited upon the Council, and suggested if an offer came from the Corporation to pay Ll6 15s per share all over, and to arrange CoLnel Kitchener’s claim, there would be little doubt it would be accepted at once. On April lb the Council disagreed with this traggestiou, but offered L 5 per share op th,e original shares, and 15s, or pU per cent., on the new ones, 11 pun which 30k had been called up, On Julia 26’ the Company made an unconditional offer of the works to the Corporation at a premium of L 5 per share all over, new and old, which the Council accepted, and agreed to deal equitably with Colonel Kitchener. He did not think that any who voted on the last occasion for this sale could possibly give a different vote on this, for he himself hold there was not the slightest doubt a sale had been made, one which he ventured would be upheld by a court of law. It was quite true that in the draft agreement signed by the directors, a danse was inserted making time a condition of the contract, but the Chairman and every director would tufl the meeting it was merely inserted to prevent the circumstance arising, as it frequently did with Corporation ß ) P.f the Council trifling with th,c directors. The (’or-, poraticn ha,d'given way in everything; had giyen way to every suggestion ox demand of the directors, had gone up the sliding scale of price from one step to another, until they had reached a point; but still the shareholders cried out and appeared insatiable, and wanted more. If the Corporation had done anything to justify the Company using that clause, he would have been the first to say it seived them mdit, and would not have now raised his voice in favor of thesale, ‘After alluding to the probability of the water rates being quickly reduced, on the works passing into tbe bauds of the Corporation, and to the advantages resulting therefrom, he observed that statements, which were not founded on fact, had been made to influence certain shareholders. They had tbe directors working con amove up to almost within the present moment in favor of the sale, and Dr Alexander turned round at the last moment, which surprised him, as he had always considered him the best friend the Corporation had in this matter. He noticed the largest shareholders—those who had borncthc heat of tbe day—were nearly all in favor of the sale—and lie admired their public spirit; whilst those who opposed appeared to be speculators, jig \reot hjdo the thing to make

the very best they could out of it. He concluded by thanking the chairman and directors for the courteous manner in which they had conducted the negociationa between them and the Council.

Dr Alexander rose for the purpose of c rrectiug a wrong impression on the part of the previous speakers, in reference to time being made an essence of the contract. He was imcler.-to'd to say that, at the last meeting, he felt himself bound to sell if the arrangement was concluded by the stipulated time; if not, that he was free to act as he pleased, and that that was his impression on that occasion.

Mr J. Cargill impressed upon the meeting that the failure to complete the bargain arose from no fault of the Corporation. Mr Elliott knew a little about the cause. He was disappointed at not hearing the other side give some reasons why they should not sell. He would give his own reasons for wi-hing to sell. It was simply a matter of pounds, shillings, and pence with him ; a change of investment ; he had no sentimental reasons like Mr Smith. He was willing to take Corporation debentures, which were equal to 0 per cent, on the capital allotted for a term of fifty years. He hoped the other side would buy him out for Lls ; or give strong reasons why he should not sell at LIS. [Mr Logan : There is no other side] He was very glad to hear it. The Chairman explained, with reference to wbat had fallen from Dr Alexander, that the insertion of the clause referred to was his (the Chairman’s) act alone, and was afterwards adopted by the directors. It was put in by him after a conversation with the Mayor and Councillor Ramsay. But it was really of no coi sequence, as the Act of 1872 said:—“ Nothing herein, or in the minutes of the “ Corpora ion’s Water Works Act, 1872,” contained, shall be deemed to authorise the Dunedin Water Works Company to sell the water works of such Company, except under authority of a special resolution of the shareholders of such Company to be hereafter passed,” So that if the agreement bad been signed and sealed, that meeting would still have been neces-ary. The resolution was then put, and declared carried by a majority of 36 to 15, the aunouncern nt being received with applause, Mr Abram demanded a poll, which was taken as follows :

There voted for the motion, Messrs R. T. Wheeler, V, B. Kiconrt, H. F. Hardy, G. P. Reid, Col Kitchener, G. P. Eliott, Sutherland, Fish, Smith, Langlands, 0, Drape, Mercer, A. W, Smith, A. Bennie, Yates, A. Barr, Jas. Brown, A. Davidson, K. Henry, J. Wilkie, J, Paterson, J. HLlop, F. Tofield, IT. Lane, C. Macandrcw, W. Begg, E. G. E l l wards, D, M. Stuart, S. Hawthorne, •). Banbury, W. Sinc’air, J. H. Lambert, R, Butterworth. Anlerson andMnwat. J. Blair, ' v . Watson, J. Cargill, Jas. Smith, and Sir F. Smith, J. Logan, Sir 1 ras. Smith, P. Dunlop. The following proxies were handed in on behalf of Messrs Reynolds and others, Jenkinson, Quick. Goldsmith, Mills, Steele, Bathgate, Miss Reynolds, Mrs Borrie, and Mrs Wilkie.

Those who voted against the motion were—Messrs Jackson, Laing, R. Watson, Bower, West, M‘Connell, Wilkinson, Hume, Brent, Matthews, Folks, Bartlcmau, J. M‘Gregor, Park and Curie, Lazarus, N. J. B. M'Cregor, Alexander and Abram. Proxies were handed in on behalf of the following : Simouds, Beverley, Walker, Janisch, Strode, Nainpeth, Bremer, Wallace, R. Wallace, Fulton, J Wallace, John Wallace, Douglas, Prendergast, Sommerville, Kincaid, Hunter, H. Jeffrey, K, Jeffrey, A. Jeffrey, Branigap,, Strafford, M'Lean, Hill, Lindsay, George, and Murcot.

Represented by shades tRe voting was— For, 838 ; against, 57-5, But as there were 78 disputed votes, which were rejected, the absolute majority in favor of the sale was 263.