WHAT ARE MORTGAGE DEBENTURES ?

Hokitika Guardian, 1 July 1921, Page 1

WHAT ARE MORTGAGE DEBENTURES ?

READERS’ QUESTIONS ANSWERED Many people in this district are wanting to know something about debentures. They are reading and talking about the issue of 7£ per cent Ten-year Mortgage Debentures being issued by the Gisborne Sheepfarmers’ Frozen Meat Company, which are making a strong appeal to investors. The reason for an issue of debentures is that a company desires further working capital, and it is not desired to increase the share capital, as the former is required for only a term of years. That is the reason in the present case, the term being ten years. Where Mortgage Debentures chiefly differ from ordinary’ Debentures or Bonds is in the nature of the security offered. An expert accountant said in a recent lecture : “Mortgage debentures are those which irfaddition to acknowledging the debt, give to the holders ~a specific mortgage of the company’s property or some part thereof enforceable by sale, or foreclosure‘like an ordinary mortgage. When the charge is fixed, it affects the title of the property, and the company can only deal with the property affected subject to tbe charge I (i.e.), in the case of a fixed charge, any asset which is not mentioned in the char'-e is free to be disposed of by the company at will, but in regard to the property specifically mentioned it can only be dealt with by • the company subject to the charge created by the debentures.” , la connection with the debenture issue of the* Gisborne Company, the £3OO 000 issue is secured by first inert-i gage’ of properties and plant that are That is, a security of £2 for every £1 invited from investors. The trustee for the debenture-holders is the N.Z. Insurance Co., Ltd., Auckland. The Gisborne Sheepfarmers Company’s 7-V per cent mortgage debentures will be* issued in bearer form, and are in denominations of £SO, £IOO, £SOO, and £IOOO. Interest will he paid halfyearly free -of Debenture Tax-, The Company is the pioneer farmers’ company of Poverty Bay, having, been established 19 years ago. It- has a noli farming .district behind if, and its progress has been consistently good. Ihe directors are:—Messrs F.B. Barker, A. J. Cameron, J. Clark, F. Hall, H. Kenwav O. A. de Lautour, H. D. de Lnutou'r’ J. W. Nolan, 0. M. Reynolds and FI. Williams. . , , Prospectus and fall particulars obtainable from Abe Bank of New /A-a-land or any member of the Stock c!ui l ,° r e, or from the Company s broker, .Mr W. Lissant Clayton, Gisborne, or the Company’s Office, Gisborne.