WHAT ARE MORTGAGE DEBENTURES?

Manawatu Herald, Volume XLIII, Issue 2300, 9 July 1921, Page 3

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 74 per cent. Ten-year Mortgage Debentures being issued by the Gisborne Shecpfarmers’ 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 tern being ten years. Where- Mortgage Dehen tares 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 in addition to acknowledging the debt, give to the holders n specific mortgage of the com-

pany's property .or some pari thereof enforcahle by sale or foreclosure, like an ordinary mortgage. When the charge is fixed, it affects the title of the property, and (he company can only deal with the property affected subject to the charge (i. 0.), in the case of a fixed charge, any asset which is not mentioned in the charge is free to he disposed of by the company at will, but in regard to the proj perly specifically mentioned it can only be dealt with by the company subject to the charge created by

the debentures.” In connection with the debenture issue of the Gisborne Company, the £300,000 issue is secured by first mortgage of properties and plant that are conservatively vaylged at £615, 263. That is, a security of £2 for every £1 invited from investors. The trustee for the debenture-hold-ers is the N.Z. Insurance Co., Ltd., Auckland.

The Gisborne Shecpfarmers’ Company’s 74 per cent, mortgage debentures will be issued in bearer form, and are in denominations of £SO, £IOO, £SOO, and £I,OOO. Interest will be paid half-yearly free of Debenture Tax. The Company is the pioneer farmers’ company of Poverty Bay, having been established 19 years ago. It has a rich farming district behind it, and its progress lias been consistently good. The directors are: —Messrs F. B. Barker, A. J. Cameron, J. Clark, F. Hall, H. Kenway, C. A. de Lautour, H. D. de Lautour, J. W. Nolan, G. M. Reynolds, and H. Williams. Prospectus and full particulars obtainable from:—The Bank of New Zealand or any member of the Stock Exchange, or from the Company’s) bro’ker, Mr W. Lissant Clayton, Gisborne, or the Company’s Office, Gisborne,