PAPER PULP

Rotorua Morning Post, Volume 2, Issue 541, 26 May 1933, Page 7

PAPER PULP

"Post.")

TIMBERLANDS' PLAN ENTHU SIASTIC MEETING OF SOUTHERN BONDHOLDERS' COMMITTEE. PROJECT SUPPORTED.

(Special to

Christchurch, Tuesday. Proposals for merging the present share capital of Timberlands Woodpulp Company with bondholders into a total share capdtal of more than £2,400,000, for the purpose of almost immediately establish'ing pulp and paper mills in the Bay of Plenty, were endorsed by a meeting of Canterhury bondholders' delegates in the Chamber of Commerce last evening. Mr. A. B. L. Smith, chairman of th'e Christchurch Bondholders' Committee, presided. Mr. Smith expressed appreciation of the large attendance of bondholders, before tyhom the h'ead committee was anx'ious to plaee its complet© proposals for the merger. The importance of the company's project could be gauged from the fact that when production was started the company would control the largest industry in the south'ern hemisphere. Government's Attitude. Mr. C. E. Kerr, representing Canterbury, Otago, and Southland bondholders on the head committee, recalled the company's negotiations with the Government concerning "thinnings," in which much' determined oppos'ition had been met with. The question had eventually been taken to the Development of Industries Board, which had appointed a committee to investigate the company's puoject. This committe had finally come to the conclusion that the proposition was absolutely sound. However, the company had been unsuccessful regarding the thinnings. The question was then taken to influential members of the Cabinet, but it was found that they did not understand very well what the company was aiming at. The argument was advanced that thei timber required by the company was not available. JEarly this year the initial difficulty regarding imme-;. diate supplies was definitely overcome through the efforts of th'e head committee, and the company's attorney in securing options over the Matahina forest, embracing an area of about 16,000 aeres. This forest, comprising rimu and tawa, was alongside the company's own block of 21,000 acres, near Te Teko. The block was consid ered to be ideal for the company's purposes. It had also been decided to start planting 5000 acres at Matahina at once. Avoiding Stamp Duty. It was decided to lose no time with the merger proposals and, as the result of a visit to Australia by three of the company's representatives, the project was going ahead satisfactorily. The original merger proposal, if carried out, would have involved £80,000 in stamp duty, whereas the present proposal under which bondholders would receive £55 for each bond, would involve a comparatively negligible cost. Mr. H. A. Horrocks, the company's New Zealand Attorney, said the Christchurch committee was representative of about £75,000 worth of capital in the company, and the holders of bonds representing this capital would doubtless be largely influenced by the opinions of the local committee which was appointed to watch bondholders' interests. There were 55 local committtees in the Dominion, and before a vote on the merger scheme was taken in July the head committee considered it essential to have the support of every local committee in New Zealand.

The notices to bondholders in Canterbury would be issued in about a fortnight's time, and the head committee wanted to be as sure as it could be that the merger would be approved. Were it not aproved the option over the Matahina forest could not be exercised and production would be delayed for several years. Mr. L. A de Guere, of Wisconsin, a foremost pulp and paper mill engineer in th'e United States, would be sent for to return to New Zealand as soon as the merger was settled. Bonds and Shares. Replying to questions Mr. Horrocks said the bond issue was restricted to 40,000. The total amount of bond capital represented was, £1,245,000. Bonds were split into groups and it was decided that those buying bonds in the early stages should have a greater share of profits. The second to last group was now selling at £50, and th'e last group would sell at ££55. The share capital would have to be written up to the value of the last issue, and holders of bonds sold earlier at, say, £25, would receive a share bonus to bring their holding up to £55 for each bond. The original company was to hold a tenth of the merger capital of £2,444,444. Were the merger proposals not agreed to it would probably be five or six years before production was started. The deed of trust was a two-edged sword. It was all right as long as the company decided to operate on its own timber. To-day there was a chance of starting production at once, with rimu and tawa involved in the company's options. But it would he of no use to huy th'e timber at £120,000 or £80,000, aeeording to which option was exercised, unless the mills could be opened and some return secured on the money. To pay for the mills the trust moneys had to be released, and the only way to release the moneys was to approve of the merger before the options expired in July. When the shares were allotted stamp duty would he about 7s or 8s for each £100 worth of shares, and it was suggested this should he paid by the individual bondholder. - Supplies Available. • Discussing the future, Mr. Horrocks said the amount of timber now available would enable a mill with an output of between 26,000 and 30,000 tons to operate. The production costs of th'e finished product was estimated at £11 a ton, and the net profit, based oh New Zealand wh'olesale. prices for the various grades of paper, it was intended to make, averaged about £12 a ton. On the Pukahunui block there was enough timber to sustain an- output of 100,000 tons a year, and on the Matahina block there would, in a

few years, be a supply to maintain an output of 50,000 tons a year. The expansion capacity for raw material was up to about 150,000 tons a year. Professor H.* H. Corbin, th'e company's technical director, explained the various attributes of rimu and tawa in comparison with other woods for' paper pulping purposes. On the motion of 'Mr. E. R. Caygill the meeting unanimously decided to approve of the bond contract being varied and of the carrying out of the ■ merger proposals. Mr. Caygill expressed complete confidence in the prospects of the company and in th'e management.