UP TO £1,000,000

Sun (Auckland), Volume II, Issue 529, 5 December 1928, Page 14

UP TO £1,000,000

FARMERS’ TRADING CO. CAPITAL INCREASED PAYING LARGER DIVIDENDS By an overwhelming majority ! the ordinary shareholders in the ! Farmers’ Trading Company, Ltd., agreed this morning to alterations | in the article* of association enab- ; ling larger dividends and an increase in share capital. A large meeting of shareholders discussed tlic* two proposals for two hours, and then carried the proposals by 88.230 votes to 135. The proposals bad previously betn passed by meetings of the “A” and “B" preference shareholders. The proposals were to increase the dividend on preference shares from 6 to 7 per cent., to increase the dividend limit on ordinary shares from 8 to 10 per cent., and to increase the capital of the company to £1,000.000 by creation of 1,140.915 new ordinary 8s shares. The directors intend to offer £IOO,OOO ! worth of share capital immediately, j present shareholders to have first i refusal. Although the increase of the capital j was really a subsidiary question, most of the discussion occurred while it was j before the meeting. The chairman, Mr. J. Body, in reply to questions, said the company was doing very well indeed, and he did not think anyone would want to see its position jeopardised by a foolish giving out of money r to repay the writing down of capital. They wanted to reinstate the shares at their original value of £l, but before this they had to wipe out £187,000 worth of debentures when they fell due in 1930. This was the reason for the issue of new capital. The proposals brought forward had received the most earnest consideration, and the board was satisfied, that it was the. best thing to be done. PRESENT VALUES The present par values of shares are: A preference, 17s; B preference, 14s: ordinary, Bs. A question was asked whether these would be reinstated to £1 value by the proportionate method. The reply was that the articles of association govern this, and if a Is write-up was decided on, it had to go on all shares, so that each A preference. B preference, and ordinary share would equally participate. The chairman said it was proposed to offer new shares, if issued, to present shareholders first. It was anticipated that shareholders would take up all the new issue. The new shares must be subject to any writing-up privileges given to present shares, and for this reason present shareholders were urged to secue this benefit by subscribing. Mr. Robert Laidlaw pointed out that if the board really wanted to issue shares, it did not require any further authority at the moment, as it had £IIO,OOO of ordinary and £127,000 of B shares capable of being issued at once. EFFECT OF HIGH DIVIDEND He also pointed out that the increased interest proposed was 10 per cent, on 8s shares, which was equivalent to 6 per cent, on shares valued at 13s 4d. As far as the value of the shares was concerned, it had the same effect as writing them up to that amount. Continuing replies to questions, Mr. Laidlaw said the A shareholders had agreed to a suggestion that they should give up rights which gave them virtual control of the company, provided they were paid the same dividend as B shareholders. LARGE PROFITS The company, on conservative figures, was making £40,000 to £50,000 a year, and the total dividends on the high rate would absorb only about half of this. In so many words, the shareholders were getting something now, and building up reserves to, enable them to secure the lull reinstatement of their original share values .