RECONSTRUCTION OF MOTUROA COMPANY.

Taranaki Daily News, Volume XLVII, Issue 8120, 26 May 1906, Page 2

RECONSTRUCTION OF MOTUROA COMPANY.

TO TIIE KDITOH. Sir, I road with much interest your leader on this subject as to the necessity of preventing the loading by fully paid-up shares choking the enterprise. The proposal is to wind up the Moturoa Company and float a new one, but this seems to me foolish, as, at a merely nominal cost, the capital of the present company can be increased to £120,000, without the expenses of liquidation and floating a new company, and the risk of being bled by the professional " company promoter." The proposal is to form a new company, with £120,000 in £1 shares, and give 100 shares of £1 teach for each £5 share, and 20 for each £1 share. This would make the present company's assets worth £50,000. The fully paid-up shares will stand at £56,000, and leave £61,000 available for working capital. Half-a-crown per share (£8000) will sink at least fire bores, and will bp all that " ill be required, or that it will bo prudent to expend at present, To erect a refinery until we have scvoral payable wells would be as idiotic as fora farmer to build a tlourmill because ho has fifty acres of wheat. If good oil is got in, say, four out of the five bores, and all goes well, there will be no need to call up more than 2s 6d, and the paid-up shareholders will take good care that no more is called up, *but will borrow on debentures or mortgage, and use the profit for boring and establishing a refinery. Then what will be the miserable lot of the contributing shareholders p Tho paid-up capita'l will be £56,000 and (2s Cd per share on 61,000) £BOOO-£61,000, and if a dividend of 10 per cent, is declared (£6IOO dividend) their 6.1,000 shares will got £BOO amongst them (3d per share), and the paid-up 56,000 will gel £5600! So it is evident all the capital available will go to buying paid-up shares, and nothing be left for working expenses. To prevent this, it will be necessary to provide, not only that the paid-up shares shall not be transferable until a dividend of, say, 6d per shqro has been paid out of oil and its products, but also that dividends shall bo p iil on the shares, and not on the amount for the time being paid up on each share. It is so important that capital should be got for actual work, and that the enterprise should not be killod by bad management, that I make.no apology for addressing you on the subject.—l am, etc., Motuboa.