TARANAKI PETROLEUM.

Taranaki Daily News, Volume LIV, Issue 149, 20 December 1911, Page 4

TARANAKI PETROLEUM.

THE NEW COMPANY. MR. H. J. BROWN INTERVIEWED. Shareholders of the Taranaki Petroleum Company have recently been circularised in connection with the purchase of their interests' by the new and larger company, and the offer the latter has made respecting their underwriting rights. Many of them do not understand the position clearly, so to gain some enlightenment a representative of the "Daily News" yesterday sought out Mr. H. J. Brown, chairman of the British Empire Oilfields, Limited, who is at present in town, and he courteously answered our representative's enquiries. ' Supposing a shareholder now has 100 shares in the Taranaki Petroleum Company, Ltd., our representative asked, what is his position' on liquidation—when the company's interests are absorbI ed by the new company?

Mr. Brown: As set out in the-circular issued by tie Taranaki Petroleum Co. he will receive 50 fully paid-up shares iw the new company and approximately £56 5s in cash.

By the arrangement made by Mr. Carter in London I notice lie has the right to reinvest the amount of cash receivable.

Mr. Brown: Yes, that is so. And 1 by becoming an underwriter for shares equal to the amount of cash to be received for his shares in the Taranaki Petroleum Company, he will be entitled' to a cash bonus, or commission, of 2s a share.

But can a shareholder underwrite more shares than the number that would be covered by the amount receivable by him?

'•Mr. Brown: Yes; a shareholder may underwrite more shares if he wishes, but it has to be borne in mind that the number of shares available under this arrangement being limited l to 55,000, an allotment of any shares over and above the number to which he is specifically entitled can only be made in the event of any shareholder failing to take up his rights-. It is possible, of course, that some of the shareholders will not avail themselves of the opportunity of reinvesting their money and obtaining the concession of ten per cent.

Then that is where the shareholder who wants to underwrite more shares than he .is entitled to comes in?

Mr. Brown: Yes; it win be conditional on other shareholders- not availing themselves of their right to take up shares that will make it possible for a man to get more than he is entitled to by virtue of the number of shares he holds. In: other words, if A does not take up his shares, B will be entitled to increase his holding. * Then, to go back to the man with 100 shares. He underwrites -his 50 shares, and on them will be allowed ten per cent, commission. Now, supposing lie wishes to'underwrite a further 100 shares over and above the 50 he is entitled to underwrite, what'is his liability? Mr. Brown: Naturally,: his liability is £IOO, less 10 per cent., the amount of commission due.

That is assuming the very worst aspect—namely, that no shares are taken' up by the public or the underwriters. But could, that happen? Mr. Brown: No; because a considerable number of shares, both in England and New Zealand, have already been taken "firm." Besides, no company I should say, has ever been bought out and no shares applied for. What do you think will be the result of the offer of £'275,000 shares? Mr. Brown: I anticipate every share will be applied for, given normal times. Suppose only half of the shares be applieif for, what, then, will be the position of the shareholder holding 100 shares in the present company and being desirous of underwriting 100 shares in the new company?

■Mr. Brown: In that event he would be called upon to take up about 8 per cent, of the number of shares underwritten, so that his position would be as follows.—He wouW own 50 fully-paid shares in the new company, and receive in cash (as per circular sent out) £W ss, unless he stipulates to take up "firm" shares when underwriting. In that event he would take more shares and leas cash. So you would a shareholder to apply for more shares than he wishes to have allotted to him?

■Mr. Brown: Undoubtedly. As subject to the conditions stated above, he would receive more shares in the new company, as well as more cash.

This thing looks attractive. It has the air of speculation about it. Supposing a man agrees to underwrite 1000 shares' and the shares in the new company are all taken up. How does lie stand?

■Mr. Brown: He makes £IOO and has no further liability, even if only 150,000 shares are applied for.

About the mode of underwriting how is it done? "'

Mr. Brown- A shareholder fills in the form sent him and deposits a cheque for 2s per share, which is afterwards returned to him, plus 2s bonus due to him as underwriter. When does he get this money? Mr. Brown: The money will be paid to him some few days after the company J goes to allotment.

The issue of the prospectus has created a great deal of interest locally, and Mr. Broivn was kept busy all day' yesterday supplying information to' prospective investors and shareholders of the present company. Applications for share* in the new company are coming mi freely, and when the position in respect to underwriting i s better understood,, as it will be by those who read what Mr. Brown says above, there is little doubt that the .w.noo shares allotted to New Zealand will be easily sub-i-'C-vibod.