DOMINION CEMENT CASE.

Taranaki Daily News, 3 August 1918, Page 7

DOMINION CEMENT CASE.

. THE PETITION FOR INVESTIGATION.' WAR BLAMED FOR LOSS OF CAPITAL. Auckland, August 1,

The petition to have the Dominion Portland Cement Company, Limited, in voluntary liquidation, compulsorily wound up, was further heard in the Supreme Court to-day. - Mr. J. IP. Campbell, who appeared for the late directors, resumed his address. Mr. Campbell read an affidavit by 11. B. Williams, chairman of directors, from January, 1 DIG, to November, 1917. Mr. Williams declared that the payto G. Winstone, jun., into which the petitioners desired inquiry, consisted of refunds of large cash advances by him and trifling payments to cover expense he had incurred in the company's interests. The affidavit denied that the debenture-holders had agreed not to foreclose if the shareholders took up £24,000 of the new debenture issue. Mr. Williams asserted that the petitioners were offered a full investigation of the company's records, and he undertook that if such investigations showed that the petition for compulsory winding up was justified, they would agree to the filing of the new petition. This offer the petitioners refused. Mr. Campbell said that in view of what had been alleged, he wanted to draw particular attention to this statement. Mr. Campbell read two affidavits by Mr. Gerard and portion of a third. Mr. Gerard specifically denied that the liquidation of the conlpany was due to action by the debenture-holders. At that time the company, owing to competition, ! could .not sell its cement except at a loss, and interest charges amounted to £56 a day.. It was faced with increases in cost, increases it could not pass on to the consumer. It had no cash in hand with which to carry on until conditions improved. The only available money was about £IO,OOO, due on the last issue of debentures, and as this would have been wholly lost if it were called up, it was resolved to go into immediate liquidation for the purpose' of avoiding further losses. Mr. Gerard considered the company's loss of capital was due mainly to the war. The directors believed they were justified in erecting a large and up-to-date plant. They engaged Amoricm experts to instal the plant and the estimates of these experts, on which they relied, were eventually much exceeded owing to the war. The demand for cement fell 30 to 50 per cent., and there were difficulties and delays in getting labor and material. Interest accumulated, the prices of commodities rose, and the progress of work was hindered by floods and storms, which did thousands of pounds' worth of damage, particularly to the electrical plant. The directors, continued Mr. Campbell, were blamed for the loss of the share capital, but he wished to point out that they had put altogether £122,•275 into the company, including £41,000 representing ordinary and preference shares. They had been carrying the whole concern on -their backs for years. They had never accepted the directors' fees, and had paid their own travelling expenses. His Honor: It would be correct to say they lost some of their own money, amongst that of shareholders. Mr. Campbell read an affidavit by Mr. Vernon H. Reed, the first chairman of directors, setting out the causes of the failure in much the same terms as those used by Mr. Gerard. He also mentioned the refusal of the Whangarei Borough Council, after the formation of the company, to proceed with the Wairua Falls electrical power scheme, thus compelling the company to put m a plant of its own —a course for which the directors were now greatly blamed by the petitioners.

On behalf of the clehenture-holdevs, Mr. M. Myers said that lie was not actively opposing the petition. Any suggestion against the good faith of his

clients could absolutely be broken down. The debenture-holders numbered fourteen; and at no time did more than four act as directors. Of the fourteen debenture-holders four were not shareholders. They took up debentures as an investment, and later,, in order to protect tho money they had put in in the first place, they had made advances of large sums. The debenture-holders had not made a penny profit out. of live purchase of the assets or out of the amalgamation scheme. The debentureholders .had provided a total of £2if}>ooo for the company's business. After they had purchased the assets they amalgamated with two other companies, and were given 25.">.000 shares, which Mr. Myers contended were not worth their par value. The debenture-holders had paid back the holders of partially subscribed :C36,000 debenture issue, with an additional 0 per cent. If the allotiees of the £.10,000 debenture issue preferred, the debenture-holders were willing to give them shares in the amalgamated company instead of cash. Counsel said the petitioners would not obtain anything under a compulsory liquidation which would not be obtained under trie voluntary liquidation. He submitted alternatives to an order for compulsory winding up, and in conclusion said the sole object was to save the debentureholders further useless expenditure. The case was again adjourned.